By Robert Burns (Special to LouisianaVoice)
LouisianaVoice readers may recall a December 15, 2014 post outlining state defense attorneys desperately fighting to block a deposition of Stephen Russo, Secretary of the State Department of Health and Hospitals (DHH), to be conducted by Lewis Unglesby, lead plaintiff attorney in the Client Network Services Inc. (CNSI) civil lawsuit against the state. CNSI alleges that Gov. Jindal’s office, in “consultation” with AG Caldwell’s Office, unjustly cancelled its contract to provide Medicaid processing services to DHH after news of a federal grand jury having convened to consider potential improprieties in the awarding of the contract broke. The federal grand jury probe went nowhere, but Caldwell nevertheless continued a probe with a state grand jury. Ultimately, that state grand jury indicted former DHH Secretary Bruce Greenstein for nine counts of alleged perjury entailing testimony to that grand jury or statements made at his senate confirmation hearing.
At that December hearing, Judge Kelley ruled that Russo could be deposed and that any attorney-client privilege had clearly been waived. The AG’s Office filed an immediate appeal writ with the First Circuit (notwithstanding the fact Judge Kelley stated, “There’s nothing to appeal because this matter is clear,”). The First Circuit upheld Judge Kelley’s ruling and denied the appeal. During that December hearing, Unglesby stated AG Caldwell’s Office had “quite likely acted illegally” in publicly releasing Greenstein’s grand jury testimony. A hearing to quash that testimony transpired in Greenstein’s criminal trial on March 20, 2015.
At that hearing, Greenstein criminal defense attorney, John McLindon, argued for protection of the grand jury “body” not only for the Greenstein case but for all future criminal trials. He stated that denying his motion to quash the grand jury testimony would send a horrible signal that grand jury secrecy was a “sham” in Louisiana. He also stated that AG Caldwell’s Office essentially engaged in an ex-parte maneuver in that the AG’s motion to file the grand jury transcript into the public record was “buried” at the end of the order. McLindon also argued that David Caldwell had been deceptive in describing the motion in court on the day it was presented as a “routine procedure” to enable McLindon to obtain a copy of the testimony, which McLindon indicated he was entitled to anyway. Judge Daniel ruled that the AG’s office acted properly in filing the transcript into the public record, but McLindon indicated he may likely appeal Judge Daniel’s ruling.
Louisiana Voice has now reviewed extensive court filings in the civil case in which CNSI attorneys lodge even more allegations of serious wrongdoing on the part of Caldwell’s Office. Those allegations entail the testimony of CNSI whistleblower Stephen Smith.
Smith is the CNSI employee who sent an anonymous email to Jeffrey Branch with the Center for Medicare/Medicaid Services (CMS) under the alias of “Kunego.” The email was sent sometime after a meeting which Smith had with Norm Nichols, President of Molina Medicaid Services, and the company which has managed Louisiana’s Medicaid processing for decades and which filed a protest after CNSI won the contract. Smith testified that Nichols indicated that, although Molina lost the protest, “there were still things in the process that were questionable.” Smith has moved on to Orlando, Florida where he serves as Vice President for Sellers Dorsey, LLC, which is a health policy consulting company.
On May 1, 2014, CNSI attorneys conducted a video deposition of Smith in Orlando. During the deposition, Unglesby presented Smith with a copy of what the AG had supplied as the “Kunego report.” That report, which was filed under seal soon after CNSI’s lawsuit was initiated, contained notations of AG investigator Scott Bailey’s interview of Smith (but identified as “Kunego”) on May 10th and May 11th of 2012. Unglesby then asked Smith to take a pen and underline those portions of the interview notes for which he wished to claim were his words and recollections of the interview and to refrain from underlining those items for which he did not wish to assess as having originated from him. As readers can readily tell from reading the 7-page report, Smith was only willing to claim responsibility for between 50-60% of it as evidenced by what is underlined. Nevertheless, the report contains some rather intriguing allegations, not the least of which is contained on page five. On that page, the report states: “Bobby Jindal has what Kunego calls an India to India ancestor driven background and network of connections that brought CNSI and Jindal together.”
The deposition continued for an extended period, so the parties agreed to recess and reconvene on a later date, which turned out to be July 8, 2014. Upon reconvening the deposition, Unglesby made an inquiry of Smith regarding whether he’d had any communication with anyone from the AG’s Office. Smith responded that Scott Bailey, the AG investigator who had interviewed him for the Kunego report, had telephoned him twice and had flown to Orlando to meet with him on June 28, 2014. Smith indicated that Bailey stated that he needed to clarify the timeframe of the meeting with Nichols and also to inform him that the AG’s office had provided CNSI attorneys with the “wrong version” of the Kunego report. Smith testified that Bailey informed him that, on May 1, 2014, he’d been provided with the “unedited” Kunego report when he should have been provided with the “edited” report, which is the report the AG’s Office intended to supply to CNSI attorneys.
