KVHD generated timeline shows 20 year default cycle

In 1986, the Kern Valley Healthcare District began a business relationship with the Office of Statewide Healthcare Planning and Development, which included a business plan to build to a nursing center, surgery suites, cafeteria, physical therapy, and other not really necessarily pie in the sky ideas.

It should have worked. We were to build 140 or so beds in the nursing center, we finished with 74.

The story goes we had no collateral to build these things, but a program called CAl Mtg. was created to get money to hospitals to build, expand and upgrade. The hitch to the Cal Mtg. plan was that the idea was not to lose but to make money. In it's own mission statement, the program must protect "the fund." So, no bankruptcy or other silly ideas of getting away, once it was signed, it was over.

As the hospital tried to finish it's project, by 1989 contractors were unhappy, materials missing, money unaccounted for, and then the Loma Prieta earthquake.

The board back in 89' could not protect the money, could not make the payments on the bonds without taking it from the loan they got to use for construction.

They borrowed money to make payments on borrowed money, paid interest with principal. Then borrowed time became a factor as in 1991 the first management company would come to the hospital and begin, Oh, I don't know...making money for themselves, supposedly helping the broke hospital continue on.

This pattern would stay with us as just two weeks ago, rather than calling it "technical default" anymore which the hospital has been in since the project began in 1986, Cal mtg. is using the contract or covenant to force an audit on the hospital, with HFS financial consultants.

According to their contract they are supposed to be inspecting and coming to meetings, helping the hospital survive, but not survive just to pay them.

We are surviving to pay them, but I've got news for you, if the hospital closed today, this community would still owe that debt. It would come straight out of our property taxes for the next however many years it would take.

When KVHD contracted with them, they used us, the community as chattel. And now in emails, CFO, Beedle has offered us up to banks for lines of credit and to who else, Cal Mtg.

Now you know this is your debt Kern River Valley.

Cal Mtg. has had it rough recently as information that they may have been hearing about the current goals of the board and the community may not be quite accurate. The finance manager turned over the employee benefit report to controller Barbara Figueroa, and that only means one thing, there's a glitch somewhere.

Nobody bankrupts on Cal Mtg. the thought is blasphemous, because Cal Mtg. will provide the hospital with reoccurring loans or lines of credit to pay the debt so "the fund" doesn't have to pay. It creates loans for the hospital as it did a month ago, a million dollar line of operating credit, which is completely gone.

$833,000 went to Cal Mtg. to pay the bondholders. Another $75,000 went to pay for the services of the auditors HFS, which Cal mtg. foisted upon the hospital. The remainder went to the employees benefit fund which was lacking.

So, 90% of this loan directly benefited Cal Mtg. Though it kept the hospital from having to have Cal Mtg. pay off the bondholders and then we owe the balance of our debt immediately.

The hospital board, as far as I know, has been given little knowledge of how this situation works and has worked since the hospital began the default cycle in 1991. I think if they knew they would try to take action to put a stop to it. I'm sure there's a communication problem somewhere.

Questions that should be asked are left floating in the air at meetings. Follow up is after I get home at night.

GOB [sic] helps those who help themselves

With the hospital being audited, and things like original documents and receipts will be expected to be shown, there is still the problem with HFS coming in on behalf of Cal Mtg. and the debt to the bondholders.

I'd almost think a trustee should be appointed in this case and will again, ask the hospital board to consider talking to Cal Mtg. themselves, rather than hearing the news through their administrators who apparently are running their own GOB campaign.

Correspondence between Cal Mtg. financial officer Mabel Chan and KVHD Cheif Financial officer, Chet Beedle reveal that Cal Mtg. is being told that the hospital is "officially" going for the general obligation which would have the community pay off the 15 million bonds with property taxes.

Who would that benefit once again? Cal Mtg. Yes, KVHD would too, but the community would have to benefit in some way too and considering this history, this timeline of terror below, they may want to pull out the people who have been covering the loan history.

Here's something to consider, as I've been adding up just some of the numbers, I am up to 6.5 million which we have paid out to, because of, or in fees, surrounding this whole insurance credit relationship we had with Cal Mtg.

(Update July 2010: the numbers and fees are difficult to pinpoint, as payments for services are vague, but I do have new information I will be sharing which includes the latest report as to why the hospital didn't obtain a loan rather than risk bonds which cannot be bankrupted on. The originator of this high risk package which could end healthcare in the KRV for good, is none other than Goldman Sachs, as was reported by the bond insurer, Cal Mtg.)

I cannot even imagine, as you will see in the documents in 2003 the refinance which should benefit the hospital, actually raised the total (rounding figures) amount from 16 million to 17 million.

What happened is we were in our default position of weakness for 24 years. We were never ahead of this revenue "bondage" deal.

Cal Mtg. again benefited from the 2003 refinance in that they were paid with a line of credit.

How could a company survive paying interest twice on the same monies? They are not and now, HFS arrives today June 6 to fulfill their contract to "forensically audit" this hospital for the next three months.

Who will this benefit in the long run? Paying HFS now as you can see in the documents brings us to 1.5 million dollars in management expenses due to the default cycle and Cal Mtg.'s refusal to pay off the bonds as they have collected more than enough from us for 24 years.

That 1.5 million which I think is a general number and there is likely much more money involved, could have been a payment to Cal Mtg. to cover the debt.

If you had a car wreck, still owed 75% of your car loan and lost your job on the same day, and your insurance company said instead of paying off your car, fixing it or totalling it, that they would back a loan so you could pay for the car yourself and pay a years worth of premiums to them: what would you say?






These documents actually help form a timeline that can aide in getting to the truth. We are beginning to hear more truth as the situation becomes more, what? Transparent maybe.




Predatory lending is defined by "who benefits from the transaction." But if the lender never comes on site and takes the word of a business in trouble, they deserve no pity, they did that themselves. Board minutes can be altered if that is what they are basing there decisions to provide more credit to a sinking ship.

And with Cal Mtg. allowing the hospital to survive on life support just because they can't handle the thought of losing them (the money) it's again not in this businesses best interest, at all. They have been allowing the CFO, Beedle to take money from a "debt reserve fund" designed to be a savings account in the event profits aren't up to par.

That savings account has to be one and half times the amount of the principle and interest payment. They use "ratios" to keep a barometer, but the ratios have been changed as Cal Mtg. once again lowered their standards so the hospital could make a payment out of savings.

It's like teaching the dog it's okay to eat at the table. And inevitably they take advantage.

Is there more? I'm afraid there is...absorb this while I work on "the" ultimate KVHD timeline (I'm calling it that because it is like seeing footprints in deep snow, obvious.) which will be my final efforts to correct something that has existed here for far too long.

I recently read and agree that white collar crime indeed diminishes public trust and some estimates say it costs billions and billions of dollars each year. And because of the complexity of these cases they are the most difficult to win in court. But depending on the evidence, it may be tough, but it's not impossible.

Now, would short staffing a nursing center because you had to pay Cal Mtg. in 2006 with another line of credit be considered a crime? I guess we will find out as I'm not letting that question go.