Sunday, November 04, 2007
By Dan Fitzpatrick, Pittsburgh Post-Gazette
Before his dramatic fall, Sherif Abdelhak sat atop the largest health system in Pennsylvania, an empire builder responsible for nearly 30,000 employees and $2 billion in annual revenue.
Almost a decade later, the former chief executive of the Allegheny Health, Education and Research Foundation spends his days in Kentucky, still believing his life and reputation were “destroyed completely” in 1998 when the AHERF ousted him and then filed for bankruptcy. It was the biggest nonprofit insolvency in U.S. history.
“I don’t have a life,” he said. “They managed to destroy it 10 years ago.”
For Mr. Abdelhak, the period after the demise of AHERF has included jail time, a divorce, an aborted oil-buying venture, a personal bankruptcy filing and a recent U.S. Tax Court order that he pay more than $500,000 in back taxes.
Reached by phone last week, Mr. Abdelhak remains reluctant to speak at length about what transpired or how the blowup in Pittsburgh informed his current existence.
Asked if he has enough money to pay the back taxes, he said, “Absolutely not. I have nothing. They never paid me my contract. I never got a penny that I was owed. … There has been so much damage to me.”
The Egyptian-born Mr. Abdelhak was the central figure in AHERF’s astonishing and rapid expansion, which at one point stretched across two states and included 14 hospitals, two Philadelphia medical schools and hundreds of physicians’ offices. But the system expanded too fast and began to bleed red, with losses of nearly $1 million a day. Creditors were owed nearly $1.5 billion.
The bankruptcy, still winding down nine years later, allowed rival University of Pittsburgh Medical Center to emerge as the region’s dominant health care provider by a wide margin. AHERF flagship Allegheny General Hospital escaped the parent’s bankruptcy only by merging with West Penn Hospital in Bloomfield; now both are part of the West Penn Allegheny Health System, the region’s second-largest health care provider. West Penn Allegheny lost $78.8 million during fiscal 2007, while UPMC recorded a net gain of $618 million.
At one time, Mr. Abdelhak faced more than 1,500 criminal charges as a result of the collapse. In August 2002, he pleaded no contest to a single misdemeanor count of misusing charitable funds, and Common Pleas Senior Judge Raymond Novak sentenced him to 111/2 to 23 months in the Allegheny County Jail, with a provision that his time could be served in alternate housing. Records show that Mr. Abdelhak was inside the Allegheny County Jail from Sept. 3 through Dec. 9, 2002, according to a jail official.
Even in the good times, Mr. Abdelhak was a mystery to colleagues and associates. And that remains the case almost a decade after he left AHERF.
“I have no idea where he is,” said attorney Judith Olson, a partner with Schnader Harrison Segal & Lewis, who once represented Mr. Abdelhak. “He really just fell of the face of the Earth.” Asked if there were anyone in Pittsburgh still close to him, she said, “He didn’t have a lot of friends. …I never learned anything personal about him at all. He was very quiet.”
Added John Lewis II, another Pittsburgh attorney who performed work for Mr. Abdelhak: “Nobody ever got that close to him.”
It appears that Mr. Abdelhak did attempt a business comeback after exiting AHERF. In February 1999, he started Sewickley-based Global Trading Group, records show, to buy and resell oil, oil products and precious minerals. One early client was California company Dynoil Refining LLC, which tried to buy 800,000 metric tons of petroleum products, according to court documents. Mr. Abdelhak offered two life insurance policies as collateral to secure the deal.
The relationship soured, however, and resulted in lawsuits filed in Pittsburgh and California. Dynoil claimed in court documents that Mr. Abdelhak tried to sell embargoed oil from Iran or possibly Iraq in violation of a presidential executive order — a charge that Mr. Abdelhak denied. The cases eventually were settled and Mr. Abdelhak now claims the Global Trading Group is “closed” as a business.
In 2002, Mr. Abdelhak and Marlynn Singleton, an ex-KDKA-TV anchor and now a physician, divorced, according to court documents. At one time Ms. Singleton was the hospital’s director of public relations. Another ex-wife, Dr. Mervat Abdelhak, said she has lost contact with her former husband.
In May 2003, Mr. Abdelhak filed for Chapter 7 bankruptcy protection in Kentucky, listing a post office box in the town of Goshen as his address. He also listed two other aliases — “Samuel Aaron” and “Sherif Samy Abel.” Among the creditors was the Internal Revenue Service, with a claim of $615,344, and his ex-wife Ms. Singleton, with a claim of $10.2 million. In that filing, Mr. Abdelhak described himself as “married,” with a 9-year-old stepson as a dependent. As an occupation, he listed “sales associate” for “Yudofskys” — perhaps a reference to Yudofsky Furriers, a Louisville retailer. At the time of the filing, Mr. Abdelhak listed a monthly income of $1,325, after taxes. He listed monthly expenses of $1,213.
In 2005, Mr. Abdelhak filed a petition with the U.S. Tax Court to dispute tax deficiencies cited by the IRS for the years 1998, 1999 and 2000. Mr. Abdelhak argued that he should be able to claim a $435,000 charitable contribution deduction for the 1998 tax year; that he should be able to claim a $2.2 million “theft loss” deduction in 2000 relating to the loss of two insurance policies and a deferred compensation account; and that he should be allowed to deduct certain amounts of travel, meal and entertainment expenses relating to Global Trading Group in 1999 and 2000.
But a tax court judge ruled against Mr. Abdelhak on almost every count — the only victories being a charitable deduction of $12,713 for 1998 and the waiver of more than $40,000 in accuracy-related penalties.
Mr. Abdelhak said he no longer lives in Prospect, but still resides elsewhere in the same state.
“It’s not Pittsburgh,” he said.
Dan Fitzpatrick can be reached at firstname.lastname@example.org or 412-263-1752.