Smith then explained that the unedited report, which CNSI attorneys provided at the May 1, 2014 deposition, was what had confused him so much because it had statements in the report which he knew he hadn’t made and therefore caused confusion as to how such statements were in a report of an interview of him. When Unglesby pressed Smith on whether he asked Bailey how such allegations, including that of Jindal’s “India to India ancestor driven background” and that being responsible for bringing CNSI and Jindal together, got in his interview report, Smith indicated that he did not press Bailey for any explanation.
CNSI attorneys, upon learning of these phone conversations between Bailey and Smith, the in-person meeting between the two on June 28, 2014, and the fact that two reports of Smith’s interview responses even exist, prompted strong accusations of witness tampering on the part of AG Caldwell’s Office. CNSI attorney Michael McKay of the law firm Stone Pigman, in a Motion to Conduct Discovery Regarding Certain Activities of the AG’s Investigator, accuses AG investigator Scott Bailey of “outrageous witness tampering,” and seeks to depose Bailey about his conduct and actions and also have the AG surrender documents, including the “edited” Kunego report, which were shared between Bailey and Smith, along with documents and dates of correspondence between Smith and Nichols.
CNSI attorneys allege that the AG’s Office filed the “unedited” version of the “Kunego report” under seal with the full knowledge that it contained material not attributable to Smith as a means to “influence the public” and to justify a six-month stay being sought by the AG’s Office for all proceedings. Although the motion to stay was denied (and the First Circuit upheld the denial on June 7, 2013), the AG’s Office filed a motion to limit discovery and a motion for Judge Kelley to recuse himself on the basis Unglesby had previously represented him. Judge Caldwell denied the recusal motion on July 1, 2013; however, Judge Kelley granted a motion to stay all proceedings on July 30, 2013. CNSI attorneys asserted that Kelley’s decision was based largely on the “unedited” Kunego report which they contended the AG’s Office knew full well contained material not supplied by Smith and for which the foundation is unknown. CNSI attorneys also expressed frustration that, as of the date of their filing, August 22, 2014, they still had not been provided with the “edited” Kunego report.
The hearing on CNSI’s motion to depose Bailey was argued before Judge Kelley on October 7, 2014, and he granted the motion. At a bare minimum, CNSI attorneys have already exposed a high level of ineptitude on the part of AG Caldwell’s Office in that it provided the wrong “version” of the Kunego report given how critical that report is to both the civil and criminal trials. It is mind boggling that a document that critical wouldn’t be triple checked as being the one the AG’s Office wanted to ensure CNSI attorneys received. The mere fact they would later have to admit to Smith that “we gave the CNSI attorneys the wrong version” speaks volumes as to the AG Office’s ineptitude. Of course, as CNSI attorneys argued in their support memorandum, it begs the question as to why two versions of the report even exist at all.
It remains to be seen how successful CNSI’s attorneys may be in exploiting their allegation of witness tampering by the AG’s Office. Obviously, their ultimate goal is to have Smith’s testimony at trial declared inadmissible based on inconsistency and the actions of AG Caldwell’s Office. If they succeed, a huge defense to CNSI’s alleged wrongful contract termination may go by the wayside and expose Louisiana taxpayers to a substantial monetary award. Further, if Smith’s testimony is ruled inadmissible, a spillover benefit to Greenstein’s criminal trial may also arise.
When combined with the recent scathing WWL investigative report on AG Caldwell, one can only question if the biggest beneficiary of all of the extensive focus of the ineptitude and controversies of Gov. Jindal has been AG Caldwell himself. It certainly appears that for an extended period, he was able to fly below radar on his office’s ineptitude and potential serious wrongdoing. Perhaps recent revelations of his actions may provide an excellent source of campaign fodder for the October election for Louisiana’s next attorney general.
Louisiana Voice 
Wow! That’s some intriguing story there. Question: How in the world can there be two versions of what is supposed to be a verbatim interview?
More questions: I remember reading somewhere over a year ago an allegation that CNSI even threatened harm to someone involving this case. I don’t remember where I read it. What’s up with that?
Is it reasonable to assume that everything Greenstein did and said was at the direction of Jindal? Why does this case not go further up the chain of command to Jindal? Didn’t Jindal intend all along to award the contract to CNSI, and that the bidding process was a sham?
