Fertility Clinic Doctor Denies Fraud Charges

A UC Irvine doctor who is among three physicians implicated in the university’s egg-swapping scandal pleaded not guilty Monday to insurance fraud charges, but his release from custody was delayed when a judge later suspended a court order setting bail.

Dr. Sergio C. Stone will have to wait until today to find out if a federal judge approves the terms of his $3-million bond.

In an emergency court hearing Monday afternoon, prosecutors persuaded U.S. District Judge Gary L. Taylor to review bail arrangements approved earlier in the day by a federal magistrate. Prosecutors contended that the arrangements would have facilitated Stone’s release from jail without proper verification of his bail collateral.

In ordering the doctor to remain in custody, Taylor said he would ask Magistrate Judge Elgin Edwards to explain in writing the complicated bail arrangements, which include a requirement that Stone remain tethered to an electronic monitor at his Villa Park home.

Stone, who appeared in court in a blue blazer and handcuffs earlier in the day, pleaded not guilty to 10 counts of mail and insurance fraud. The indictment alleges that he filed false claims stating that he was assisted by other licensed physicians while performing medical procedures when he was working alone or with trainees.

Prosecutors filed the criminal charges amid a seven-month federal investigation into UC Irvine’s now-closed Center for Reproductive Health. The university has accused Stone and two partners in the clinic of stealing human eggs and embryos from scores of women and implanting them in others, some of whom gave birth.

Stone’s two partners--Dr. Jose Balmaceda and Dr. Ricardo H. Asch--have since sold their Orange County homes and moved to Chile and Mexico respectively.

Federal prosecutors charged that Stone was planning to leave the country too when they brought him to court Friday. They said Stone had recently wired $500,000 to a Chilean bank and was selling his extensive real estate holdings in preparation for what they said was a “hasty departure” to his native Chile.

Stone’s attorneys, Allan H. Stokke and James Riddet, insisted that their client had no plans to flee.

Under terms of the bail arrangement, Stone agreed to return $400,000 of the $500,000 in his Chilean bank account to the United States and promised to pay $3 million if he failed to show up for trial.

Three of Stone’s friends and relatives agreed to pledge their homes and other business properties--in which they have about $1 million in equity--to guarantee the bail. The three, all physicians, each agreed to pay $1 million if Stone jumps bail.

In addition, Edwards ordered the doctor to surrender his passport, remain confined at his Villa Park home and wear an electronic monitoring device.

During Monday’s arraignment hearing, Edwards said he would allow the doctor to be released from custody after he returned the $400,000 from Chile. The magistrate said Stone would not have to remain in custody while bail documents were being verified--a process that could take up to 10 days.

“I do not recall a case that had the quality of so many sureties who are willing to put so much at stake,” Edwards said.

Assistant U.S. Attys. Thomas Bienert and Wayne Gross later appealed the magistrate’s decision, contending that the doctor should remain in custody pending a closer review of the financing involved.

During a brief hearing, Jesse Flores, a court official who evaluated Stone’s bail request, told Taylor that Stone’s brother in Chile offered to send an additional $500,000 to help the doctor make bail.

The pledge appeared to catch prosecutors by surprise.

“We know this guy has a lot of money, and we know he’s trying to move it around,” Bienert said. “But we don’t know how much he has. This is another $500,000 in cold cash. This guy can buy his ticket out of jail.”

Stokke said the money belonged to Stone’s brother--not the doctor.

Taylor said he has “a great deal of confidence in [Edwards’] judgment” but still wanted the magistrate to explain the “cobbled-together [bail] arrangement.”

During the hearing, prosecutors gave their strongest indication yet that they are considering additional charges against the doctor, including allegations of egg misuse, but they declined to elaborate or to discuss sealed court documents filed in connection with the federal investigation.

In a surprise move, Bienert told the judge that prosecutors planned to file a motion seeking the disqualification of Stone’s defense attorneys in the case. Prosecutors contended that the attorneys had a conflict of interest, but would not comment further. Stokke said he was unaware of any conflict.