“Whether your intelligence and charismatic personality were corrupted by greed or pride, or some rationalization, it’s really hard for me to tell,” said U.S. District Court Judge Nancy Freudenthal, shortly before giving Cardwell the 121 months in prison requested by federal prosecutors.
While the head of Powell Valley Healthcare between March and September 2011, Cardwell funneled nearly $848,000 to a West Lafayette, Ind., man by pretending he ran a medical staff recruiting firm. In actuality, Michael J. Plake’s “company,” Plake and Associates, was just a front for him and Cardwell to pocket the hospital’s money.
The scheme fell apart after Powell Valley Healthcare officials and auditors began probing the payments. Federal authorities discovered that Cardwell and Plake had run the same scam between 2003 and 2009, when Cardwell was head of White County Memorial Hospital in Monticello, Ind., and taken in another $850,000.
Judge Freudenthal called it a troubling scheme that took from hospitals that struggle to provide a vital service to their communities.
“For me, it was the escalation of the fraud in Indiana to Powell that causes me the most concern,” she said towards the end of a two-hour hearing in Cheyenne, adding “Mr. Cardwell perfected it in Indiana to such a degree that Powell Valley was quickly defrauded — much to their, I think, long-lasting detriment.
“And that detriment will be to board members that will be reluctant to agree to serve, staff members that will remain worried about their positions and their roles vis a vis the board, and the leadership by (Bill Patten, Cardwell’s successor as CEO) will in all likelihood continue to be second-guessed by the leadership within the community, which will affect his ability to lead and govern as a CEO,” Freudenthal said.
Cardwell’s prison time on the three felony counts of conspiracy to commit mail and wire fraud, conspiracy to commit money laundering and conspiracy to commit mail fraud will be followed by three years of supervised release and he faces a $1,698,664.77 bill in restitution.
In rejecting a request from Cardwell’s attorney to give a lighter sentence in the range of 63 to 87 months, Freudenthal also noted Cardwell’s flight from prosecution: While free on an unsecured bond in July 2012, Cardwell stole a family member’s passport and fled to Thailand.
He remained at large until last June, when U.S. and Thai authorities caught up to him in Hua Hin, Thailand.
Cardwell, who appeared in standard shackles and an orange prison uniform, apologized for his actions in a statement to the court.
“I was prideful, I was arrogant and I’m a thief,” he said.
Cardwell said he was so self-absorbed and so desperate for cash after suffering losses on Thai real estate that he didn’t realize the harm he was causing to the Powell Valley Hospital community in 2011.
“I simply convinced myself that the money I was stealing through Plake and Associates was due to me because of the work I was doing,” Cardwell said. “It was not true. The money was not mine, it was not earned and I was stealing to get it.”
As for his flight from law enforcement, Cardwell said he had thought he could sneak away and arrange for a young child he’d fathered with a Thai woman to be brought to the United States.
“It just truly didn’t occur to me that I was leaving under anything other than good intentions to bring back my son, although now I realize that was both cowardly and arrogant,” Cardwell said.
Court records say that when Cardwell was arrested in Thailand, he was with a different Thai woman who was identified as his girlfriend. Freudenthal noted he did not have the child brought to the U.S.
Cardwell said Monday that he’s lost everything from his poor decisions: his family, friends, employment, home, respect, freedom and trust.
“I sincerely ask the citizens of Powell, Wyoming, and Monticello, Indiana, to forgive me. I’m a different person from the Paul of two years ago,” Cardwell said.
He said his eight months in prison — including time in Thailand, where he said he slept on the floor with dozens of other men, had a hole for a bathroom and lost nearly 60 pounds — were difficult and had changed him.
“The pride and arrogance are gone,” he said.
Earlier, Powell Valley Healthcare attorney Tracy Copenhaver had warned the judge that Cardwell “is a con man extraordinaire” and predicted he wouldn’t tell the truth in court.
“I believe he is willing to say whatever Paul Cardwell thinks will help Paul Cardwell,” Copenhaver said. “And that’s the type of person he is.”
Patten and Copenhaver outlined some of the lies Cardwell made while at Powell Valley Healthcare, including: a pledge to donate his salary to the Powell Medical Foundation (“Nothing was ever donated,” said Patten); that his wife was suffering from mental illness and he needed to attend to her in Indiana (he’d actually been in Thailand with the woman who later gave birth to the son); claimed to be a former Navy Seal; and once told a real estate partner he was a skilled surgeon who’d operated on NFL star Peyton Manning.
“Your honor, from what I’ve been told, Mr. Cardwell lied about everything,” Patten said.
Cardwell was away from the hospital many days during his stint as CEO and had asked for flexibility and patience from officials with Powell Valley Healthcare and its management services company, HealthTech Management Services.
HealthTech President Neil Todhunter said the organizations showed Cardwell compassion on several occasions as he claimed he was moving his family out to Wyoming, helping with hospital accreditation in Japan and tending to his ill wife in Indiana.
“Cardwell repaid HealthTech and Powell Valley leaders (with) lie after lie after lie,” Todhunter said.
Cardwell’s defense attorney, James Voyles of Indianapolis, submitted letters from several friends and family members who spoke of Cardwell being more than the crimes he’d committed. Voyles noted that Cardwell had been a respected leader and someone people had looked up to while being engaged in fraud and deceit the entire time.
“Trying to wrap our minds around those two different people is difficult and I recognize that,” Voyles said. He noted that Michael Plake received a 30-month sentence in the scheme and argued Cardwell’s should be closer to that mark.
Cardwell told the judge he hoped some of his good deeds would be considered in his sentence, “such as my volunteer work running the tent hospital during Hurricane Katrina for FEMA in New Orleans, serving with the Thai Red Cross at the Phuket hospital following the tsunami in Thailand the day after Christmas and responding in Myanmar (Burma) to assist after Cyclone Nargis, along with being an elected school board member and Goodwill Industries volunteer of the year, a Special Olympics coach, high school football coach and multiple-year youth football coach — but none of these services excuse my theft and poor decision-making skills.”
Cardwell also said he hoped his $3.5 million civil settlement with HealthTech indicates his willingness to repay what he’s stolen and more. It’s unclear what assets Cardwell has today.
Both Powell Valley Healthcare and White County Memorial Hospital — now IU Health White Memorial Hospital — were repaid their direct losses by their insurers (and in Powell’s case, HealthTech). But Patten and Todhunter said beyond the lost dollars and the thousands of hours spent dealing with its aftermath, there’s been severe damage to their organizations’ reputations.
Both asked for the stiffest sentence possible, “and in my opinion, your honor, that still will not be long enough for justice to have been served,” Patten said.
IU Health officials did not attend the hearing, but sent a written victim impact statement. Cardwell’s mother, Barbara Cardwell, attended but did not speak.
Assistant U.S. Attorney Lisa Leschuck indicated that Cardwell may later receive some kind of reduction in his sentence under a provision for defendants who provide assistance to the government in the prosecution of others. A spokesman for the U.S. Attorney’s Office in Cheyenne declined to comment about what the cooperation might be.