Bankruptcy officials are accusing the owner of shuttered Christ Medical Center and the Diabetes Treatment Center, Dr. Eihab Tawfik, of funneling money out of the business before and as he was seeking bankruptcy protection in order to keep the money from his creditors.
Tawfik had filed for bankruptcy protection in April 2018 to reorganize his debt, but the United States Bankruptcy Court in the Middle District of Florida changed the case to a Chapter 7, dissolving the business and moving to pay off creditors.
Last month, Luis Rivera, the court appointed trustee overseeing Tawfik’s bankruptcy case, filed suit against Tawfik, the Khouri Law Firm in California and the Commercial Bank of California. In court documents Rivera said that Tawfik between 2016- 2018 took about $1.1 million from the businesses he owned to keep it from creditors. Rivera said some money went to a law firm trust and is held in the California bank.
Most of the money Tawfik withdrew from his businesses was an unspecified amount of monies to pay off personal loans, $900,000 for “various personal expenses,” and $145,000, bankruptcy officials believe, to buy a pharmacy, according to court documents. Those were withdrawals he made before he filed for bankruptcy protection.
He also withdrew about $56,000 from the businesses after filing for bankruptcy, using some of that money for a Mercedes, moving and living expenses.
In original April bankruptcy documents, Tawfik reported more than $8 million in debt.
Rivera also said in the recent lawsuit that Tawfik transferred money to a California bank in the form of a trust and overseen by the Khouri law firm. Rivera said in his lawsuit that Tawfik made the 2016-2018 withdrawals and transfer to California “with the actual intent to hinder, delay or defraud an entity to which the debtor was or became…indebted.”
On Nov. 26, 2018, Bankruptcy Judge Jerry Funk ordered the California law firm to return the money it was holding in a trust for Tawfik. The law firm told the court it had only $70,000 in the account.
That emergency order came about only after negotiations between the law firm and Rivera fell apart. That’s when Rivera asked Funk for an emergency motion to force the law firm to give Rivera the money.
In Rivera’s request for the emergency injunction, the trustee warned that “Tawfik’s disregard for the Bankruptcy Court’s authority indicates that absent the freezing of these funds, these funds will be dissipated and not recovered for the benefit of the estate.”
Contacted by the Citrus County Chronicle, Michael Khouri, of the Khouri Law Firm, would not discuss the case.
Khouri also would not say whether Tawfik had originally transferred more than $70,000 to the trust and more recently withdrew money from the trust, when asked by the newspaper.
The discussions between Rivera and Khouri are in themselves an intrigue.
Rivera said in the lawsuit and emergency request that Khouri contacted him in early October to “engage in settlement discussions regarding the transfers.”
Rivera said he and Khouri had “numerous discussions” including Khouri traveling to Florida to meet him.
During those discussions, Khouri asked on behalf of Tawfik that Rivera hold off on his emergency motion hearing scheduled for Nov. 15 to freeze money in the trust and sanction Tawfik.
Rivera wrote in the lawsuit that Khouri, had “at all times ... acted in a professional manner” and both sides were working to settle the transfer issue. So Rivera agreed, “in good faith and reliance,” to hold off on the emergency motion until Feb. 20, 2019.
As soon as the court granted Rivera’s request that the emergency motion be pushed to a later date, Rivera said the California lawyer emailed him saying that he no longer had authority to negotiate with Rivera about the transfer of the money.
“It appears that the defendant acted in bad faith during the settlement negotiations and used any settlement negotiations as a ruse to entice the trustee into seeking a continuation (to hold off) on the emergency motion so that he (Tawfik) can continue to deplete property of the bankruptcy estate,” Rivera wrote in his motion to get back the money.
It's also not the first time Rivera suspected wrong doing. In petitioning the court to convert the case to Chapter 7, Rivera wrote that he "identified several instances of potential fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity in the management of the affairs of the debtor."
Tawfik opened Christ Medical at 7562 State Road 44, Crystal River, in 2013. The diabetes treatment facility is at 7394 State Road 44.
A medical records employee who would not give her name said this spring that the Citrus facility had nearly 1,000 patients.
Tawfik also owns or owned Christ Medical Centers in Spring Hill and Ocala. They are also closed.
Tawfik also owned a facility in Celebration, Florida. It is also closed.
But Tawfik told the Chronicle earlier that his hope is to reopen Christ Medical Center despite his bankruptcy and a bank foreclosure on at least one of his facilities in Citrus County. Tawfik did not return telephone calls for this story.
Tawfik also purchased an ad in the Chronicle announcing he was opening a medical office in Inverness and that it would open its doors Monday, Dec. 3, 2018. The business at 2216 State Road 44 is dark inside with boxes still unpacked.
When the Chronicle telephoned the business’ telephone number (352-341-3004) it appears the number is invalid or disconnected.
In February, Central Bank in Tampa began foreclosing on Tawfik’s diabetes center, filing foreclosure documents in Citrus County circuit court. The diabetes center is closely affiliated with Christ Medical and is included in the foreclosure. The bank claims that Tawfik has not made payments toward its $2.52 million loan to the doctor since January. In addition to the $2.52 million principle loan, the bank claims Tawfik owes additional late fees and charges of more than $40,000.
In Tawfik’s original April bankruptcy filing, Tawfik’s lawyers reported that Tawfik had $2.6 million in secured loans. Those loans came from Central Bank and were secured by Tawfik’s properties and medical equipment. In addition, lawyers reported to the court that Tawfik had an additional $6 million in unsecured debt.
The court records also indicate that Tawfik’s assets consisted of $40,000 in bank accounts, $1.65 million in owed accounts from Medicare and other properties valued at about $4 million.
In his April bankruptcy filing, Tawfik said that about 60 percent of his revenues came from Medicare payments, 30 percent came from Medicaid, and about 10 percent came from private insurance.
That is important because in his bankruptcy filing, Tawfik’s lawyers reported that in 2017 Medicare “challenged” bills his facilities submitted to the federal agency for repayment. The billing discrepancies date back a few years, the court documents said.
As a result, Medicare stopped paying Tawfik’s Medicare claims from 2017 , wrote his Orlando-based bankruptcy lawyer, Justin Luna.
When Medicare stopped paying, Tawfik couldn’t pay his debts and loans, Luna wrote in bankruptcy documents.
To make matters worse, Luna wrote that soon Central Bank, which had a secured loan with medical equipment as collateral, began collecting that equipment.
Without equipment, Tawfik could no longer work, Luna said.
Tawfik told the Chronicle that his plan was to hire a new management team for Christ Medical Center and to reopen it. It remains closed.
"Just because it's shut down doesn't mean it won't open again," Tawfik told the Chronicle earlier this year.
He also said that he's cleared up his Medicare dispute. According to Medicare websites, Tawfik can now receive Medicare and Medicaid patients and is reimbursed.
Tawfik and the Christ Medical Center made news last year when it was reported he fired about 70 of his employees, saying he had received complaints from patients of poor service. Later, he said he fired only 20 but rehired half of those back.