When asked in federal court what he’d done to earn some $212,000 of Powell Valley Healthcare money intended for recruiting physicians and other staff, Michael Plake was blunt.

“I did nothing,” he said.

The 47-year-old man from West Lafayette, Ind., made the admission while pleading guilty to felony counts of conspiracy to commit mail and wire fraud and conspiracy to commit money laundering at a Sept. 17 appearance before Chief U.S. District Court Judge Nancy Freudenthal in Cheyenne.

In pleading guilty, Plake admitted to conspiring with former Powell Valley Healthcare CEO Paul Cardwell to defraud the organization out of $847,884 between March and September of last year. Another 12 counts of mail fraud and one count of wire fraud will be dismissed as part of the agreement.

Cardwell, on the lam from federal authorities since Aug. 29, is charged with having pocketed the other 75 percent of the money, or about $637,000. He previously pleaded not guilty to the same 15 felony counts, and his current whereabouts are unknown.

Powell Valley Healthcare officials paid the money to Plake and Associates believing Plake was, as Cardwell claimed, the owner of a successful staff recruiting firm.

The ruse fell apart by late summer and Cardwell resigned in late September 2011. Criminal charges followed this March.

According to Plake’s testimony at the Sept. 17 hearing — a transcript of which was obtained recently by the Tribune — it was Cardwell who came up with the scheme. Plake said that in March 2011, Cardwell approached him “about continuing a business that we had.”

In contrast to Cardwell’s representations that Plake was a recruiter, “The idea of this business was that he (Cardwell) would recruit physicians and that I would pay him to recruit said physicians,” Plake said.

“Do you have any background in the healthcare field?” Assistant U.S. Attorney Lisa Leschuck asked Plake at the hearing.

“I have absolutely none,” said Plake. He has a master’s degree in education leadership and was working as a Catholic youth minister at the time of the scheme.

“Has Plake and Associates ever done any recruiting for any hospital or any medical facility?” Leschuck asked.

“Not by me,” said Plake.

Plake said he was told by Cardwell that his involvement with Powell Valley Healthcare was needed so Cardwell could “hide himself from an appearance of a conflict of interest ... that he could get in trouble with his board for moonlighting (as a recruiter).”

Plake said his role in the operation was to receive mailed checks from Powell Valley Healthcare, deposit them in his Plake and Associates bank account, then cut a check to Cardwell. In the later days of the arrangement, Plake said he’d wire Cardwell’s checks to an account in Thailand.

Though he understood Cardwell was misrepresenting him as a recruiter and had suspicions Cardwell wasn’t doing any work, Plake said he “hoped and prayed that he (Cardwell) actually was.”

Powell Valley Healthcare staff received periodic (apparently bogus) updates on the recruiting process that appeared to come from Plake, but PVHC documents reviewed by the Tribune appear to show that Cardwell actually wrote the emails and then made them appear to have been sent by Plake.

Plake recounted that when he asked basic questions, Cardwell assured him he was doing real recruiting and that he was not doing it for Powell Valley Healthcare; not recruiting for the hospital where he was CEO was a stipulation Plake said he had placed on Cardwell.

Plake acknowledged there were signs Cardwell wasn’t telling him the truth — such as “the fact that I knew that I was receiving the checks from the hospital that he was working at.”

“Is it a fair assessment to say that it didn’t really matter what he was telling you ... as long as you were getting your money?” Leschuck asked later.

“I think that’s fair, yes,” Plake said.

In August, Plake said Powell Valley Healthcare’s chief financial officer called and asked if he had copies of the recruiting agreements.

“Paul (Cardwell) told me that he would take care of everything,” Plake said. In September, however, an attorney for HealthTech Management Services, Inc. — Powell Valley Healthcare’s management company and Cardwell’s employer — began calling.

“It was shortly after that contact that we concocted recruiting agreements and dated them at dates that would coincide with, you know, when the fictitious recruiting activities were going to occur,” Plake said. He also emailed invoices based on the checks he’d received.

Plake did not elaborate on what business Plake and Associates had done in the past, though he indicated Cardwell had approached him with the idea for the business around 2003. Cardwell served as the CEO of White County Memorial Hospital in Monticello, Ind., for nine years and received glowing praise when he retired in May 2010.

The FBI and Indiana State police are continuing to investigate wrongdoing by Cardwell in Indiana, the Monticello Herald Journal reported last week, quoting the White County prosecutor. The prosecutor, Robert Guy, told the Herald Journal he had met with the FBI on Thursday to discuss Cardwell.

Cardwell came out of retirement to take the helm at Powell Valley Healthcare.

Judge Freudenthal said the signed plea agreement in Wyoming includes a provision where Plake acknowledges he may be required to pay up to $847,884 in restitution. Most of the terms of Plake’s agreement were not disclosed at the hearing — such as how much, if any, prison time he might receive.

The maximum penalty for the two charges is 30 years in prison and $500,000 in fines, but comments made in court indicate Plake will face nothing close to those stiffest punishments. Plake ranks on the low end of the sentencing guidelines because of his lack of criminal history and background. Further, Freudenthal said the agreement states that the government may ask for a further reduction in Plake’s sentence “for assistance that you may be able to provide the Government in the prosecution of others.”

Judges typically follow plea agreements, but Freudenthal noted she doesn’t have to accept it.

Sentencing is set for Nov. 26 in Cheyenne.

A separate civil case being pressed against Cardwell and Plake by Powell Valley Healthcare and HealthTech also remains pending before Judge Freudenthal.

Freudenthal had put the civil case on hold so that Plake and Cardwell wouldn’t have to defend themselves against the two cases at once. However, with Plake having pleaded guilty and Cardwell having fled, Freudenthal ruled on Sept. 18 that there’s no reason to keep the case paused.

A pre-trial conference is set for Nov. 2.