Fifth day of Walter Reed trial focuses on hospital contract, meals charged to campaign account _lowres

Advocate staff photo by JOHN McCUSKER -- Former St. Tammany/Washington parish DA Walter Reed arrives at federal court Wednesday where his trial is continuing.

Opening their defense of Walter Reed, his attorneys on Wednesday zeroed in on the former north shore district attorney’s relationship with St. Tammany Parish Hospital, taking aim at the government’s contention that Reed pocketed money from the hospital that was meant for his office.

One of the main legs of the government’s case against Reed, presented over six days of testimony from dozens of witnesses that ended Tuesday, is that he personally took payments for serving as legal counsel to the hospital’s board, while hospital administrators thought they were paying the District Attorney’s Office for his work.

Reed maintains that all involved were aware of the arrangement under which he was representing the hospital beginning in 1994.

On Wednesday, Reed attorney Richard Simmons pointed to a letter from 1996 in which Reed clarified for the chairman of the hospital board, Paul Cordes, that he was working for the board as a private attorney.

“As you know, approximately two years ago, I began representing the board of St. Tammany Hospital personally,” the letter says. “Prior to that time, the District Attorney’s Office was counsel of record. Through an oversight, the board never did ratify my appointment as counsel.”

Reed went on in the letter to say he had only recently become aware of the oversight, and he asked the board to clear things up at its next meeting.

The letter was unsigned, but Reed’s former secretary, 83-year-old Jean Young, testified that her initials appeared at the bottom of the letter, which she said was her customary practice when typing letters.

Reed’s ex-wife, Shawn Reed, also told jurors that she remembered the issue of Reed’s work for the board coming up in 1996.

She said it was prompted by her husband’s election challenger at the time: Former U.S. Attorney John Volz was gunning for Reed’s job, and a campaign finance report filed by Volz revealed that he had paid the hospital for copies of minutes and other board documents related to her husband’s position as counsel for the board.

Reed’s defense team produced a series of faxes between Shawn Reed and her husband’s close friend and staffer Harry Pastuszek that contained drafts of a resolution Reed wanted the hospital board to vote on, confirming him as legal counsel.

Pastuszek also testified on Wednesday, and although he told jurors that Volz was “making some type of noise” about Reed’s hospital work during the 1996 election, he did not say what he thought Volz hoped to prove.

In any case, hospital officials testified last week that they could find no evidence of a resolution confirming Reed, the private lawyer, as the board’s legal counsel.

Another witness called by Reed’s camp, his former office manager, Sandra McDougall, testified that she found a 1994 memo that also appeared to back up the district attorney’s claim about the hospital arrangement.

Unearthed in response to a public records request made in mid-2014, it reads, “Effective May 1, 1994, I will be personally representing the St. Tammany Parish Hospital board.” The memo was addressed to then-office manager Don Scroggins.

Court recessed before the prosecution cross-examined Shawn Reed.

But Assistant U.S. Attorney Jordan Ginsberg asked Pastuszek numerous questions about how he had benefited financially from his association with Reed, including work as general counsel for the St. Tammany Parish School Board, a job Pastuszek acknowledged he received, at least initially, through Reed’s intervention.

Ginsberg listed amounts that Pastuszek’s firm received from the School Board for 2011 through 2013, which ran from $440,000 to $545,000.

The retired attorney was clearly nettled. “I wasn’t making $500,000. I was billing $500,000,” he said, his voice raised. “I had my employees to pay.”

Pastuszek acknowledged, under cross-examination, that he continued to be paid as an assistant district attorney even though he did not have an office there.

Ginsberg also asked about a special retirement program that Reed put in place for select employees, including Pastuszek, in which the office contributed 20 percent of the participants’ salary without requiring them to put up a match.

Pastuszek acknowledged that he received about $180,000 overall from the benefit, but when Ginsberg asked if that was unusual, he said he didn’t know.

The prosecution also quizzed McDougall about a benefit she and a few others received.

Assistant U.S. Attorney Maria Carboni asked McDougall if she was told to keep secret the fact that the office was reimbursing her and a handful of others for medical co-payments and out-of-pocket medical expenses. She said she was told not to say anything about it to others.

But when Carboni asked if she was part of Reed’s inner circle, she said, “I don’t think so.”

In testimony Tuesday, IRS special agent Tim Moore said the extra medical benefit, which Reed also received, is one of the items he counted as undeclared compensation in accusing Reed of making false statements on his tax returns.

Follow Sara Pagones on Twitter at @spagonesadvocat.