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Feds indict former KC medical school chief

Feds indict former KC medical school chief

March 31st, 2011 in News

KANSAS CITY (AP) - A federal indictment unsealed Thursday paints a former Kansas City medical school chief as an unscrupulous leader who falsified meeting minutes to give herself bonuses, claimed charitable donations made by the university as her own and got reimbursed for several trips that had nothing to do with her job at the university.

In all, prosecutors say Karen Pletz, 63, former president and CEO of Kansas City University of Medicine and Biosciences, fleeced the school out of more than $1.5 million over a seven-year period.

Pletz was a former resident of Jefferson City, where she was employed with Central Bank.

At a news conference Thursday, U.S. Attorney Beth Phillips said Pletz created false minutes of executive committee meetings that never occurred, in which she gave herself "leadership stipends" of $60,000 to $65,000 roughly twice a year.

Pletz failed to report those payments on her income tax returns, prosecutors said.

She also is accused of reporting hundreds of thousands of dollars in charitable donations on her tax returns that actually were made by the university, and receiving reimbursements for those donations.

When federal investigators started looking into her finances, prosecutors said Pletz blamed the high donation figures on her assistants, who she said mingled university records with her own to cause the mistakes.

The indictment says Pletz was reimbursed for $50,291 in travel and entertainment expenses in 2007 for personal trips and purchases, including nearly $25,000 on a trip to Jackson, Wyo., to vacation with one of her friends. She also is accused of wrongfully getting reimbursed for nearly $12,000 in items she purchased at the Vera Wang boutique in Honolulu, Hawaii.

Prosecutors said she also is charged with failing to report those reimbursements as income on her tax returns.

She is charged with 16 counts of stealing from the university, one count of attempting to interfere with the administration of internal revenue, three counts of making false statements on tax returns and four counts of money laundering.

Pletz was the school's top administrator from 1995 until she was fired in December 2009 after a special committee formed by the university uncovered signs of fraud going back to at least 2002.

The committee estimated that 70 percent of the claims Pletz submitted for reimbursement were based on false or materially inaccurate information.

Two weeks after Pletz's termination, executive vice president Doug Dalzell was fired and chief financial officer Richard Hoffine resigned.

The school filed a lawsuit against her last March, and Pletz filed a countersuit hours later seeking more than $2 million in compensation and benefits, plus punitive damages.

In her suit, Pletz called the special committee's probe was a "sham and the outcome was predetermined."

Pletz made a first appearance in federal court Thursday morning and entered a not guilty plea through her lawyer, Charley German. Her defense team issued a written statement after the hearing criticizing the government for getting involved in a case that already was being handled at other levels.

"With today's indictment, the federal government has injected itself into the civil litigation dispute between KCUMB and its former president, Karen Pletz," the statement read. "All of the issues raised in the indictment are also the subject of the ongoing IRS audit of KCUMB and its board of trustees as well as the civil lawsuit, which after filing one year ago KCUMB has done everything in its power to avoid litigating.

"It is unfortunate, in our view, that local federal prosecutors would choose to spend public resources on a case like this when there are other, legitimate processes already at work to resolve the issues in dispute. Ms. Pletz denies and will fight the government's charges, and pleads not guilty to any federal crimes."

Prosecutors are seeking forfeiture of her Lexis convertible and more than $39,000 in cash from her bank account, both of which were seized in October when agents executed seizure warrants. They're also seeking an $830,000 money judgment and Pletz's condominium near County Club Plaza in Kansas City.