By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
By Charles Lam
Forget Dennis Rodman. George Argyros, the conservative Newport Beach billionaire and U.S.-ambassador-to-Spain designee, is fast becoming Orange County's real bad boy.
Argyros is already under suspicion for his alleged role in a scheme to defraud thousands of his apartment tenants over two decades. Now federal prosecutors are negotiating a fine against Apria Healthcare Group Inc. for allegedly cheating Medicare out of at least $103 million while Argyros served as the company's chairman.
Fraud investigators estimate that Apria submitted 900,000 false claims to the federal assistance program during a three-year-period that ended in 1998. The company acknowledges "errors and omissions that do not amount to fraud."
In a mid-July filing with the Securities and Exchange Commission, Apria disclosed to its investors that the Department of Justice could seek penalties as high as $9 billion but was asking only for $400 million to resolve the scandal. The Costa Mesa-based company—with annual revenues of more than $1 billion—has not admitted to any criminal conduct and does not want to pay more than $7 million in fines.
Argyros helped build Apria into one of the nation's largest suppliers of home respiratory and infusion therapies. He left the board after a whistleblower revealed the alleged billing scam to federal authorities in 1998.
The Newport Beach resident remains one of Apria's largest individual stockholders. As of late August, Argyros controlled almost 2.8 million shares worth more than $76 million.
For Argyros followers, the Apria scandal may sound like déjà vu. Last December, prosecutors in the Orange County district attorney's office privately accused the Republican Party fat cat of masterminding a systematic "rip-off" scam involving his 4,500-unit apartment empire. The case involved millions of dollars in allegedly swindled funds belonging to thousands of poor Vietnamese and Mexican immigrants. Investigators believed that Argyros may have paid his apartment managers bonuses for cheating ex-tenants out of their security and cleaning deposits. But by the time the case went public in February, the billionaire's involvement had been erased from the public record. Highly reliable law-enforcement sources later told the Weekly that DA Tony Rackauckas had effectively ordered the case softened and delayed until after the U.S. Senate had approved Argyros' nomination. Rackauckas says he has shown his longtime pal no favoritism. In March, he removed himself from the civil case, kicking it up to California Attorney General Bill Lockyer. It has not yet been settled.
Members of the Senate Foreign Relations Committee, which will consider Argyros' nomination after it returns to work following the Labor Day holiday, may want to ask Argyros how he has been so lucky. Though his two key businesses have allegedly stolen more than $100 million in two separate cases, the Harbor Island mogul—who flies to Europe on his own state-of-the-art jet and sails the Mediterranean on his personal, 180-foot-plus yacht—has avoided any criminal charges.
One answer is the local media. Rodman, Argyros' colorful neighbor and a former NBA basketball player, goes to South Coast Plaza, gets arrested; speeds his boat in Newport Bay, gets cited; drives to a convenience store, gets arrested; plays his trance music too loudly, racks up more than $8,500 in noise violations from more than 50 police visits—in the past year alone. In the past eight months, Rodman's misdemeanors have earned him more than two dozen negative articles in the local daily newspapers.The Orange County Register and Los Angeles Times are so busy covering Rodman—a man who will never influence U.S. foreign policy—that they don't have time for much else. Since July, not one story in either paper has connected the would-be ambassador to the Medicare scandal.
Sloppy reporting is likely the best explanation for the Times' and Register's bizarre failures in l'affair Argyros. But one wonders whether the Times is also compromised by its singular relationship to one of the principals in the Apria story, a former Nixon aide, Newport Beach resident Larry Higby. From 1989 to 1994, Higby was chairman of the Times Orange County; while in Costa Mesa, Higby also oversaw circulation and marketing for all of the Los Angeles Times' non-LA editions. In 1997, Argyros recruited him to serve as Apria's president and chief operating officer. Higby is still there today.