Stone Called ‘Greedy’ by Prosecutors

Prosecutors described former UCI fertility doctor Sergio C. Stone on Thursday as a “greedy” man who conspired with his ex-partners to avoid paying taxes and to dupe insurance companies so that they could reap extra profits.

Stone’s attorney denied the allegation, saying his client did not intend to deceive anyone and that he was “left out of this criminal loop” by his former colleagues.

The contrasting portraits were painted during closing arguments as Stone’s fraud trial neared an end Thursday evening.

Assistant U.S. Atty. Wayne Gross told jurors that evidence during the case showed that Stone and two other doctors participated in a scheme to avoid paying taxes on cash they skimmed from their fertility clinics.

Gross pointed to poster-sized reproductions of insurance forms and hospital records to argue that Stone was an “insider” acting in concert with his partners, doctors Jose P. Balmaceda and Ricardo H. Asch.

“They were so greedy they conducted the fraudulent conduct even after their tax accountant” told them that the cash-skimming practice violated the law, Gross said.

Gross, who is prosecuting Stone along with Assistant U.S. Atty. Thomas H. Bienert Jr., contended that the doctors routinely used unlicensed personnel, including medical students and foreign research fellows, in surgeries.

They would bill insurance companies as if the work had been performed either by another member of the medical team or by another licensed physician, he said.

“They were able to get the most money they could . . . by spreading themselves out in ways that were not physically possible,” Gross said. “They used each other as phantom assistant surgeons.”

Stone, Asch and Balmaceda each were indicted on 23 federal charges, including 20 counts of mail fraud, two counts of filing false income tax returns, and one count of conspiracy to commit tax fraud.

Asch and Balmaceda fled the country shortly after the scandal broke in the fall of 1994, eventually shutting down the university’s Center for Reproductive Health. The charges against Stone grew out of a massive investigation into allegations that human reproductive eggs and embryos were stolen from some women and then transplanted into other women or shipped to medical research laboratories.

“This center was corrupt to its very core,” Gross said.

Stone intimidated the clinic’s employees into assisting in his scheme by calling them “stupid,” throwing office telephones and angrily spilling patient files, Gross said.

Defense attorney John D. Barnett sought to use that description of his client to his own advantage. That he pitched fits prevented Stone “from being in the loop,” Barnett said. “He could not be throwing files at somebody who held the keys to the jail. The only reasonable interpretation is he did not know” about the criminal activities at the clinics.

Barnett portrayed his client as “the outsider,” saying that for “whatever reason” Stone was not told about his partners’ criminal scheme.

He argued that the government had not proved that the doctor set out to cheat insurance companies.

Barnett said Stone was following a well-established practice when he billed fees for absent partners instead of the medical students who were present during some surgeries.

That practice, Barnett argued, was followed by university hospitals across the nation. If Stone didn’t bill in that way, the insurance companies would reap a windfall because they would not have to pay for services performed, the defense attorney said.

Bienert will present the prosecution’s rebuttal after Barnett completes his closing arguments this morning.

U.S. District Judge Gary L. Taylor is expected to ask the jury to begin deliberations later today.