Federal agents briefly detained former Steward Health Care CEO Ralph de la Torre early last week, served him with a search warrant, and seized his phone — the latest sign that a federal corruption probe is focused on the health care chain’s embattled founder, according to three people briefed on the matter.
Another Steward executive, Armin Ernst, a Brookline resident who leads Steward’s international entity, was also recently visited by federal investigators and had his cellphone seized, two of the people briefed told the Globe.
The searches come on the heels of a Globe Spotlight Team report that revealed several Steward board members had been summoned to answer questions as part of a sprawling grand jury probe into alleged fraud, bribery, and corruption within the now-bankrupt, Boston-born health care chain.
Federal authorities have also been in talks with several other top Steward executives, the Spotlight Team has learned, seeking information about Steward’s financial operations.
A spokesman for de la Torre declined to comment Monday. Ernst’s attorney also declined to comment.
Neither man has been charged with a crime in the US. Both are at the center of a broad, still unfolding criminal corruption case in Malta, where authorities allege the Steward executives bribed government officials.
A spokeswoman for Steward, once the nation’s largest private, for-profit health care company, declined to comment.
Experts in white-collar crime said the execution of a search warrant is a clear sign the probe has gone beyond the exploratory phase.
“On a scale of 1 to 10, this action by federal authorities brings the Steward scandal to an 11,” said Douglas Chia, president of Soundboard Governance LLC and a senior fellow at the Center for Corporate Law and Governance at Rutgers Law School.
To obtain a search warrant to seize a phone, federal prosecutors have to present credible evidence to a magistrate judge that a particular crime was committed, and probable cause that evidence of that crime would be found on the phone that was seized, according to former federal prosecutors.
“This [search warrant] makes it more likely to me that the prosecutors think that [de la Torre] is a participant in a crime” not a bystander, said Mitchell Epner, a former federal prosecutor in New Jersey. “Very often in a situation like this the underlings have already been contacted.”
Added Harry Sandick, a former assistant US attorney in the Southern District of New York, “It certainly suggests a mature investigation and not something you would expect prosecutors to do on a whim.”
There are at least two lanes of inquiry that make up the federal investigation, several people close to the matter told the Globe. Prosecutors are looking into potential violations of the Foreign Corrupt Practices Act, a law that prohibits US companies or citizens — as well as foreign entities doing business on US soil — from engaging in bribery and other corruption overseas. Another prong of the probe is focused on potential fraud and embezzlement in the US, and the grand jury has also closely examined executive compensation, travel, and spending, the Globe has reported.
Earlier this month, former US House speaker John Boehner, a longtime Steward board member, appeared at the federal courthouse in Boston alongside an attorney. Boehner, who lives in Ohio, declined to comment.
Grand jury proceedings are secret and law enforcement is prohibited from discussing them. A spokeswoman for the FBI’s Boston field office, as well as a spokeswoman for Acting US Attorney Joshua S. Levy, declined to comment Monday.
The Spotlight Team has reported on several instances in which de la Torre allegedly dipped into Steward’s dwindling bank accounts to serve his own personal ends — making a donation to his children’s school, purchasing a multimillion-dollar apartment in Madrid, and using the company planes to ferry friends across the globe. Even as these questionable transactions were made, Steward’s bills from hospital vendors were piling up and causing fiscal distress and risk to patients across the company.
De la Torre, who lives in Dallas, has kept a relatively low profile since the chain filed for bankruptcy in May. He was spotted at the Paris Olympics in July, watching competitors take part in the genteel equestrian sport of dressage. Two months later, he resigned from his position atop Steward, ending a decade-plus reign.
Company insiders have told the Globe he has not been spotted at Steward’s Dallas office since his resignation. He remains the major stakeholder, though Steward is now worth virtually nothing after claiming in bankruptcy court some $9 billion in total liabilities.
Ernst, a German-born physician who was educated at Boston’s top medical institutions and now resides in Brookline, still heads Steward’s international arm, which is based out of Spain and still operates in Colombia and Saudi Arabia. The company’s previous dealings in Malta have come under particular scrutiny both there and in the US.
In May, a Maltese magistrate concluded a four-year criminal investigation into government partnerships with Steward and Vitals, the company that Ernst oversaw before returning to Steward. In her 1,200-page report, the magistrate recommended Ernst and de la Torre be charged with money laundering, criminal association, and corruption of public officials, including the nation’s former prime minister, Joseph Muscat.
In 2022, Maltese authorities raided Muscat’s hillside villa and seized his electronic devices as part of a probe into fraudulent public-private partnerships. At the time, Muscat refused to provide the officers with the pass codes needed to unlock the devices and the authorities called on the US Department of Homeland Security Cyber Crimes Center to extract data from the electronics, according to court documents.
Recent court dates in Malta for Ernst and de la Torre were postponed. Ernst didn’t appear in court in early October when he was due to face charges in connection with the partnership.
Ernst’s attorney in Malta, Jose Herrera, told the court that Ernst “lives abroad, and has every intention to come here and contest the charges, and submit to the judgment of this court. The only reason that he is absent today is because his wife is seriously ill.” The court adjourned the case to Nov. 28.
De la Torre’s case was heard in Maltese court later in October, but the executive was also not in attendance. The court rescheduled his case to January, but it is likely that any US case will take precedence, Maltese legal experts told the Globe.
Once authorities have seized a phone, cracking into it is not always straightforward.
Federal agents still need the password to review the phone, and it’s easy for targets of investigations to erase encrypted texts simply by deleting the messaging apps, such as Signal, according to Epner, the former prosecutor. A federal corruption investigation against New York Mayor Eric Adams was complicated when prosecutors couldn’t unlock his seized phone. The mayor told FBI agents last November that he changed the password and then couldn’t remember it.
“It’s a reasonable conclusion that the prosecutors were concerned that they needed to grab [de la Torre’s] phone without giving him a heads-up out of fear that he might try to discard the whole phone or tamper with it,” Epner said. “It’s likely the tip of the iceberg.”
Lawrence Cunningham, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said the phones could contain a trove of evidence — including texts, photos, and meeting logs — that could implicate other members of Steward’s leadership team and board.
“This is a serious elevation of the stakes,” Cunningham said. “We saw the smoke clouds building for months. Now we can see the flames.”
Hanna Krueger can be reached at hanna.krueger@globe.com or via the encrypted messaging app Signal at hsk.13. Chris Serres can be reached at chris.serres@globe.com. Follow him @ChrisSerres. Brendan McCarthy can be reached at brendan.mccarthy@globe.com.