Steward bankruptcy disclosures reveal $250 million paid out to CEO de la Torre

Wall Street Journal report: ‘CEO accrued a fortune as hospital chain failed’

By: maltatoday.com

Aug 19 2024
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Steward bankruptcy disclosure

Steward Healthcare’s chief executive in the United States, Ralph de la Torre, bagged at least $250 million in salary and bonuses over the last years, while the health network’s hospitals were struggling to pay their rents or keep operating.

Bankruptcy documents seen by the Wall Street Journal have now drawn government scrutiny after a U.S. Senate committee launched an investigation and summonsed de la Torre to testify next month.

De la Torre was the CEO of the U.S. healthcare company whose international interests spread to Malta when it acquired a hospitals PPP previously managed by a former Steward executive, Armin Ernst. The contract was ruled to have been awarded fraudulently, and a criminal inquiry has now led to money laundering charges against former government officials and Steward executives.

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The $250 million in payments from Steward to de la Torre and to his businesses are based on public disclosures.

Steward’s disclosures in most cases have covered only the 12 months before it filed for chapter 11 bankruptcy. Some of the $250 million was paid to de la Torre directly. Other payments were to companies that did business with Steward where he had big ownership stakes.

Steward has been trying to sell the 30 hospitals it operated in eight American states. The WSJ said that while Steward has been busy shutting downs its hospitals, de la Torre was in France to attend Olympic equestrian events at the Palace of Versailles.

“The former cardiac surgeon owns a 190-foot, $40 million yacht and a 90-foot, $15 million sportfishing boat, according to the Senate committee. He owns an 11,108-square-foot Dallas mansion, valued at $7.2 million by the county. He paid at least $7.2 million in 2022 for a 500-acre ranch 45 miles south in Waxahachie, according to the deed. Two private jets that the same Senate committee valued at $95 million were owned by a Steward affiliate that is majority-owned by de la Torre,” the WSJ reported.

De la Torre became the majority shareholder in Steward in 2020 when the company’s private-equity owner, Cerberus Capital Management, transferred its 90% stake to a physician group he led, in exchange for a $350 million promissory note.

In 2021, Stewed distributed $111 million to shareholders, of which around $81 million went to de la Torre, who owned 73% of the company.

By the end of 2021, Steward had a $2 billion deficit, and lost $365 million in 2021 and $269 million in 2022, according to previously undisclosed Steward financial statements viewed by the WSJ.

In 2022, Steward sold a healthcare business it owned to CareMax, a public company, for cash and stock, transferred most of that stock – $99 million – to a company owned by de la Torre.

Steward also made payments to a consulting firm, Management Health Services majority-owned by de la Torre at a rate of $30 million a year. The firm employed 16 people, including Steward executives, for management services for Steward. The same company owned two private jets, both of which were sold this year.

Another company that was 40% owned by de la Torre, CREF, was paid $37 million from May 2023 to May 2024; the firm provides real-estate and facility-management services.

A federal grand jury in Boston is investigating Steward, including whether it violated antibribery laws in a deal to run state-owned hospitals in Malta.

In May, a Maltese magistrate recommended criminal charges against de la Torre. The Maltese investigation has resulted in charges against former prime minister Joseph Muscat and dozens of other individuals.

De la Torre’s spokeswoman told the WSJ that the magistrate’s inquiry “a retaliatory sham.”

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