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How Moskowitz Profits from his Hawaiian Gardens Non-profits
A Detailed Analysis of Irving Moskowitz's Non-profit Operations in Hawaiian Gardens

nonprofit (non·prof·it) adj. 1. not conducted or maintained for the purpose of making a profit <a nonprofit organization> - noun 2. a nonprofit organization, institution, corporation or entity.

These days, Dr. Irving Moskowitz is seldom seen in Hawaiian Gardens but his presence is everywhere. A banner bears his name in a picture of the Little League team that runs in the local paper. Senior citizens attending a city council meeting sport t-shirts with Moskowitz's name emblazoned across the back.

Moskowitz may be hundreds of miles away at his home in Miami Beach but he is ubiquitous in the community as a businessman and benefactor who has pumped millions of dollars into the city. And there is no question Hawaiian Gardens is in need of help. The unemployment rate is high in this largely immigrant slice of LA County where half of all adults lack a high school diploma. And where close to one out of every four Hawaiian Garden residents lives below the poverty line.1

But Irving Moskowitz's track record of less-than-charitable activity in Hawaiian Gardens belies his image as a philanthropist - a careful examination of his financial records and those of his non-profit foundation show that the majority of his contributions resulted in either financial gain or increased political influence for himself.

Dr. Moskowitz, it seems, has engaged in non-profit profiteering in Hawaiian Gardens.

Since posting this report on our website, more information has come to light that strongly suggests that Moskowitz's non-profit Tri-City Regional Medical Center is in violation of Internal Revenue Service rules qualifying health care providers for tax-exemption. (Click here to read more…)

Putting the 'profit' in Non-profit healthcare

Tri-City Hospital sign greets motorists entering Hawaiian Gardens saying the "community" facility serves all health needs - as long as you're not poor or pregnant.
Take Tri-City Regional Medical Center in Hawaiian Gardens.

In 1996, when its balance sheets were beginning to look less-than stellar,2 Moskowitz decided to spin off this privately owned hospital as a non-profit, while retaining ownership of the building and land.3 Immediately after converting Tri-City Regional Medical Center into a non-profit, the Irving I. Moskowitz Foundation4 donated $4.9 million in tax-free proceeds from its Hawaiian Gardens bingo to the hospital.5 Moskowitz then began collecting the money back by charging the hospital $95,000 a month in rent, payable to his private landlord company.6 Those payments now exceed $110,000 per month.7 California state financing records show that in 2000 the foundation made an additional transfer of funds to Tri-City.8

The hospital's fidelity to the concept of charitable trust9 is tenuous at best. This could perhaps be forgiven if the hospital was meeting the health care needs of the local community. But despite its non-profit status, Tri-City is less than solicitous when it comes to the health of Hawaiian Gardens.

When the hospital applied for non-profit status in 1997, it made a commitment to provide pre-natal care.10 Recent patient discharge data published by the state of California shows that Tri-City has stopped delivering babies - none were born at the hospital in either 2000 or 2001.11

It isn't for lack of demand for services. Last year residents of Hawaiian Gardens brought home 98 newborn babies.12 While small in size (the city's population is a little under 15,000 13), Hawaiian Gardens is a young, largely immigrant community - recent census data indicates the average age of its resident is 26. More than half of the households have children under the age of 18. And as of 2000, a little more than 10 percent of the population was under the age of 5. The women of Hawaiian Gardens are having babies - they are just not having them delivered at the hospital in their own neighborhood.

Tri-City's failure to fully address the health care needs of the poor may be a factor. Again, nearly one out of every four resident of Hawaiian Gardens lives below the poverty line and many are immigrants who do not qualify for state programs such as MediCal (although MediCal is available to cover prenatal care and deliveries for undocumented immigrants, making the hospital's failure to provide these services all the more shocking).

Stomach stapling accounts for a large part of Tri-City Hospital's tiny patient census.

When it turned non-profit the hospital made a commitment to provide free or reduced cost care to the indigent 14- and yet in recent years Tri-City has provided zero dollars in charity care.15 State health care data shows the other four non-profit hospitals of comparable size in LA County provided a combined total of two million dollars in charity care in 2001 (the most recent year that statistics are publicly available).16

Tri-City's failure to pull its own weight when it comes to helping out poor patients has little to do with its bottom line - in 2001 the hospital's gross patient revenue exceeded $72 million and its net income was slightly more than two million dollars - despite the fact that its occupancy rate in 2001 was an abysmally low 19.6 percent.17 The average occupancy rate for other hospitals of comparable size in the state of California that year was 52.16 percent.18

How does the hospital manage to stay afloat with such low patient volume? The answer may be as close as the sign in front of Tri-City's main entrance announcing it is also the home of "The Center for the Surgical Treatment of Obesity."

