Ex-Hospital CEO Reynolds Pleads Guilty in Kickback Case

The former chief executive officer of New York’s Hospital for Special Surgery, charged by federal prosecutors with taking $1.4 million in kickbacks, pleaded guilty to two felonies.

John R. Reynolds, 64, today pleaded guilty to wire fraud and making false statements, admitting that he took payments from a hospital employee and lied to investigators about it.

Reynolds was arrested in September and charged with taking part in a decade-long kickback scheme. Prosecutors claimed that from 1996 to 2007, he took money from the hospital employee and from at least two hospital vendors and an unidentified health-care organization in the U.K. Reynolds left the hospital in 2008, according to the government.

Under a plea agreement with the government, Reynolds will forfeit $718,500. Both sides agreed that federal sentencing guidelines, which are advisory, call for him to serve 27 to 33 months in prison. Reynolds is scheduled to be sentenced Nov. 7.

During the hearing today, Reynolds told U.S. Magistrate Judge Debra Freeman that he has had a heart attack and suffers from memory loss.

The Hospital for Special Surgery was founded in 1863 as the Hospital for the Relief of the Ruptured and Crippled, according to its website.

The institution, which specializes in orthopedics, is known for treating sports stars including New York Mets third baseman David Wright and New York Yankees pitcher Mariano Rivera. Players for the New York Giants, Knicks, Red Bulls and Liberty are also treated there, according to the website.

Reynolds served as the hospital’s chief financial officer from 1986 to 1997, when he was promoted to CEO, according to the government. He was replaced as CEO and continued as a contract worker from October 2006 until December 2008, prosecutors said.

The case is U.S. v. Reynolds, 12-cr-00708, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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