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Paul Cardwell says fraud scheme started with some legitimate goals

It ended up as a more than $1.64 million scam, but Paul Cardwell says it didn’t start out that way.

As Cardwell tells it, a childhood friend was having some tough times and Cardwell, then the CEO of White County Memorial Hospital in Monticello, Ind., “suggested (to the friend) that physician recruitment could be a good occupation.”

“Did you really engage in it at the beginning with some legitimacy and some interest in really doing that (recruiting)?” Cardwell’s attorney, James Voyles of Indianapolis, asked at a court hearing last week.

“Yes,” the former CEO answered.

However, Cardwell said he and the friend, Michael J. Plake of West Lafayette, Ind., later decided to just start pocketing the Monticello hospital’s money — Cardwell getting 75 percent, Plake 25.

The men took in roughly $800,000 in Indiana as Plake and Associates between 2003 and Cardwell’s retirement from the Monticello hospital in 2009.

Voyles asked his client how he was able to get the money from the Indiana hospital.

“Really broad sweeping authority for my time as the CEO there,” Cardwell said. “Really had no limit to the amount that would be approved for recruitment.”

When Cardwell became CEO of Powell Valley Healthcare in March 2011, he and Plake reactivated their bogus recruiting firm. In just seven months, Cardwell got Powell Valley Healthcare to pay out nearly $848,000 to Plake and Associates.

The scheme was discovered when Powell Valley Healthcare auditors and other officials began questioning where the recruiting payments were going; in the subsequent investigation by the FBI, Plake volunteered that he and Cardwell had run the same scheme in Indiana.

Cardwell gave his overview of the scheme in federal court in Cheyenne on Oct. 2 as he pleaded guilty to three felony fraud counts. Two relate to running the billing scheme in Powell, the other to running it in Indiana.

In court last week, Cardwell said he had done legitimate work to bring in new staff during his time in Powell and Monticello, though he acknowledged none of that work had been done through Plake and Associates.

“On his part, he (Plake) did no recruitment. I did all the recruitment,” Cardwell said of his time at White County Memorial Hospital.

“OK, but again, as part of this Plake and Associates, the recruitment was not done through that company, is that correct?” Voyles followed-up.

“Yes, that’s correct,” Cardwell said.

Cardwell’s account differs from the one given by Plake earlier this year.

While Cardwell testified the scheme began with an idea to get Plake a legitimate job in recruiting, Plake has testified that when Cardwell approached him, the job offer was to pose as a recruiter while Cardwell did recruiting; Plake says Cardwell claimed the set-up was to allow him to recruit behind the backs of his supervisors.

Plake was sentenced to 30 months in prison for his role in the scheme.

Exact terms of the plea deal Cardwell has accepted from federal prosecutors have not been made public, but some aspects were disclosed at last week’s hearing.

U.S. District Court Judge Nancy Freudenthal told Cardwell it’s “likely” he’ll be headed to prison, and she indicated he must also serve three years of supervised release and pay “up to the sum of approximately $1,647,884” in restitution. Thirteen other felony counts relating to the Wyoming scheme will be dismissed as part of the deal, the judge said.

For reasons that are unclear, Freudenthal said prosecutors may ask for Cardwell to receive a reduced prison sentence for providing “substantial assistance” in investigating or prosecuting someone else.

John Powell, a spokesman for the U.S. Attorney’s Office in Cheyenne, declined to comment on what assistance Cardwell has provided prosecutors.

Cardwell’s sentencing hearing has been set for Dec. 23.

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3 comments

  • posted by doug maiko

    December 05, 2013 3:30 am

    Paul
    looks like I will be seeing you soon in Pattaya, thailand. look forward to playing golf with you again really soon. Dr.Doug

  • posted by clipstein

    October 12, 2013 7:08 pm

    when are they going to arrest those that knew what was going on? then how about those that wasted millions of taxpayer money in powell........

  • posted by Mike Wilson

    October 11, 2013 4:22 pm

    Not Surprising!!!
    He may not serve much time at all for providing "substantial assistance" in investigating or prosecuting someone else.
    Powell Valley Healthcare hired this guy twice and looked the other way when Director's, and staff new something was fishy with him.

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