Feds allege Cardwell sought passport under different name

Former Powell Valley Healthcare CEO Paul Cardwell is now considered a fugitive after he reportedly dropped off the map. Cardwell is awaiting trial on criminal charges alleging he embezzled nearly $848,000 from the healthcare organization.

A warrant for Cardwell’s arrest was issued last week after federal probation agents learned he was missing.

Though it had never been scheduled on the court’s calendar, two of Cardwell’s three attorneys said in a Wednesday court filing that their client had agreed to take a plea deal and appear in Wyoming’s U.S. District Court on Aug. 29 to resolve 15 felony counts related to fraud. However, those attorneys — Robert York of Indianapolis, Ind., and Robert Horn of Jackson — say Cardwell fell out of contact with them beginning in mid-August.

On Aug. 28, after Cardwell failed to keep two appointments, York tried contacting Cardwell in person by sending a paralegal and investigator to Cardwell’s mother’s house in Tipton, Ind. That’s where Cardwell’s bond conditions required him to stay. However, Barbara Cardwell informed York’s staff that her son had been gone since Aug. 25 “and that she did not know where he was, nor did she know how to contact him except to send him an email and hope that he responded,” York’s filing says. York said he immediately tried calling Cardwell, but found his number was no longer in service.

Wednesday’s filing from York and Horn asks for them to be allowed to withdraw as Cardwell’s attorneys in a civil case related to the criminal one. The lawyers said they have no idea where Cardwell is or how to contact him and indicated he hasn’t paid their fees.

The defense attorneys notified the U.S. Attorneys’ Office in Cheyenne upon learning of Cardwell’s disconnected number on Aug. 28.

After being notified of his disappearance, federal probation officers soon discovered Cardwell had — unsuccessfully — applied for a U.S. passport under a name of “Paul D. Sappington” back on June 25, said John Powell, a spokesman for the U.S. Attorneys’ Office in Cheyenne.

Applying for a passport would be a violation of Cardwell’s bond conditions. He had to surrender his passport as a part of the conditions of his pre-trial release.

Cardwell had also been ordered not to venture outside Indiana or Wyoming, keep his attorneys and the court advised of his phone number and report to U.S. Probation/Pretrial Service Office when directed to, among other conditions.

Cardwell’s $50,000 bond was unsecured, meaning Cardwell has not put up any collateral, but has promised to pay $50,000 if his bond was ever revoked.

The bond was set by U.S. District Court Judge Scott Skavdahl back in March. Powell said he did not know what terms the U.S. Attorney’s Office had asked for.

The man accused of working with Cardwell to embezzle the money, Michael J. Plake of West Lafayette, Ind., is set to take a plea deal later this month. Plake, who previously pleaded not guilty to the 15 felony charges he also faces, is set to change his plea on Sept. 17 in Cheyenne. Details of the deal were filed with the court this week, but are not publicly available.

A trial for both men had been set to start on Sept. 18.

The allegations behind the criminal cases are that Cardwell and Plake embezzled $847,884 from Powell Valley Healthcare under the guise of recruiting staff. During his tenure as CEO from March to September of 2011, Cardwell allegedly pretended Plake ran a medical staff recruiting firm called Plake and Associates. In reality, prosecutors say, the men did no recruiting and pocketed the money on a roughly 75-25 split.

Powell Valley Healthcare has a separate civil suit pending against Plake and Cardwell. In an Aug. 1 order, Judge Freudenthal put that case on hold until the criminal charges are resolved.

Plake and Cardwell’s attorneys successfully argued to the judge that with both civil and criminal cases pending, their clients would have had to choose between saying nothing — risking losing the civil case — or offering a defense and potentially incriminating themselves in the criminal case.

Plake’s attorney, Michael Reese of Cheyenne, wrote that his client wouldn’t be able to testify about “his relationship with the parties, or lack thereof” or provide exculpatory evidence without waiving his Fifth Amendment privilege. It’s been unclear what role Plake played in the alleged scheme; Cardwell was allegedly writing emails to hospital supervisors while pretending they were from Plake.

Powell Valley Healthcare, through attorney Tracy Copenhaver of Powell, had objected to delaying the civil case. Copenhaver said doing so would be promoting the rights and interests of Plake and Cardwell over those of the hospital and the general public. PVHC said the misuse of the money has made it unable to buy needed medical equipment, provide raises and bonuses to staff or hire personnel it would have hired.

Copenhaver added in the filing that the hospital believes a significant amount of money taken by Cardwell, and possibly money taken by Plake, “has been transferred to acquire assets in foreign counties and that the greater the delay in the civil proceeding, the more difficult it will be to locate those assets and collect them in the foreign countries.”

Court filings and information reviewed by the Tribune indicate Cardwell spent a significant portion of his nine-month tenure as Powell Valley Healthcare’s CEO out of the country, while misleading people about what he was doing.

Freudenthal said PVHC hadn’t shown how a delay would cause additional prejudice to the organization.

Powell Valley Healthcare is seeking more than $1.3 million — including the allegedly embezzled funds, the $146,000 paid for Cardwell’s salary and benefits and more than $50,000 in attorneys fees. The organization is also suing its management company, HealthTech Services Inc. Cardwell was chosen by the Powell Valley Healthcare board, but was technically a HealthTech employee.

Cardwell and Plake have denied the civil allegations.

The proposed plea agreement in the criminal case would have included requiring Cardwell to make restitution to Powell Valley Healthcare and Healthtech and also completely and fully disclose his financial status to prosecutors, York and Horn wrote Wednesday.

“At no time during their representation of Cardwell has he provided to his attorneys even an inkling that he would not enter into the plea agreement nor that he would move from his mother’s residence,” the defense attorneys wrote.

Cardwell could potentially face increased penalties for violating his bond conditions in the criminal case, but federal agents will have to catch the fugitive first.

Powell, the U.S. Attorneys spokesman, said agents will speak to friends and family and check places Cardwell may have gone. “They’re just logically trying to figure out where he might be,” Powell said.

Editor's note: This version corrects which judge set Cardwell's bond conditions and removes information that Sappington is a fake name.