Federal investigators issued warrants, seized the phones of two top Health Care executives, sources say – The Boston Globe

The investigation follows a report by the Globe Spotlight Team that revealed several Steward board members have been subpoenaed as part of an ongoing grand jury investigation into fraud, bribery and corruption. of failing health, born in Boston. chain of custody.

Federal authorities have been in talks with several other top Steward officials, the Spotlight Team has learned, seeking information about Steward’s financial performance.

A spokesman for de la Torre declined to comment Monday. Ernst’s attorney also declined to comment.

Neither man has ever been charged with a crime in the US. Both are at the center of a wide-ranging, ongoing criminal corruption case in Malta, in which authorities allege Steward executives bribed government officials.

A spokeswoman for Steward, once the nation’s largest public, for-profit health care company, declined to comment.

Crime experts said that the execution of a search warrant is a clear indication that the investigation has gone beyond the investigation phase.

“On a scale of 1 to 10, this action by federal officials brings the Steward scandal to 11,” said Douglas Chia, president of Soundboard Governance LLC and senior fellow at Rutgers’ Center for Business and Governance Law. Law School.

To obtain a wiretapping warrant, federal prosecutors must provide credible evidence to a magistrate judge that a specific crime has been committed, and it is likely that the evidence of that crime is can be found on the seized phone, according to a former government statement. the accusers.

“This [search warrant] it makes it easy for me for the prosecutors to think so [de la Torre] he’s a participant in the crime” not a bystander, said Mitchell Epner, a former New Jersey prosecutor. “Usually in cases like this there’s already been contact with the underdog.”

Harry Sandick, a former assistant United States attorney for the Southern District of New York, said, “It certainly suggests a more mature investigation, not something you would expect prosecutors to do it suddenly.”

There are at least two lines of inquiry in the federal investigation, several people close to the matter told the Globe. Prosecutors are looking into possible violations of the Foreign Corrupt Practices Act, a law that prohibits US companies or citizens – as well as foreign entities doing business in the US – from engaging in bribery and corruption. some overseas. Another part of the investigation focuses on possible fraud and theft in the United States, and the grand jury has also examined executive compensation, travel and spending, reports the Globe.

Earlier this month, former speaker of the US House, John Boehner, who was a member of Steward’s board for a long time, appeared in the federal court in Boston together with the lawyer. Boehner, who lives in Ohio, declined to comment.

Grand jury proceedings are secret and the law prohibits discussing them. A spokesman for the FBI’s Boston branch office declined to comment Monday.

The Spotlight team reported on several incidents in which de la Torre dipped into Steward’s dwindling bank accounts to finance his own projects – donating to his children’s school, buying a multi-million dollar apartment in Madrid, and using company jets to get there. friends of ships around the world. Despite these questionable transactions, Steward’s bills from hospital vendors were mounting and causing financial stress and harm to patients throughout the company.

De la Torre, who lives in Dallas, has kept a low profile since the chain filed for bankruptcy in May. He was spotted at the Paris Olympics in July, watching competitors take part in the genteel equestrian sport of dressage. Two months later, he resigned as Steward, ending a decade-plus reign.

Company employees told the Globe that he has not been seen at Steward’s Dallas office since his resignation. He remains the main shareholder, even though Steward is now nothing after filing a bankruptcy lawsuit for nearly $9 billion in total debts.

Ernst, a German-born doctor who was educated at Boston’s top medical centers and now lives in Brookline, remains the head of Steward’s international arm, which is based in Spain and operates in Colombia and Saudi Arabia. . The company’s past dealings in Malta have come under particular scrutiny there and in the US.

In May, a Maltese magistrate concluded a four-year criminal investigation into the government’s dealings with Steward and Vitals, a company that Ernst managed before returning to Steward. In his 1,200-page report, the magistrate recommended that Ernst and de la Torre be charged with embezzlement, organized crime and corruption of public officials, including the country’s former prime minister, Joseph Muscat.

In 2022, Maltese authorities raided Muscat’s hilltop villa and seized his electronics as part of an investigation into public-private partnerships. At the time, Muscat refused to give officials the passcodes needed to unlock the devices and officials called the US Cyber ​​Security Agency at the United States Department of Defense. States to extract information from electronic, according to court documents.

The latest court dates in Malta for Ernst and de la Torre have been postponed. Ernst failed to appear in court in early October when he was due to face charges related to the conspiracy.

Ernst’s Maltese lawyer, Jose Herrera, said court that Ernst “lives abroad, and intends to come here to contest the charges, and to give the judgment of this court. The only reason he is not here today is because his wife is very ill.” The court adjourned the case to Nov. 28.

De la Torre’s case was heard in a Maltese court later in October, but the judge was also absent. The court rescheduled his trial for January, but it is likely that any American case will come first, Maltese legal experts told the Globe.

Once the authorities get hold of the phone, hacking it is not always easy.

Federal officials still need a key to scan a phone, and it’s easy for an investigative target to decrypt encrypted messages by hacking messaging apps, such as Signal, according to Epner, the former prosecutor. The federal corruption investigation against New York Mayor Eric Adams was complicated when prosecutors were unable to unlock his tapped phone. The mayor told FBI agents last November that he had changed the password and could not remember it.

“It’s a logical conclusion that prosecutors were worried they had to arrest him [de la Torre’s] phone without telling her head for fear she might try to throw the whole phone away or destroy it,” Epner said. “That’s probably the most important point.”

Lawrence Cunningham, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said the phones could contain a wealth of evidence — including texts, photos and meeting notes — that could implicate other members of the group. Steward leadership and board. .

“This is a very serious situation,” Cunningham said. “We’ve seen clouds of smoke build for months. Now we can see flames.”

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Hanna Krueger can be reached at hanna.krueger@globe.com or at Signal at +1 339 242 0289. Follow her @hannaskrueger. Chris Serres can be reached at chris.serres@globe.com. Follow him @ChrisSerres. Brendan McCarthy can be reached at brendan.mccarthy@globe.com.