Ted Cain testifies he’s successful. His tax returns show otherwise, U.S. attorney says.
Ted Cain considers himself a successful businessman even when he reports significant losses on his federal tax returns, he said from the witness stand Tuesday in U.S. District Court, where the second week of his trial has begun on civil claims that he defrauded Medicare.
Tom Morris, an assistant U.S. attorney from the Justice Department in Washington, reviewed the returns with Cain in an attempt to show jurors that most of his income came from Stone County Hospital, which he owns.
Cain defended his business acumen, attributing losses to startup expenses.
Cain also has about 15 other companies that, like the hospital, operate under the umbrella of Corporate Management Inc. in Gulfport, which he also owns.
The small rural hospital is at the center of the fraud trial. Attorneys for the government are trying to prove Cain did little work for the annual salary the hospital paid him. The hospital paid him a total of $15.2 million from 2004-13, with Medicare reimbursing $10.4 million of the total, government attorneys say.
The government is trying to recover the Medicare funds, plus damages. Cain denies any wrongdoing, saying he worked long hours for the money.
Cain has three co-defendants in the case, including wife Julie Cain and two CMI executives, Tommy Kuluz and Starann Lamier. Julie Cain also was paid for working at Stone County, while Kuluz and Lamier handled administrative duties that included reporting to Medicare.
Morris asked Cain over and over Tuesday if Cain considered himself a successful businessman. Morris posed this question as he went through several years of the Cains’ joint tax returns. They showed some of his businesses lost money, including Cain Cattle Co. in Wiggins, and advertising and marketing firm The Focus Group, based in Biloxi.
For example, The Focus Group lost $210,000 in 2012 while the cattle company was $950,000 in the red. Stone County Hospital lost $385,415 the same year.
Meanwhile, Cain reported gross income that year of almost $2.2 million, most of it from Stone County Hospital, with no taxable income due to business losses that put him $2.6 million in the hole.
“Did you consider yourself a successful businessman in 2012?” Morris asked Cain.
“Yes,” Cain responded.
“Why?” Morris asked.
“I was successful,” Cain responded. “ . . . I was successful.”
Morris also reviewed the Cains’ joint returns from several other years, showing most of his income from the hospital and business losses that more than offset gains.
In 2009, for example, Cain had $5.25 million in losses and only $1.6 million in gains. His Stone County Hospital salary that year, as in the other years reviewed, covered most of his $3.4 million in wages.
“Did you consider yourself a successful businessman in 2009?” Morris asked.
Cain said, “Yes.” Morris again asked, “Why?”
“Because I was,” Cain said. “That’s the reason.”
