Community Memorial Hospital plans to file a federal tax statement this week detailing nearly $107,000 in hospital purchases made by former administrator Michael Bakst, many of them apparently for expensive gifts to a select number of doctors and items for his personal use, officials said.

The list to be filed with the Internal Revenue Service shows a $15,000 watch given to a physician, a $661 bill from Louis Vuitton, thousands of dollars in airline tickets for doctors, $7,500 in car expenses and multiple purchases of computers and cameras.

At issue is whether the purchases, disclosed after a multi-year investigation, were legitimate business expenses or what the Internal Revenue Service calls "excess benefit transactions."

Excess benefit transactions are prohibited on the basis that a nonprofit organization is established to fulfill a worthy purpose rather than to enrich key players in the organization. Typically, such individuals are trustees and top managers who can influence the nonprofit's business, but they could also include physicians, attorneys say.

Bakst was Community Memorial's top administrator for 24 years until the board of the Ventura nonprofit hospital terminated him in 2003 in the wake of a legal battle with physicians that was hurting business. Growing numbers of doctors were moving admissions to St. John's Regional Medical Center to protest what they said was unfair treatment.

Although hospital officials say they have tightened their policies since then, there apparently was no hospital policy on gifts to doctors at the time. The limit is now $329 per year. Community Memorial officials acknowledge that the board approved the expenditures.

Bakst's attorney defends expenses

Bakst, who now lives in Las Vegas, said Wednesday through his attorney that all the items were legitimate business purchases approved through normal channels.

"This is a vendetta," attorney Michael Amir said. "This is a smear campaign."

Bakst charged the items on credit cards and then received reimbursement from the hospital, according to the documents accountants plan to file with the medical center's 990 form required of nonprofit organizations. The purchases that are detailed were made from 1999 to 2003. The descriptions are based on Bakst's handwriting or a forensic accountant's interpretation of the claims, officials said.

Amir said his client has broken no law or done anything wrong.

"If these were not for legitimate hospital business, why did the hospital approve them?" he said of the expenses. "I have to question why four years after he left, eight or nine years after the expenses were made, why is it an issue? Mike held people accountable for quality measures and he ruffled some feathers, and they are now after him."

Bakst's successor, Gary Wilde, said the hospital is not accusing Bakst of any wrongdoing, but that the amount of money involved is too great to ignore.

"We can't ignore $100,000 for things we can't explain," he said, adding that the hospital is legally bound to report it.

Wilde said the IRS and other authorities will have to decide what action, if any, to take.

Under federal tax code, a penalty of up to 200 percent of the value of an excess-benefit transaction can be imposed on the recipient. The giver also can be held responsible, the IRS said.

Wilde said the investigation has been delayed because Bakst would not cooperate by answering questions — something Bakst's lawyer denies.

Bakst has offered to sit down with Board Chairman Gary Wolfe to explain each purchase, Amir said. The hospital has declined the offer, insisting that Bakst meet with lawyers investigating the matter.

Amir said he has advised Bakst not to do so because it would be "an interrogation."

Wilde said a meeting between Bakst and Wolfe would not be appropriate.

"The questions we had were from our attorneys and from forensic accountants," he said. "Gary does not know these questions. We believe Mike would use that meeting and say, I don't remember anything.' Here I've satisfied your needs.'"

Probe started two years ago

Wilde said roots of the investigation began in 2004, when he arrived and heard rumors about Bakst's spending habits. There was enough smoke to merit an inspection of hospital records going back a year to 18 months, he said. The board then agreed to take a deeper look going back into the 1990s, he said.

Two years ago, the hospital hired lawyers and a forensic accountant to conduct the review, which has cost a few hundred thousand dollars by Wilde's estimate. Based on those findings, the board approved the statement to be sent to the IRS, as well as the full list of expenses, Wilde said.

A board task force led the effort. Its members included Dr. John Hill, the physician who led the doctor revolt in 2003, as well as one of Bakst's strongest supporters during that time, former board chairman Phil Drescher.

Others were Wolfe, former District Attorney Mike Bradbury, Ojai physician Marty Pops and businessman Greg Smith of Ventura.

Last year, hospital officials first reported what they called "questionable business expenses" claimed by Bakst, but did not provide a total amount and said the accounting investigation was still ongoing. In the new filing, the hospital board updated its report and added the itemized list.

Trustees declined to comment and referred all questions to Wilde.

Amir said the board approved the purchases, a statement with which Wilde did not disagree this week.

"I believe it is generally true that the expense account was approved by the board each time, and it was also reviewed by an auditor," Wilde said.

But the level of review was not as great as it is now, he said. Wilde said the review consisted mainly of matching up the expense claims with receipts that Bakst provided, rather than taking a look at the purpose.

Wilde said his expenses are reviewed by two board members.

Internal auditors have reviewed the procedures for expense reports, while external auditors verify whether the hospital is following its practices and procedures, he said.

The hospital also has hired a compliance officer.

Wilde said the previous practice was considered adequate for the time, but policies have changed in the wake of the Enron scandal and congressional scrutiny of nonprofits.

"The entire world has stepped up its awareness and focus post-Enron," he said. "In our case, we believe we are practicing best practice."

Wolfe said in a previous interview that such expenses would not normally be reviewed by the entire board. He said the chairman of the board's finance committee would have reviewed Bakst's expense reports and then forwarded them to the hospital's business office.

Harry Maynard, the chairman of the finance committee for 29 years, declined comment and referred questions to Wilde.

Wilde declined to identify the doctors, saying they have told attorneys that they thought the items were personal gifts from Bakst. They did not know Bakst was seeking reimbursement from the hospital, Wilde said.

Some of the items may have reflected legitimate business expenses, the document said.

Wilde said the 15 to 20 doctors who received gifts were not necessarily physicians who made a lot of admissions to the hospital. The doctor who received the $15,000 watch returned it, and a gift card worth over $800 was not redeemed, according to the documents that will be filed with the IRS. The other gifts have not been returned.