Thanks for getting the story out there!
That’s an excellent question, Veritas! In a polite hint in that regard, somewhere in the pleadings, I remember reading “assuming there were two versions before Smith provided testimony.” The document SHOULD have contained NOTHING beyond what Smith stated in his interview, yet obviously material was added that Smith testifies is either incorrect or didn’t come from him. Perhaps someone needs to place some AG officials in a polygraph machine and ask “was the second version of the Kunego report drafted AFTER Smith’s testimony?” It would be interesting to see (assuming the response is “no”) just how far the needle moves on the machine. The AG’s Office is clearly paranoid that evidence may come to light to suggest Molina may be behind the entire episode, and one would hope they would not resort to constructing a second version of Smith’s interview (not to mention a need to “walk” Smith through a timeline — see comment below) but, at this point and what I’ve observed of state government, I’m not willing to rule anything out.
You probably read about the threat of harm in an Advocate article, and while I don’t know this, I think that may have been a key basis for the FBI investigations. Speaking of which, McKay also heavily criticized the AG’s Office (see footnote # 15 on page 7 of the support memorandum — page 13 of the PDF file) for failing to divulge to the court that the subject of the FBI investigations had been reviewed by the U. S. Attorney’s Office and that they had “discontinued our investigation of possible statute violations.”: Here’s the link for that letter from the U. S. Attorney’s Office dated 3/31/11: http://www.laboards-commissions.com/CNSI_fed_closeout.pdf . Given the date of that letter (which was long before any meeting between Smith and Nichols and long before “rumblings” of a fed investigation made its way into the public domain), one can only wonder if this entire episode wasn’t 100% state-driven and state-motivated.
There are indications in the Kunego report (the “unedited” one at least) that CNSI officials were aware they had to bid under $200 million to obtain the contract; however, Smith did not underline any portion of that report which indicated he knew what the other bids were and thus what number had to be beaten to procure the contract. While he did underline the portion expressing the extent of CNSI’s financial condition and the fact that the company’s loans had been assigned to Bank of America’s Strategic Asset Division (see bottom of page 6 of the “unedited” Kunego report), he did not underline the section about knowing $1.2 million CNSI would need to set aside to provide for program implementation. He also didn’t underline the next few sentences entailing efforts to deceive Bank of America on the costs and that, were it set aside $1.2 million, that CNSI may be insolvent.
Bottom line: This trial is going to be something to behold!!
Mr. Burns, Thanks! I hope this story, and the trial, are publicized far and wide.
The Jindal administration can take solace from one thing, at least: This case will not be tried under sharia law.
Let me make a comment to correct one small error and provide a P. S.\
The small error entails the first paragraph identifying Russo as “Secretary” of DHH. He’s actually DHH’s legal counsel.
On the P. S., it’s interesting that CNSI attorneys would have to accuse the AG’s Office of witness tampering because, on July 30, 2013, in this excerpt from a hearing on that date http://www.laboards-commissions.com/Ung_angry.pdf ,Unglesby lambasted the AG’s Office for suggesting to the court a need for documents to be filed under seal for fear that CNSI attorneys would engage in witness tampering. Unglesby argued that for the AG’s Office, not some private practitioner, to suggest they would do that was “more than offensive, it’s wrong.” Unglesby also said he would not want to sit with attorneys representing the State of Louisiana who would make such an accusation.
Unglesby went on to indicate his belief that the AG’s Office had no business coming to court defending Molina, whom he said was costing the state hundreds and hundreds of thousands of dollars. He also indicated his belief that Molina was behind everything and that the AG’s Office was serving as a “handmaiden” for Molina.
Regarding Unglesby’s assertion of Molina being behind everything, I would direct readers’ attention to the bottom of page 9 and top of page 10 of Mr. McKay’s support memorandum (pages 15 and 16 of the PDF file). McKay indicates Smith testified that Bailey “walked [him] through the timeline.” He’s referencing when Smith sent the email to CMS. The AG’s office wants to establish it was BEFORE Smith’s meeting with Nichols. If it was after, as Smith initially testified, that lends credence to Unglesby’s contention that Molina is behind everything. Smith testified that Bailey provided a credit card receipt from a Mexican restaurant, purportedly obtained from Nichols, to substantiate the date the two of them met. Significantly, Smith then changed his testimony to say that it was not the meeting with Nichols which prompted him to send the email to CMS. Smith testified that all he had was “Bailey’s assurance” that the meeting between Smith and Nichols took place on the date of that receipt. That sounds like REALLY strong and compelling evidence to submit in a court of law to substantiate the date of a meeting, all of which is to deflect focus from Unglesby’s contention that Molina is behind the entire episode of getting CNSI’s contract cancelled so that it could continue as the “default” processor of Louisiana’s Medicaid claims!
