Lockport Union-Sun & Journal Online

February 7, 2014

Hospital's suit against ex-employee on hold

By Howard Balaban
Lockport Union-Sun & Journal

Lockport Union-Sun & Journal —

MEDINA — Former Medina Memorial Hospital payroll coordinator Linda Rakonczay is scheduled to be sentenced May 5 after her guilty plea to federal fraud charges. Meanwhile, there's a lull in the pending civil suit against her in Orleans County.

“We will need to evaluate whether it make sense to proceed with the civil suit,” Joe DiStasio, MMH controller, said this week.

During the federal court proceedings in Buffalo last month, Chief U.S. District Judge William M. Skretny ordered Rakonczay, a Middleport resident, to make full restitution to the hospital. The amount topped out at nearly $500,000.

DiStasio said once the actual amount of restitution is known, hospital attorneys will do a cost-benefit analysis to determine whether moving forward with the civil suit is worth it. He noted that the amount will not likely be known until sentencing.

“I understand that right now there are U.S. Marshals accumulating her assets and selling stuff off,” DiStasio said. “We’ll still need to wait until May or later to receive any restitution, though.”

Rakonczay, who worked for the hospital from 1990 until 2012, pleaded guilty to wire fraud and tax fraud. The U.S. Attorney's Office accused her of redirecting funds from the hospital's healthcare insurance account to her personal bank accounts over an 11-year period. The tax fraud charge stemmed from taxes owed on unclaimed income.

DiStasio, who was the one to uncover Raknoczay's embezzlement, said the hospital is satisfied with the way the criminal case has gone so far.

“We’re curious just like everybody else to see what the judge will decide at sentencing.” Any money that goes to MMH “will be a positive,” he added.

Since the embezzlement was discovered, changes have been made at the hospital, according to DiStasio.

“We’ve improved our internal controls and insured that nothing like that can happen again. It comes down to breaking up responsibilities and improving the checks and balances in our financial system," he said.