Lawsuit filed against Paul Cardwell for allegedly embezzling nearly $850,000

The former chief executive officer for Powell Valley Healthcare is being sued for allegedly embezzling nearly $850,000 while he was at the helm of the organization.

The lawsuit against Paul Cardwell was filed Thursday in the U.S. District Court in Casper by attorney Scott P. Klosterman of Casper on behalf of HealthTech Management Services Inc.

HealthTech, hired to provide management services for Powell Valley Healthcare, is the company that formerly employed Cardwell to oversee the company’s operations in Powell.

The lawsuit states that Cardwell, a U.S. citizen, currently is believed to be living in Thailand.

According to the lawsuit, Cardwell authorized spending $847,934 between March and September to recruit physicians and other personnel to Powell Valley Healthcare.

However, the lawsuit alleges that the money was actually sent to a “straw company” set up by an acquaintance of Cardwell’s that did no legitimate work and kicked a “substantial” amount of Powell Valley Healthcare’s money back to Cardwell.

Cardwell “knew that in fact no such recruiting services would be performed and that no portion of the purported recruiting fees would be legitimately earned,” the lawsuit alleges.

Cardwell represented the straw company to be a legitimate recruiting firm and the Indiana acquaintance and the acquaintance’s wife to be recruiters for the company, “concealing the fact that the Indiana acquaintance was in fact a longstanding personal acquaintance rather than a mere legitimate business contact,” the lawsuit says.

The suit states that Cardwell wrote emails about non-existent recruiting efforts under way and made them appear to have come from the Indiana acquaintance.

He then used those emails, in part, to justify payments to the straw company, the document says.

“(A)fter being requested by PVHC and HealthTech to provide documentation to support the issuance of payments to the Straw Company, (Cardwell presented) PVHC and HealthTech with purported contracts with, and invoices from, the Straw Company, knowing full well that the documents were inauthentic and gave the false impression that the Straw Company actually intended to and did engage in recruiting efforts on behalf of PVHC,” the lawsuit states.

Then, “Beginning not later than August 2011, in accordance with Defendant’s instructions, the Indiana acquaintance secretly kicked back funds to Defendant, typically via electronic funds transfer to accounts controlled by Defendant,” it says.

The lawsuit says Cardwell’s actions violated “his fiduciary duty and the implied covenant of good faith and fair dealing” inherent with his employment by HealthTech as chief executive of Powell Valley Healthcare.

As supporting exhibits, the suit includes a copy of the management agreement contract between HealthTech and Powell Valley Healthcare and a copy of Cardwell’s employment contract.

HealthTech asks the court to award a judgment against Cardwell for actual damages in an amount to be proven by the evidence in a jury trial.

The U.S. District Court has jurisdiction because the amount exceeds $75,000, and is between citizens of different states, the document says.

Cardwell came out of retirement to take the job as chief executive officer at Powell Valley Healthcare. His references from the Indiana hospital he formerly managed were, without exception, outstanding.

HealthTech Attorney Eli Richardson of Nashville, Tenn., said the complaint is filed by HealthTech alone, with no participation by Powell Valley Healthcare.

“This is a situation where HealthTech itself felt that it ... needed to pursue claims itself,” he said in a telephone interview on Monday.

As to whether any money won in the lawsuit would be turned over to Powell Valley Healthcare, “how that figures into the overall picture of remedying this overall situation is something outside of this lawsuit, and something I won’t comment on at this time,” Richardson said.

With Cardwell apparently residing in Thailand, Richardson would not specify how Cardwell would be served with the lawsuit. But, he said, “There are a variety of ways persons located domestically or persons located abroad can be served with lawsuits. It is certainly HealthTech’s intention to serve him under one of those ways.”

Richardson also declined to say why the names of the straw company and Cardwell’s acquaintance were not named in the lawsuit, or whether any further legal actions against other people were likely.

“As a plaintiff in the lawsuit, HeathTech has the option of deciding who it wants to state claims against at this time,” he said. “At this time, that is solely Paul Cardwell. That does not speak one way or another as to who else may be responsible. ... HealthTech, I think, will remain cognizant as proceedings go forward to assert its rights against parties that it needs to assert its rights against.”

Richardson said he doesn’t know whether criminal charges are pending.

“That’s something that you need to address to authorities,” he said.

Park County Attorney Bryan Skoric said he was unaware of the allegations in the complaint.

“I don’t think anything’s been reported to law enforcement, to my understanding,” Skoric said Monday, adding, “Certainly nothing’s come across my desk.”

Skoric’s office handles the prosecution of all state law violations; he said he wouldn’t necessarily know if a federal investigation was pending.

Richardson said he is unable to comment on anything regarding Powell Valley Healthcare.

PVHC Board President Dr. Mark Wurzel and Powell Hospital District Board President Mark Kitchen did not return calls for additional information by press time Monday. Board members Renee Humphries and Larry Parker said they were unable to comment, as the matter still is under investigation.

Interim Chief Executive Officer Mike Lieb said he has no answers, as this occurred before his arrival at Powell Valley Healthcare.

Cardwell replaced former CEO Rod Barton, who resigned in August 2010 after leading the organization for 13 years.

Shortly after Barton left, former Chief Financial Officer Steve Ramsey retired. Ramsey had been with the organization for more than 20 years.

Calvin Carey replaced Ramsey as chief financial officer in November 2010.

When Cardwell took up the helm at Powell Valley Healthcare in March 2011, four of the seven Powell Hospital District board members had been on the board for just a few months, having been elected in November; two others were appointed to the board less than a year earlier.

Cardwell resigned Sept. 23. On Sept. 26, he asked to be reinstated, but was denied.

Carey resigned from the chief financial officer post in early December.

Monday was the first day on the job for Cardwell’s permanent replacement, Bill Patten, who now will serve as Powell Valley Healthcare’s chief executive officer.