DETROIT – Former Wayne County assistant executive Michael Grundy has taken a plea deal in a case that accused him of accepting kickbacks when he was at the helm of the country's health care program.
Grundy on Tuesday pleaded guilty to one count of wire fraud.
According to court records, on October 19, 2011, Grundy caused the accountant of HealthChoice to wire transfer $400,000.00 to a company called Medtrix, falsely representing that the payment was pursuant to a contract between HealthChoice and Medtrix executed on March 1, 2011, for Medtrix to develop and implement an electronic medical records ("EMR") system for HealthChoice medical providers.
However, the contract was actually not executed until October of 2011, and it was not approved by the HealthChoice Board of Trustees. Further, Medtrix never created or obtained any EMR programming, and an EMR system that was developed by another company was already being offered to HealthChoice networks and medical providers.
Co-conspirator Keith Griffin pleaded guilty on May 10, 2012, to the wire fraud scheme. He admitted that Grundy used his position as Executive Director of HealthChoice to authorize fraudulent payments to Medtrix and Advertise Me (also owned by Griffin), and that Griffin kicked back substantial portions of those payments to Grundy. In his plea agreement, Grundy admits that he was receiving kickbacks of funds that were supposed to be used for the benefit of the participants of HealthChoice insurance programs.
Grundy's attorney, Michael Swor, had earlier been vehement in denying the charges. But on Tuesday, he made an admission about the wire fraud plea.
"The wire services, the honest services law are very broad and they encompass a lot of activity that is legal and we just felt it was in his best interest to resolve this issue," Swor said.
Attorney Michael Swor said there was no discussion with prosecutors about cooperating in other ongoing corruption investigations.
"There was never any conversation. I mean, they didn't ask for cooperation and we wouldn't seek to cooperate," Swor said.
However, prosecutors are seeking a sentence for Grundy of 17 years in prison. Former FBI Special Agent in Charge in Detroit, Andy Arena, said Grundy should consider cooperation in exchange for reduced jail time.
"I think it would be in his best interest to cooperate because there is a pretty wide area there and the only thing that's going to knock down that sentencing is cooperation," Arena said.
Grundy's plea could spell trouble for more officials in the Wayne County Executive's office, because the FBI continues to comb through financial records seized more than a year ago.
Grundy is scheduled to be sentenced on Sept. 16.