Foundation's sale of nonprofit hospital a windfall for one trustee
For Gregory Monardo, running a small nonprofit San Francisco hospital was practically a birthright. He succeeded his father in the job. It was also a highly profitable affair, even as the fortunes of the Davies Medical Center flagged.
Monardo's salary was paid by the Franklin Holding Corp., the private foundation that owned Davies, a hospital known for its AIDS care. The payments to him grew from $312,000 in 1995 to $470,000 in 1997, years in which Davies increasingly struggled to compete with larger institutions.
But Monardo's big payday came in 1998, when Franklin sold the hospital to a health care company for $29 million. That year, Monardo took home $3.5 million from the foundation.
Few in California health care or foundation circles know about Monardo's windfall, which came two years before the state's attorney general began routinely reviewing transactions involving such sales of nonprofit hospitals.
Monardo, 51, did not return repeated telephone calls to his home and office over a three-month period. His assistant said he was spending much of his time in Lake Tahoe, where he is building a second home. None of the foundation's trustees returned calls seeking comment.
Two trustees of Davies Medical, now part of Sutter Health's California Pacific Medical Center, say they do not recall voting on Monardo's $3.5 million payout. Dr. Cherie Mohrfeld, an anesthesiologist who served as chief of staff at Davies and represented the hospital's doctors on its board, said there was never any discussion of Monardo's compensation during the sale negotiations.
"I never heard the figure," she said in a telephone interview. She said Franklin Holding was a mystery to many at the hospital. "All the physicians were in the dark about it."
The payout in the year of the hospital sale wasn't the first time Monardo reaped a personal benefit from the foundation he chaired and served as a trustee. In 1988, when he succeeded his father as chief executive of the hospital, he took a $350,000 home loan from Franklin Holding. He repaid the loan over seven years, at a market rate of interest.
Personal loans to foundation trustees are not permitted by the IRS.
Today, Monardo continues to run Franklin Holding, where he was being paid $47,000 a year in 2001 for four hours of work per week, according to the latest tax filing. He also runs a foundation created after the hospital sale.
Franklin Holding, which still had $24 million in assets in 2001, is writing checks to the new foundation, a host of Texas causes, and to Sutter Health. New York's Sept. 11th Fund received $25,000, while a check for $10,000 went to the Junior League of San Antonio, home of Lutz E. Issleib, a trustee of both foundations who was on the Davies hospital board at the time of the sale.
Issleib did not return several calls requesting interviews.