Just to be clear, I’m using TOTAL sarcasm in relaying the receipt is really strong and compelling evidence!!
For a whistleblower, who is BOUND to be on edge about what he’s doing, wouldn’t know EXACTLY what predicated his action, is absurd! The date the email was sent is known: December 8, 2011. So now the AG’s Office, clearly paranoid that Unglesby will be able to effectively show to a jury that the AG’s Office worked in tandem with Molina and it’s President, Norm Nichols, to get the CNSI contract cancelled, is utterly desperate to demonstrate that a meal meeting between Nichols and Smith was BEFORE December 8, 2011, so what do they produce to substantiate that? A simple restaurant receipt showing Nichols paid for a meal at a Mexican restaurant AFTER December 8, 2011! (meaning Smith sent the email before they met). Boy, that’s going to be compelling evidence!! Most people don’t eat at a restaurant one time and that’s it. What happens when, during discovery, Nichols’ credit card receipts uncover the fact Nichols ate at that restaurant on numerous occasions, plenty of which were BEFORE December 8, 2011 (meaning any one of those meetings could have been with Smith), after one of which Smith “pulled the trigger” and sent the email to CMS?
Smith testified initially that it WAS the meeting with Nichols which prompted him to send the email!!!! Now the AG’s Office is, as far as I’m concerned, substituting Scott Bailey as the anonymous informant, as restating testimony to say, “No, I remember now. I sent the email, and THEN I met with Nichols at a Mexican restaurant!” ANY jury is going to believe his INITIAL testimony was the correct version, and all this dog and pony show by the AG’s Office does nothing more than make them look UTTERLY DESPERATE to prove that the AG’s Office ITSELF isn’t in bed with Molina for the contract to remain with Molina.
For the AG’s Office to engage in this kind of activity (having to walk an informant through events that he should know WAY better than them and to draft interview reports riddled with statements and accusations that he won’t touch with a 10-foot pole), is nothing short of outrageous. For Unglesby, making a football analogy, it’s as if he’s coaching a football team for which the opposing team’s coach was willing to provide the playbook outlining their first 20 plays from scrimmage!! Gee, I wonder how the score of that game is going to turn out????????????
No wonder Caldwell’s office has been busy trying to stall this case until after the October elections. He knows it’s going to blow up in his face, and he sure wants that to be after the election this fall!
Correction above…..AG’s Office is desperately attempting to prove Nichols/Smith meal was AFTER (not BEFORE) December 8, 2011. See what happens when you try and fabricate dates? It gets tough to remember exactly what you NEED the date to be (irrespective of what it actually was) to keep from exposing what AG Caldwell fears Unglesby is going to make crystal clear to the jury (i.e. that the meal was BEFORE 12/8/11 and that Smith sent the email AS A DIRECT RESULT OF that meal meeting with Nichols – something Smith already testified was the case before he got a little “coaching” from the AG’s Office).
O. K. I want everyone to know that I had dinner with Norm Nichols tonight at Ninfa’s, probably the nicest Mexican restaurant in Baton Rouge. Here’s a link to evidence our meal together: http://www.laboards-commissions.com/Nichols_Receipt.pdf. As everyone can tell, it has the date, the time, and even our server’s name.
Heck it even shows the meal was purchased with A Discover Card!!! Now, I’m sure the AG’s Office will need to substantiate my meal with Mr. Nichols, so I’ll book a flight out to Long Beach, California next week and hand deliver it to Mr. Nichols so he can be crystal clear on when we had our dinner together! Just take a look at the receipt on the preceding link! It proves our dinner tonight beyond any shadow of a doubt!!!
God, are we in Louisiana in SERIOUS trouble with an AG Office which is THIS inept and, if Unglesby’s long-held theory that Molina has deployed the AG’s Office to obtain a CNSI wrongful contract termination so Molina could continue as “default” provider is accurate, in a TERMINAL state of hopelessness if our governmental officials (particularly the head of chief law enforcement agency in this state) have become THIS corrupt?
Whatever the case, good luck, Buddy Caldwell, on the flimsy evidence of a credit card receipt to bail you out, especially if it has as little details as the receipt I just provided a link for my meal tonight with Mr. Nichols at Ninfa’s!!
As C. B. Forgotston always says, “You can’t make this stuff up, folks!”