The “deep trust” placed in former COO Stephanie Roskovski by Butler Health System was allegedly betrayed, according to a recently unsealed court document.

Roskovski, now facing dozens of federal embezzlement and fraud charges, allegedly stole more than $1 million from the nonprofit health network, according to the newly released document.

The federal government filed a 42-count grand jury indictment in April charging the hospital's former second in command and her husband, Scott, with embezzling $1.3 million from the health system and placing them on pretrial supervision.

The court document unsealed in November details the two-year investigation into the Center Township woman and her husband, a former county detective, that began in 2017 and led to the search and seizure of documents, electronic devices and email correspondences belonging to the Roskovskis during the summer of 2018 and their arrests this past April.

Originally used to obtain search warrants executed at the Roskovskis' home and business — Switchback MX — as well as their son's apartment, the filing was unsealed in response to a motion by the defense to suppress the bulk of the evidence seized.

Prosecutors allege that a portion of the embezzled money was used to help purchase and redesign the “expansive motocross racetrack.”

Attorneys Michael Comber and Wesley Gorman petitioned the court in October in separate filings on behalf of Stephanie and Scott Roskovski, respectively, to suppress all search warrants connected to the case, thus suppressing any evidence seized. The motions argue the warrants were unconstitutional and in the case of the emails, violated the confidentiality of attorney-client privilege.

Forging receipts

Included in the unsealed document is key information about how an independent audit made by the health system led first to Stephanie Roskovski's firing from her position as chief operating officer in August 2017, and then led federal investigators to allege she defrauded her former employer of about $1.9 million using a variety of deceitful methods.

Among the many examples included in the documents, Stephanie Roskovski is alleged to have altered an email confirmation receipt for a U2 concert so that it looked like “physician recruitment events” for the hospital.

In addition to altering receipts to make them appear as though they represented hospital business, investigators also allege that Stephanie Roskovski used three other methods to enrich her family by using BHS money.

First, she allegedly used her corporate credit card for personal expenses. When turning in altered receipts, she would remove the “To,” “From” and “For” portions of email confirmations and turn in just the bodies of the emails — which investigators allege were doctored.

Second, she purchased more than $250,000 worth of gift cards from multiple vendors between 2011 and 2017 using BHS “Direct Vendor” checks. Although her stated purpose in the check requests turned in to the hospital state the cards were meant for focus groups and marketing efforts, investigators allege the couple used many of them personally or gave them away to family and business associates.

Third, she allegedly tricked the health network into footing bills for Scott Roskovski's motocross company by submitting reimbursement requests without receipts to the health network, getting them signed, and then altering the reports before turning in the requests to accounting.

Scott Roskovski was a detective in the Butler County District Attorney's Office until being fired in 2017 when District Attorney Richard Goldinger learned of the federal investigation into the couple.

The Roskovskis are also accused of knowingly spending hospital funds on personal items for their children. In one example, the couple's son, Jacob Scott Roskovski, used his mother's corporate credit card to buy guitar equipment for $714.98 in October 2015. But in her business expense report to BHS, Stephanie Roskovski alleged the expense was for 11 books used as “physician anniversary gifts.”

Key witnesses interviewed by federal investigators

Included in the unsealed document used to obtain the search warrants were accounts of interviews with a BHS official and a former Switchback employee.

Postal Inspector David Gealey, who headed the multiagency fraud investigation, interviewed CEO Kevin DeFurio and the unnamed former Switchback employee.

DeFurio was Stephanie Roskovski's boss during her time as chief operating officer. In that capacity, DeFurio approved expense requests from her, the same as he did for 10 to 15 other vice presidents who worked under him.

The health network hired a private auditing firm to investigate company losses in August 2017, according to the unsealed document.

In September of that year, the company turned its findings over to the Federal Bureau of Investigation.

The affidavit states that DeFurio was interviewed twice, first in August 2017 by attorneys and investigators hired by the health network, and then again in January 2018 by the federal investigators.

According to the unsealed document, DeFurio told investigators that Stephanie Roskovski, as COO of the hospital system, was part of the administrative team of vice presidents, each with their own corporate credit card for business-related expenses. Prosecutors allege Stephanie Roskovski often “used her personal credit cards and frequently submitted reimbursement/disbursement requests to the CEO, Ken DeFurio, for his approval and signature.”

DeFurio told investigators Roskovski made regular requests for funds of less than $1,000 to be paid to vendors and he would sign them. He added that, in hindsight, he should have delivered the check requests directly to accounting because he believes now that Roskovski often increased the amount of money on requests after getting his approval.

