An Alabama Angle to the AIG Mess

We recently reported that the mess at financial giant AIG might be far worse than most of us now can imagine. And we noted that the story has an angle that hits pretty close to our backyard.

Where do Birmingham and Alabama come into play? How is even my former employer, the University of Alabama at Birmingham (UAB), connected?

The report originated with Michael Hirsh of Newsweek, based on the analysis of a Mississippi-based forensic accountant named Thomas Gober.

Does Gober know what he is talking about? You can check out his Web site, which includes biographical information.

I've never met Tom Gober, but our paths have nearly crossed numerous times. He worked for two years at the University of Alabama Health Services Foundation, the umbrella organization for outpatient care at UAB.

He then became director of research compliance at UAB itself. That's where I first became familiar with his name. When you help oversee the research enterprise at a research-intensive university such as UAB, your name becomes well known on campus.

After I was unlawfully terminated at UAB last May, I started taking a closer look at the university's activities. That led me to the U.S. Courthouse in Birmingham and a case where two whistleblowers alleged that UAB had engaged in massive research fraud.

One of those whistleblowers was Tom Gober. He filed a complaint in April 2001. That was followed by another complaint by Dr. Jay Meythaler, a specialist in rehabilitation medicine, in June 2004.

Gober left UAB and joined a private forensic-accounting firm before starting his own company in 2004. Meythaler now is on the faculty at Wayne State University in Detroit, Michigan.

We will be going into great detail about the UAB research-fraud case. But here is the crux of it: According to court documents, Gober alleges that UAB engaged in research fraud that totaled at least $300 million for a 10-year period. And that doesn't include the fraud outlined in Meythaler's complaint, which included three years after Gober had left the university.

Gober's complaint goes into signficant detail, showing the various methods UAB used to defraud federal health-care programs such as Medicare. Did the Bush Justice Department, led by local U.S. attorney Alice Martin, take the charges seriously? Doesn't look like it.

UAB and the Bush DOJ announced the case had been "settled" in 2005 for a little more than $3 million, a fraction of the actual fraud as detailed in the two complaints.

Gober's background suggests that he knows financial fraud when he sees it. In the late 1990s, he helped prosecute a Pennsylvania case involving an executive named Allen W. Stewart. That wound up being one of the government's largest and most successful prosecutions for reinsurance fraud.

By the way, an Alabama reinsurance company was heavily implicated in the Stewart case. In fact, that's why Gober and prosecutors from Alabama were involved. But the DOJ never followed up with a case against the Alabama company, which just happens to be owned by one of the most best-known members of the University of Alabama Board of Trustees.

Much more about that Alabama company, and its ties to the Stewart case in Pennsylvania, will be coming at Legal Schnauzer.

I've studied Gober's work enough to believe he is the real deal when it comes to detecting financial fraud. The government, unfortunately, has a mixed record when it comes to following up on his work.

The government acted decisively in the Stewart case in the 1990s.

In the early 2000s, Gober called attention to research fraud at UAB, and the Bush Justice Department largely covered the problem up.

Now, Gober is sounding an alarm about AIG. Will someone pay attention?

Here is a video from his Web site in which Gober addresses corporate fraud in general, with some specifics about AIG: