Louisiana governor goes on trial in hospital permit scandal


NEW ORLEANS -- Gov. Edwin Edwards, accused of using his influence to steer hospital and nursing home permits to friends for $10 million in profits, goes on trial this week on federal racketeering and fraud charges.

After six months of legal maneuvering, including several attempts to get the case thrown out, the trial was scheduled to open Tuesday with the task of selecting 12 jurors and six alternates.


Edwards, his brother, a nephew and five business associates are accused of conspiring illegally to aquire and sell hospital permits from the state for at least $10 million in profits. The indictment returned on Feb. 28 lists 50 various counts of racketeering and mail and wire fraud.

The charges carry a maximum prison sentence of 265 years.

There are signs the prosecution might try to prove that Edwards, who has an admitted passion for the dice tables, joined the scheme to pay his gambling debts.


Subpoenas have been issued to at least a dozen employees of gambling casinos, bits of evidence have been sealed and several news reports concluded the governor lost heavily at the gaming tables in Las Vegas and Lake Tahoe.

Neither side has commented in detail on the reports because of a gag rule imposed by U.S. District Judge Marcel Livaudais Jr. But Edwards said the gambling reports were 'off the mark.'

The sealed evidence 'is just not nearly as sinister as some think,' he said.

The indictment says Edwards used his position to steer hospital and nursing home construction permits to his friends, while secretly holding stock in their health care companies.

The permits, called certificates of need, made the builders eligible for large cash reimbursements from the federal government's Medicaid program.

In most instances, the permits were sold or traded for stock in other health care corporations at great profit to Edwards and his friends, the indictment alleged.

Edwards said he earned $2 million in the hospital enterprise, which he described as legal business done while he was a private citizen during the four years between his second and third terms as governor.

Edwards, a Democrat, said he is being persecuted by Republicans - led by U.S. Attorney John Volz, who was appointed by President Reagan, in retaliation for his humiliating comeback defeat of Republican Gov. Dave Treen in the 1983 election.


Part of the federal indictment against Edwards says the governor deliberately violated a state law by failing to report his interest in the hospital enterprise. About six weeks after his indictment, Edwards filed an amended personal financial disclosure statement to include his dealings with certain hospital corporations.

The indictment also says Edwards' part in the enterprise was hidden in letters that showed stock in the corporations held in the names of some of his co-conspirators actually belonged to Edwards.

One of the defendants, former New Orleans City Attorney Philip Brooks, was added to the original indictment after he reneged on an agreement to testify against Edwards. The indictment says Brooks was one of the front men for those who truly owned stock in the health care companies.

In addition to Edwards the defendants are his brother, Marion Edwards; nephew Charles Isbell of Baton Rouge; Brooks; James Wyllie Jr. of New Orleans and Ronald Falgout of Baton Rouge, partners in Health Development Services Corp.; architect Perry Segura of New Iberia, and businessman Gus Mijalis of Shreveport.

The courtroom promises to be a controlled mob scene. Each of the eight defendants is represented by two lawyers. Another four or five lawyers for the prosecution will be headed by Volz.


Special passes have been issued to family members of the defendants and to reporters because of limited seating space in the fourth floor courtroom. A few rows of seating will be available to the general public, admitted on a first come-first served basis.

The trial could last six to eight weeks, Livaudais said.

'I certainly hope we will be finished by Thanksgiving,' the judge said.

It could take two weeks or more just to find the 12 jurors and six alternates that must be selected, he said.

In an agreement worked out last week, the defense will be allowed to reject 18 potential jurors without giving any reasons. The prosecution will be allowed 10 such strikes.

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