“We were deeply disappointed to discover this situation in 2017,” DeFurio said in a recent statement released by the hospital. “However, we are pleased to have recovered a large portion of the money, and we've taken multiple steps to strengthen safeguards.”

Investigators also interviewed a former employee from Switchback who raced at the track. The man recalled visiting the Roskovskis' home when he and his wife “would drop off cash deposits from the track.” The man told investigators he recalled the home being “extravagant” and “very modern,” with a “bar, workout area, a closet full of jewelry and a basement area which contained sports memorabilia, guitars, drum sets and a media room.”

The man also told investigators he was paid $500 per week “under the table” with a personal check or cash from the Roskovskis. He further reported receiving gift cards and $100 bills after certain events at Switchback, adding that he even received leftover prizes from those events such as a Play Station 4, helmet and a GoPro camera.

According to the former employee, the purse amounts for winning and other prizes often helped the track attract more than double the number of racers as other tracks of its size. The man said Scott Roskovski told him the prizes were donated, and would even brag to him that “you don't see any other tracks doing these types of giveaways.”

Other key findings lead investigators to charges

Also included in Gealey's 38-page affidavit are allegations of how — among the $250,000 in allegedly fraudulently purchased gift cards — Stephanie Roskovski allegedly submitted “Direct Vendor” disbursement requests to purchase 415 gift cards from Giant Eagle alone in increments of $100, totaling $41,500, from December 2013 through December 2016.

Roskovski's check request to BHS claimed the gift cards would be used for “marketing incentives, survey incentives, or sponsorships.”

Gealey, on the other hand, reported records from the grocery chain revealed “284 of the cards were used by Scott, and 83 of the cards were used by Stephanie.”Additionally, 21 of the cards were used by people associated with the Roskovskis but not BHS, including the couple's housekeeper and hairstylists.

In his sworn affidavit, Gealey said the cards purchased by the hospital and tracked by a grocery chain were used in conjunction with Giant Eagle Advantage cards associated with the Roskovskis.

Roskovskis contest the search warrants

In recent filings in federal court, prosecutors and defense attorneys wrangled over the legality of the search warrants executed in 2018 leading up to the indictment last summer. The team of private attorneys hired by the Roskovskis regarded the search warrants as a violation of the Fourth Amendment that overreached when prosecutors sought the records and communications from expenditures related to Switchback and any other records related to the couple.

During its investigation and subsequent search warrants, the federal government collected personal items such as computers, hardware, cellphones, emails, motocross goods and other items dating back more than 15 years. The couple's lawyers contested the “unlimited search authorization of all records,” calling it “wholesale seizure.”

The defense team asked a judge to drop much of the information from the case, according to court documents.

This request led to the unsealing of interviews with DeFurio, the former Switchback employee, and other financial records compiled during the investigation and submitted by prosecutors to bolster their counter-argument that the search warrants executed in July were lawful and valid.

“These warrants were overbroad,” defense attorneys argued in their October filings. “They authorized the search and seizure of electronic devices for which the affidavits acknowledged there was no probable cause.”

Among other things, the Roskovskis' defense team argued the warrants allegedly pulled in records related to purchases made by their children and digital information that contained correspondence protected by attorney-client privilege.

“We seek suppression of any evidence seized pursuant to these overbroad portions of the warrants,” the attorneys wrote. “We also, however, ask the court to invalidate the warrants in their entireties.”

In all, the couple is charged with mail fraud, conspiracy to commit mail fraud, money laundering, conspiracy to commit money laundering, false statements in a loan application, conspiracy to defraud the United States and filing false tax returns. Stephanie Roskovski is also charged with embezzlement from a health care benefit program.

In response to the motions, Assistant U.S. Attorney Carolyn Bloch alleges that Stephanie Roskovski embezzled funds from Butler Health System in 2011 or earlier and argues that the search warrants were “sufficiently particular” and “were flush with probable cause to seize the items listed.”

Bloch laid out the expansive nature of the alleged crimes as the reason for the warrants.

“The proceeds of the fraud were used for the personal benefit of the defendants and their children, and it pervaded everything in their lives,” Bloch wrote.

The prosecutor further argued the allegedly illegally obtained money was used for “vacations to birthday party expenses, limousine transportation, expensive rock concerts, gifts and other personal goods; daily expenses, such as food and gasoline, and the purchase and operation of the defendants' motocross business.”

A judge assigned to the case has yet to make a decision on the defense team's request, and the matter will likely undergo several hearings before a decision is made.