Former CEO Paul D. Cardwell and Michael J. Plake of West Lafayette, Ind., have been indicted by a federal grand jury in Wyoming’s U.S. District Court on 15 criminal counts — 12 of mail fraud, one of wire fraud, one of conspiracy to commit money laundering and one of conspiracy to commit mail and wire fraud, say documents obtained by the Tribune.
According to the indictment the Tribune received Wednesday, the counts are based on allegations that Cardwell conspired with Plake to defraud Powell Valley Healthcare out of nearly $848,000 between March and September 2011 — the time Cardwell was CEO.
The grand jury’s indictment alleges that Cardwell and Plake came up with a “fraudulent billing scheme” in which Cardwell would send money to Plake’s company, Plake and Associates, for the purported purpose of recruiting physicians and other staff to Powell. In reality, the indictment alleges, Plake was doing no work. Instead, he would send roughly 75 percent of the money back to Cardwell while keeping 25 percent for himself, says the indictment.
When Powell Valley Healthcare’s auditors began questioning the payments made to Plake and Associates, Cardwell and Plake “fabricated ‘recruiting agreements’ and ‘invoices’ to create the illusion that the contract and invoices had been previously provided to PVHC for the payments totaling $847,884,” says a portion of the indictment.
HealthTech Management Services Inc., the company that helps manage Powell Valley Healthcare, filed a suit against Cardwell over the same allegations in February, but that case is a civil, and not criminal, matter.
In a statement, HealthTech said it was “gratified” to learn of the criminal charges.
“The disturbing conduct alleged is of grave concern to HealthTech, which is why HealthTech is pursuing its own civil lawsuit against Paul Cardwell,” said the statement.
In a Wednesday news release announcing the indictment, Powell Valley Healthcare spokesman Jim Cannon described the indictment as outlining “a fraudulent scheme, involving numerous acts of deception against PVHC employees and directors, whereby PVHC suffered significant financial losses.”
Cardwell and Plake each made their first court appearances before District Court Judge Scott Skavdahl of Casper on Tuesday, but details of the proceedings were not available at press time.
Cardwell has been living in Thailand, with unrelated court records listing a 10th floor penthouse in Pattaya, Thailand, as his address. Golf tournament results posted to the Pattaya Sports Club website between October and last week indicate Cardwell has been a regular golfer in the Pattaya area since leaving Powell.
As recently as Thursday, March 22, Cardwell took fifth place in a 18-hole competition at the Khao Kheow Country Club outside Pattaya, says the Sports Club site.
Plake is the director of religious education and youth minister for the Catholic student center serving Purdue University.
When reached at his office at the St. Thomas Aquinas Center on March 15, Plake confirmed that he is the owner of Plake and Associates but otherwise declined comment to the Tribune.
Indiana Secretary of State records show Plake officially created Plake and Associates as a limited liability company on Sept. 28 — two days after the Powell Valley Healthcare board upheld Cardwell’s resignation as CEO.
Online biographies for Plake say he has a bachelor’s degree in music education and assists with directing bands at Purdue. There is no reference to medical recruiting in the biographies.
When asked by the Tribune whether he did any recruiting work for Powell Valley Healthcare, Plake referred questions to his attorney, Sean Barrett of Cheyenne.
Attempts by the Tribune to reach Barrett over the past week and a half — through his phone number listed with the Wyoming State Bar and his email address — have been unsuccessful. At press time, it was not clear who is representing Cardwell.
Plake would not comment on how he knows Cardwell, but on his Facebook profile page, he lists three of Cardwell’s immediate family members as friends.
With most of the case still under seal on Wednesday, it is unclear when the next hearings will take place in the criminal proceedings against Cardwell and Plake.
Cardwell was served with HealthTech’s civil suit on Tuesday, records say, and must file a response by April 17. Plake has not been named as a defendant by HealthTech, but the Powell Valley Healthcare board has said — and officials reiterated Wednesday — that it plans to join HealthTech’s suit and name Plake as a codefendant.
Powell Valley Healthcare had a net loss of about $909,000 in 2011. In its annual report recently mailed to the Powell community, the board wrote that the loss was due to unexpected claims on the organization’s self-funded insurance plan and “increased costs related to recruitment.”
Despite the losses alleged by the indictment, “PVHC has continued, and will continue, to serve its community and its patients as it always has,” Cannon said in the news release.
He said the hospital and HealthTech have been cooperating with federal investigators since the beginning and appreciate their efforts in pursuing the case.
“PVHC shares federal investigators’ and U.S. Attorney’s desire to see justice fully served in this case and intends to do its part to ensure that this occurs,” Cannon said.
HealthTech expressed similar sentiments in its statement, saying it believes the criminal and civil cases will be a crucial part of moving forward for both organizations.
(Ilene Olson contributed reporting to this story.)