DEAD WRONG?

By WILLIAM DOWELL/NEW ORLEANS

Correction Appended: March 14, 2007

Death and taxes, as the saying goes, are life's certainties. But, so far, their conjunction has only produced mystery as the IRS investigates the department of pathology at Tulane University's medical school. It is a mystery involving hundreds of thousands of dollars, the byzantine politics of academia, the plight of indigent patients and possibly the existence of an undead corpse or two.

One of the bodies in question belongs to the recently deceased Dr. Michael Gerber, chairman of the pathology department at the Louisiana institution. The doctor was alive and nervous in September as agents from the IRS's criminal-investigation division began questioning members of his department about its finances. Gerber's associates recall his behaving erratically and constantly phoning for legal advice. Then on Oct. 12, in Tennessee, his daughter Elisa, 21, walked away from the wreck of a car she had driven into two trees. She said she had been tired. Apparently she had fallen asleep at the wheel. There were two bodies in the car, her mother Minda and her father Michael, whose face, says a mortician who helped prepare the body for cremation 48 hours later, was damaged beyond recognition.

Dr. Aizenhawar Marrogi, a former colleague of Gerber's, does not quite believe he is dead. An Iraqi immigrant named after Dwight D. Eisenhower, Marrogi was once a star of Gerber's department, bringing in hundreds of thousands of dollars in research grants and computerizing the department's billing system. But Marrogi and Gerber were soon quarreling over the billing system, with Gerber setting up his own balance sheet and issuing accounting statements that Marrogi and other physicians disputed. The dubious statements included payments for services at Charity Hospital, a public facility where Tulane doctors work with indigent patients. Marrogi believes Gerber maneuvered him out of tenure and then engineered his dismissal from Tulane. He also believes Gerber funneled money into his own accounts. Upon hearing of Gerber's death, Marrogi's lawyers hired a private detective to look into the accident. His report is in the hands of the IRS.

While Tulane dismisses Marrogi's suspicions as far-fetched, documents examined by TIME as well as interviews with witnesses who have testified to the IRS illustrate financial machinations that appear to have Gerber at their center and, at the very least, paint a portrait of a prestigious university shoddily run. Indeed, the school's officials and its legal counsel openly contradict one another. The vice chancellor for finance, Ray Newman, contends that doctors are due compensation for work at Charity Hospital (which produces revenues for the university of $20 million to $30 million in payments), even as general counsel John Beal says the physicians merit no payment: "They provide the service as part of our community-service obligation." Still, Tulane officials dismiss Marrogi's complaints (as well as his lawsuit for unspecified damages) as having no basis in fact.

Charity Hospital is at the center of the financial dispute. Last week Dr. Samuel Parry, a plastic surgeon who had taught as a full professor at Tulane for 12 years, brought a class action charging that the university has systematically withheld fees earned by Tulane faculty members at Charity Hospital. Marrogi's suspicions about Gerber began over Charity billings--and compensation. "I started looking at what he was giving us, and I knew it was impossible," says Marrogi. One department memo claimed Marrogi had billed $9,000 to Charity over a year. But Marrogi had filed 1,100 lab reports that would have been billed at roughly $150,000. Going outside Tulane's billing system, Marrogi asked the state office responsible for Charity's records for an account of how much he had charged. The office reported that he had collected more than $50,000 for the same period. Gerber claimed the entire department had been paid a mere $12,000. The state's records indicated that the pathology department had actually received more than $240,000.

Gerber's scheme, a former insider at the department tells TIME, "was to short-circuit the money before it reached the university" and thus have his department directly receive payments. To bypass the university's accounting service, Gerber had one of his secretaries rent an outside post-office box under the name "Tulane Pathology Group." Bonnie Jones Jackson, who was in charge of billing for the department, said she was sent twice a week to pick up checks from the mail drop. At first she did what she was told without asking questions. But gradually it began to occur to her that something was wrong. "We were our own little business," says Jackson. "We used to joke that all you had to do with a federal tax ID number was to think up a name, and then you could collect as much money as you wanted." Jackson also recalls seeing one of the people who worked in Gerber's office randomly downsizing pay slips for Marrogi. "I actually saw her change the codes on the billing," says Jackson. "She said he was money hungry and didn't need that much."

The question Marrogi and other doctors began to ask themselves was what was happening to the money. They focused on Gerber's life-style. Earning $325,000 a year, Gerber had a $7,000 monthly mortgage on a $1.2 million home in an exclusive New Orleans neighborhood. A signed sketch by Picasso was placed eye-catchingly near the front door. He had two, possibly three, Mercedes-Benz, a $300,000 condo in Colorado and a $345,000 house in Florida. He also had more than $3 million in an investment fund and several hundred thousand dollars in a trust fund for his daughter. Department insiders say Gerber had a mistress with whom he frequently traveled to exotic places.

Around the office, Gerber was known for charging an average of $1,200 a month for lunches and an additional $2,000 to $3,000 for dinners. "The irony," says a witness, "is that he never ate lunch. He used to prefer tofu sandwiches." A witness told the IRS that when Gerber traveled to Dubai on a recent trip, he charged the university the full cost of the trip, despite the fact that his hosts picked up the tab.

Witnesses say they informed IRS investigators that Gerber had begun storing cash in dormant bank accounts that were unlikely to be examined during a routine audit. Money transfers out of the university system were masked by fictional purchases of equipment. One piece of machinery was billed at $500,000, despite the fact that the top of the line in its category costs $60,000. The person for whom the equipment was ordered never received it. The department regularly processed reimbursements for conferences that never existed. The department was able to get away with the irregularities because no one in the administration seemed to be tracking what was happening. "As long as you have the money in the account," says an insider, "no one checks on what you are using it for. You hand in a receipt, and no questions are asked."

Then one inaccurate patient's bill was reported to an inside billing agency, causing a ruckus in the school's official accounting system. The dean of the medical school, James Corrigan, eventually insisted he had given Gerber permission all along to do his own billing. But the alarms had alerted the IRS, and it soon swooped in.

But is Michael Gerber dead? It may be impossible to know since the body was cremated before anyone outside the family could identify it. At least two private investigators as well as the IRS are looking into the accident. His daughter, who could not be reached for comment, identified the bodies as those of her parents. Nevertheless, Marrogi and his lawyers, Peter Butler and Christopher Beary, say they have tantalizing clues that Gerber could still be alive. When their private detective, Ted Hembree, showed mortician Fred Adomat a color photograph of Gerber, Adomat responded that the male in the picture "was not the male victim that he had observed and attempted to work on." Adomat said the male victim was much darker, but he added that the face had been badly damaged. Hembree also interviewed Bill Taylor, an employee at the crematorium where the bodies were cremated. He said he had seen the entire body of the female victim and described her as a young woman of Asian descent, in her 30s and about the same height as the male victim. Gerber's wife is from the Philippines but is 58 years old and about a half-foot shorter than Gerber. Taylor also noted that the man's skin was very dark and that he had dark hair on his chest and head. Gerber is gray-haired. Helen Taylor, director of the crematorium, said she was unable to identify either corpse from the photographs, but she added that she found a hip socket and joint-replacement apparatus when she raked the bones out after the cremation. Neither Michael Gerber nor his wife was known to have had hip-replacement surgery. Forget about death. The only sure thing in life is taxes.

In a story about possible financial improprieties in the pathology department of Tulane University's medical school, TIME reported allegations that the head of the department, Dr. Michael Gerber, may have faked his own death in an automobile accident. These allegations were made by persons involved in a lawsuit against Gerber. After further investigation by TIME and by Brill's Content magazine, we are convinced that Gerber and his wife died in the accident, and we apologize for any suggestions to the contrary. This correction was published November 2, 1998