Tri-City, it seems, has gotten into the lucrative business of stomach stapling.

The Center, run by the somewhat famous Dr. Mathias Fobi provides surgical stomach shrinking services to patients clinically termed morbidly obese, that is, those who are 75 to 100 pounds or more overweight. (In what is perhaps an unfortunate display of poor taste, his website's motto is "lighten up." 19) According to a CBS News Report profiling his practice, Fobi performs surgery on up to 600 patients a year.20

While Fobi charges for the surgeries he performs, the hospital also bills patients for the use of its operating and recovery rooms and other medical services it provides. In 2002 patients who underwent the surgical procedure at Tri-City, on average, racked up $50,000 in hospital charges.21

State health care data shows that at least 439 Tri-City patients underwent the stomach stapling procedure last year, that is, more than one out of every four patients that received some sort of surgical treatment at the hospital had their stomach stapled.22 Total charges for those patients was $21,936,400 - representing close to a third of the hospital's gross charges for the year.

Tri-City's 2001 income tax forms (the most recent that are publicly available) indicate that by far its highest paid independent contractor that year was FOCA Management Company, a private company registered to Dr. Mathias Fobi.23 Tri-City paid Fobi's firm $2,293,044 - more than its next four highest paid contractors combined.24

Dr. Fobi has made numerous national television and radio appearances touting his surgical techniques and his patients come from as far away as Alaska,25 but the obesity center appears to be of little value to the community where it is based: last year not one Hawaiian Gardens resident made the short trek across this mile-wide city to receive the procedure.26

One former City Council member recalls that when the hospital was first built, Hawaiian Gardens welcomed it as the solution to the community's unmet health care needs. But citing the high cost of treatment at Tri-City and the lack of charity care, he said few use the hospital now. State health care data backs that assertion up - despite its proximity only 13.7 percent of all Hawaiian Gardens residents who were hospitalized in Los Angeles County last year were admitted to Tri-City Regional Medical Center.27 Hawaiian Garden residents admitted to the hospital represented an even smaller percentage of Tri-City's total patient census - just 5.4 percent.28

Since posting this report on our website, more information has come to light that strongly suggests that Moskowitz's non-profit Tri-City Regional Medical Center is in violation of Internal Revenue Service rules qualifying health care providers for tax-exemption. (Click here to read more…)

Banking on Bingo Bucks

Moskowitz earns more than $1.3 million dollars annually as landlord of what is ostensibly a non-profit hospital. But his money-making off non-profits doesn't end there.

In 1988, the city of Hawaiian Gardens granted the Irving I. Moskowitz Foundation a license to operate a non-profit bingo within its city limits in exchange for a commitment to spend the majority of the funds generated by the bingo on the local community.

The foundation, which had existed mainly to own a piece of land in Northern California and seldom got much cash, was suddenly taking in more than $30 million annually from bingo games. But the foundation's bottom line wasn't the only beneficiary.29

Moskowitz is the managing general partner (for practical purposes, the sole owner) of Cerritos General Hospital Company, the private firm that owns the land where his bingo is situated and the building in which the game is played.30 It is not possible to tell from the foundation's IRS 990 forms (which non-profits file instead of income tax returns), exactly how much Moskowitz's foundation is paying him for use of the land, but even by conservative estimates, the total comes to several hundred thousand dollars a year. The Moskowitz Foundation's 2000 and 2001 990 forms show that in both years it paid total occupancy costs (defined by the IRS as rent and utilities) of over $900,000 for services and programs. The bingo is the foundation's only activity -- apart from writing checks. If even half its occupancy costs went to paying rent on the bingo hall as opposed to covering the costs of electricity, gas and water, it's safe to say Moskowitz is paying himself roughly $450,000 a year for the privilege of holding his own bingo games.

On top of the bingo's rental payments, Moskowitz also drew more than half a million dollars in salary ($322,880 in 1999 and $184,503 in 2000, respectively) from the Moskowitz Foundation.31

By contrast, the Moskowitz Foundation takes advantage of a state law requiring bingo workers to be volunteers for the non-profit operating the bingo. To run the bingo, Moskowitz uses mostly immigrant workers who have no ties to, or even knowledge of, the aims of his foundation, compensating them with nothing but the opportunity to get tips from bingo winners.32 Workers say that their nightly shifts sometimes bring in as little as $20, even though the "volunteers" essentially function as full-time employees.33 The Mexican American Legal Defense and Educational Fund is currently suing Moskowitz's bingo on behalf of 24 unpaid bingo workers.34

continued on page two

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© 2003 the Coalition for Justice in Hawaiian Gardens and Jerusalem