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LBJ hospital internal investigation alleges “collusion” between Langkilde and Lucky Star

LBJ HOSPITAL
reporters@samoanews.com

Pago Pago, AMERICAN SAMOA —Evidence documenting alleged collusion between the LBJ Medical Center hospital’s former LBJ procurement manager Joe Langkilde and the owners of Lucky Star INC/ Canton Mart were uncovered during an internal investigation by an overseas financial consultant.

It is alleged that a container of medical protective gear was cleared under the auspices of the hospital and therefore no excise tax was paid; and then delivered to Canton Mart, and in turn they sold these products back to LBJ on an incremental basis and at a significant markup in price.

“LBJ was paying up to 66% more for products through Canton Mart while the same products were available from prior suppliers for considerably less,” says the hospital’s investigation report. This report was submitted as part of a criminal investigation by the Department of Homeland Security, OTICIDE into this incident.

The consultant was hired from overseas by the hospital last year and the investigation concluded in November during the time Moefaauo Bill Emmsley was CEO of the hospital.

“To date, LBJ has paid $719,160 for purchase of the above items within a period of 3 years,” says the report.

Customs Agents also noted that the invoice for the container in question was incorrect and the commercial invoice should reflect the total of $2.373 million instead of $198,725 as declared on the form.

“On November 17, 2020 a 20 ft container numbered DRYU 2430214 was received at the port of American Samoa consigned to LBJ Medical Supply Division; Attn: Mr. Joe Langkilde. According to the Bill of Lading HKHKG0664445, the supplier was a company called SHENZEN HYYT SUPPLY MANAGEMENT CO LTD based in China while the Consignee was Medical Supply Division, ADDR: LBJ Tropical Medical Center, ATTN: Mr. Joe Langkilde.

The shipment contained 250 cartons of Disposable Isolation Gown and Medical Face Masks.  The Customs Officer noted that while the container was cleared under the LBJ name, the container was being hauled to a local business premises in Puapua belonging to Canton Mart.

Upon inquiry by the Customs Officer to the owner of Canton Mart, the officer was informed that “her brother in China supplies Joe Langkilde who is the person in contact for LBJ Medical Supply. Two days later on November 19, 2020 the container was hauled to Customs Warehouse where the items were inspected.  

“However, what is unclear is whether the container was still sealed and untouched or were the seals already broken.”

The report outlines that on November 14, 2022, LBJ requested a transaction history with the above- mentioned vendor, Shenzhen Hyyt Supply Management Co. However it was noted that LBJ does not have such a vendor in its records.

“Subsequently, LBJ requested for a transaction listing for the vendor whom LBJ uses to purchase disposable isolation gowns and medical face masks.

“It was revealed that the vendor is called Lucky Star, INC, which is a local company based in American Samoa.

“Between 2020 and 2022, LBJ Tropical Medical Center has purchased $719,160 worth of disposable gowns and face masks from Luck Star INC. 

"Upon inquiry with the LBJ Finance staff, it was noted that there were no contracts in place to support these purchases.”

It’s alleged that LBJ then conducted a review of the items purchased from Lucky Star INC, which indicated that there was a vast difference in the purchase price of the products compared to other vendors. 

According to the investigation report product item 7-158 300, which is Nonskid Shoe Covers, which comes 300pcs per case, was purchased in 2019 from Medline Industries INC for $42 a case.

The same item was purchased during 2020  from Discount Computer Supplies INC  at a price of $699.95, while also in 2020 and 2021, the same item was purchased from Lucky Star INC for $450 a case. 

“Upon inquiry of pricing via www.amazon.com conducted on November 17 2022, the price of 200pc Disposable Shoe Covers indicated a price of $26.98 per pack. Product item 7-160-000 which is Disposable Isolation Gowns recorded as 100pcs per case,  was purchased in 2019 from Medline Industries INC for $60.12 per case.

“The same item was purchased in 2020 and 2021 for $850 per case  from Lucky Star INC. “A further search of the current cost of a case of shoe covers conducted on  www.amazon.com indicated that a 120pack of Level 2 Disposable Isolation Gowns comes up with a price of $124.99, which is a vast difference when compared to pricing the prices at which LBJ received the items for.

“Product item 7-160-001 which is Medium Level 3 Isolation Disposable Gowns which come in 100pcs per case, was purchased in 2020 from Ralph Ryback  Industries for $89.25 per  case. 

“Also in 2020, the same item was purchased from Lucky Star INC for $1,700 per case.  In 2022, however, the same vendor now charges $850.00 a case. Worthy to note also is the fact that we have purchased the same items from Discount Computer Supplies INC in 2022 for $285.00 per case.”

According to the report LBJ hospital was unable to identify any justification of why the purchases vary significantly in pricing and why the hospital continues to purchase the same items from Lucky Star INC when they are potentially available for a cheaper price off-island.

“In some instances, the price we are paying is 66% higher than off-island purchase pricing.”

Furthermore the report states the fact that a shipment was brought into American Samoa using the LBJ Tropical Medical Center name but for a local company indicates a serious violation of local Customs Regulations as well as indicates potential room for fraudulent behavior on the part of Procurement Office.

“To date, LBJ has paid $719,160 for purchase of the … items within a period of 3 years. Additionally, Customs had also noted that the invoice was incorrect mathematically and the commercial invoice totaled to $2,373,000 instead of $198,725 as declared on the form. 

“The fact that the goods were imported under LBJ‘s name but the goods have not been consigned to LBJ but rather delivered to Canton Mart — there is no information to suggest that all the products imported were intended  for LBJ.

“There is also the likelihood that the goods may have been sold commercially or otherwise and points to false declaration of intended user.

“The actions allude to potential fraudulent and mismanagement issues, as well as potential breaches of an employee's code of conduct which could result in potential felony.”

To date Mr Langkilde has yet to get back to Samoa News after repeated efforts to get comments.