March 2003

Ray Shoemaker forms a non-profit corporation, Kaizen Consulting, Managing and Researching

June 2005
Dr. Robert Corkern enters an agreement to purchase Tri-Lakes Medical Center from the City of Batesville and Panola County government. He needs $500,000 earnest money; a loan through First Security Bank gives him $300,000 and the remaining $200,000 allegedly comes from Tri-Lakes itself through then-County Administrator David Chandler.

During negotiations for the purchase, Corkern learns he can qualify for a USDA-guaranteed loan for purchasing Tri-Lakes if the purchase is made through a non-profit organization. For a purchase price of $250,000, Shoemaker offers Corkern his Kaizen consulting firm as the non-profit for the purchase.

At about the same time, Corkern enters a consulting agreement with late Batesville resident David Vance though his firm, MTV Healthcare, which generates more than $600,000 in fees for Vance.   

July 2005

Shoemaker changes Kaizen’s name to Physicians and Surgeons Hospital Group, filing papers with the Mississippi Secretary of State.

November 2005

Physicians and Surgeons purchases Tri-Lakes for approximately $27.3 million from Batesville and Panola County government through a loan from UPS Capital Business Credit and Stillwater National Bank, with USDA guaranteeing 90 percent of the cost through its Rural Development agency.

At the same time, Corkern’s Batesville Hospital Management enters into a contract with Physicians and Surgeons, giving Corkern “complete control” of the hospital, according to the indictment.

During that same month, Physicians and Surgeons secures a $2.1 million line of credit from Stillwater for working capital.

December 2005

According to the indictment, David Vance contacts GE Capital Corporation, seeking a $4 million line of credit for Tri-Lakes to replace the $2.1 million from Stillwater.

January 2006

GE Capital provides a commitment letter agreeing to the $4 million line of credit.

March 2, 2006

USDA objects to the $4 million line of credit, arguing that it would take “priority position” over the $27.3 million loan, which is backed by the USDA. If a default is made on the loan, any funds applied to creditors would be applied to pay the GE Capital loan before the loan from UPS Capital.

March 7, 2006

In a letter to USDA, Shoemaker pleads with the agency to reverse its decision, declaring that the “future of the hospital is in jeopardy.”

March 28, 2006

USDA reverses its decision and allows Physicians and Surgeons to obtain the $4 million line of credit from GE Capital.

March 31, 2006

Shoemaker signs a letter to GE Capital that states the proceeds from the $4 million “shall be used exclusively for the benefit of Physicians and Surgeons Group, and shall not be used to pay any expenses of any affiliates of Physicians and Surgeons or any other parties other than Physicians and Surgeons.”  

But federal investigators allege Vance secretly created a “Sources and Uses Statement” at Tri-Lakes which was used to funnel proceeds from the line of credit to both Corkern and Shoemaker.

April 7, 2006

The $4 million line of credit is made available to Physicians and Surgeons, and Shoemaker signs a Payment of Proceeds Letter requesting the first disbursement.

Representing the hospital, Corkern signs two documents that day, a Loan and Security Agreement and Certificate of Validity, both related to receiving the $4 million line of credit.

That same day, Shoemaker issues a check for $250,000 to Kaizen. The money is deposited into an account at First Delta Credit Union in Marks.

April 10, 2006

Three days after the line of credit is made available, David Vance instructs Physicians and Surgeons to wire $291,508 into the account of Emergent Health at Trustmark National Bank. Vance was acting on behalf of Corkern, authorities allege.

April 11, 2006

Emergent Health issues a check to First Security Bank for $291,576 as payment for the $300,000 loan from June 2005 for earnest money

January 2007

The Mississippi Division of Medicaid begins withholding funds for all claims from Physicians and Surgeons, ending a major revenue source for the hospital.

March 2007

Corkern is aware of $400,000 Panola County government is holding in a bank account, monies left over after the sale of Tri-Lakes in 2005.

Authorities allege he bribes Chandler for $25,000 and the money is transferred from Panola County to Physicians and Surgeons.