$3-Million Bail Set for Indicted Fertility Doctor

Despite strenuous warnings by prosecutors that the first UC Irvine physician indicted in the human egg-switching scandal plans to flee the country, a federal magistrate on Friday set bail, although at a hefty $3 million.

The judge also ordered Dr. Sergio C. Stone to surrender his passport, remain confined to his Villa Park home and wear an electronic monitoring bracelet after he posts bail.

Stone, who was arrested Thursday on 10 counts of filing false medical bills, “willingly participated” in a “massive billing scheme,” with two partners who left last year for Latin America, prosecutors told the judge Friday. The extent of the scheme was uncovered by federal investigators who seized about 10,000 patient files last September in raids on the doctors’ offices and homes, prosecutors said.

Prosecutors unsealed the indictment against Stone only when they learned he was selling his extensive real estate holdings and liquidating other assets for what they saw as preparation for “a hasty departure in case he had to leave the country,” Assistant U.S. Atty. Wayne Gross said.

Stone, a native of Chile and a naturalized U.S. citizen, recently sold a Laguna Beach home for $415,000 at an $85,000 loss and recently wired $500,000 in cash to a bank account in Chile, according to Assistant U.S. Atty. Thomas H. Bienert Jr.

“Why would Dr. Stone have $500,000 sitting in a bank account in Chile, where he was born . . . and has numerous professional and family ties . . ?” Gross said, imploring the judge to deny Stone’s request for bail.

“The reason he sold his Laguna Beach home is exactly the same reason Dr. Balmaceda and Dr. Asch sold their assets when they fled,” he said.

Asch left the country last fall around the time federal agents searched his home, and is working in Mexico. Balmaceda has returned to his native Chile to practice at a Santiago clinic.

UC Irvine has accused the three fertility specialists who worked at its Center for Reproductive Health of stealing eggs and embryos from scores of women and implanting them in others, some of whom gave birth. Several agencies are investigating those allegations.

The federal grand jury indictment, which makes no mention of that scandal, alleges that Stone filed false claims stating that he was assisted by other licensed physicians while performing medical procedures, when he actually was working alone or with trainees.

Gross told the court that federal investigators who raided Stone’s home last year discovered that the doctor had a net worth in excess of $2 million. That amount included $1 million in investments, $200,000 in a UCI retirement plan, four life insurance policies with a total cash-out value of $160,000, $63,000 in local banks accounts and $42,000 in cash. Stone also owns properties in Palm Desert, Villa Park and Hawaii.

But Stone’s attorneys, Allan H. Stokke and James Riddet, denied the prosecutors’ assertions that he was liquidating his assets to flee.

Stokke said Stone, who currently receives $11,000 a month in payments for an unidentified disability, sold his Laguna Beach home to pay his mounting legal bills.

The doctor had wired the $500,000 to Chile because of what Stokke termed “creative estate planning,” a bid to shield his assets from dozens of civil lawsuits filed against him.

“He never intended to flee,” Stokke said. “His family is here. He has every reason in the world to remain in this country.”

A small parade of family and friends called by the defense to testify all said they would guarantee up to $1 million each and risk the equity in their homes and businesses so that Stone could make bail.

At the end of a 2 1/2-hour hearing, U.S. Magistrate Judge Elgin Edwards ordered Stone, his relatives and family to put up their cash and properties to secure the $3-million bond. The agreement calls for Stone to return $400,000 in cash from Chile and to surrender his U.S. passport to the court. Stone will be monitored in his home by the electronic bracelet under terms of the bail, the magistrate said.

Edwards said his decision to grant bail was difficult, especially in light of the government’s “credible arguments” that Stone was plotting a “hasty departure.”

“There is always that possibility that the defendant would decide not to show up, [but] that’s part of the risk we take in this country,” Edwards said. “When American residents are willing to take a chance on losing their home . . . it takes a great deal of faith in someone.”

The judge, however, declined to release Stone immediately, meaning that the doctors could spend another week at the Santa Ana Detention Facility before bail documents are processed.

A federal marshal escorted Stone to the courtroom in handcuffs linked to chains that dangled from the doctor’s waist.

After the hearing, Bienert said, “We are obviously concerned as to whether he would show up for a trial, but the bail is a sizable amount to create some doubts” that he would flee.

Paul William Raymond, a Newport Beach lawyer who represents Balmaceda, said his client would consider returning to the U.S. to answer any allegations against him, but that “he doesn’t want to suffer the same indignities as poor Dr. Stone.”

“He’s anxious to make his patients and people here know he wants to tell the truth,” Raymond said.

But Raymond, who attended Friday’s hearing, said Balmaceda would return “only if certain safeguards are put in place.” He declined to elaborate.

The hearing was attended by a host of Stone’s family and friends, victims in the fertility scandal and two lawyers for Balmaceda.

Melanie Blum, an attorney who represents about 22 women in lawsuits against the doctors and the university, said she was disheartened to hear that Stone was trying to shield his assets.

“My clients have been severely damaged,” Blum said. “It’s very distressing to hear that [Stone] is taking assets out of this country to avoid responsibility for his action in this case.”

* 4TH HOSPITAL INVOLVED: UCI says Saddleback Memorial scene of improper egg swap. B1