Dr. Stone of UCI Clinic Found Guilty of Fraud

Dr. Sergio C. Stone, one of three former partners in the fertility clinic that plunged UC Irvine into an international scandal involving stolen human eggs and embryos, was convicted Thursday of nine counts of fraudulently billing insurance companies.

He was acquitted on 14 other charges, including tax evasion and conspiracy.

Stone, who had been free on a $3-million bond guaranteed by relatives and friends since his indictment 16 months ago, was handcuffed and taken into custody Thursday afternoon on the order of U.S. District Court Judge Gary L. Taylor, who said the Chilean-born doctor could easily flee the country.

Taylor called the jury’s verdict “a very significant professional setback” for the 57-year-old Stone.

“It is a great blow to his honor and prestige as a world-renowned physician,” Taylor declared, rejecting Stone’s request to remain free on bail pending sentencing.

Assistant U.S. Atty. Thomas H. Bienert Jr., one of the prosecutors in the case, said he was pleased with the verdict, which could put the doctor behind bars for up to 63 months.

Bienert said he could not say how the verdict would affect the prosecution of Stone’s former partners, Drs. Ricardo H. Asch and Jose P. Balmaceda, who left the country before similar charges were filed against them.

“The jury’s verdict sends a strong message to Drs. Asch and Balmaceda that the indictment against them is well-founded in fact and law,” Bienert said.

Stone, who during the monthlong trial took the stand and blamed his former colleagues for his prosecution, blew farewell kisses to a band of family members and supporters. Many of them sobbed and comforted each other with tight embraces as the doctor was led from the courtroom by a trio of U.S. marshals.

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Defense attorney John D. Barnett said the jury’s decision to acquit his client on the majority of charges showed that jurors had problems with the prosecution’s case.

“The [mixed] verdicts are an indication of the confusion these charges created,” Barnett said.

“Scapegoat is the word I would use,” said Karen L. Taillon, an attorney defending Stone against malpractice suits filed by some of his former patients. “The process has not been fair from day one.”

Stone faces a prison term of 14 to 63 months when he is sentenced Feb. 9.

But his attorneys said Thursday that they would push for a new trial. One of the grounds could be possible jury misconduct, attorney William Kopeny hinted in court.

One juror, Sherrill Thompson, a Laguna Beach homemaker, said she would have acquitted Stone on all counts--if she had been able to.

“It is very upsetting,” said Thompson. “I have been very torn with my feelings.”

Thompson said she and several other jurors did not want to find Stone guilty because they didn’t believe he intended to commit a crime.

But after twice seeking guidance from the judge on their verdict options, the members of the jury believed they had no other choice, she said.

But Ronald Wheeler, a 59-year-old Garden Grove resident who served as the jury’s foreman, said he believed Stone was “part of the problem” at UCI’s Center for Reproductive Health, the fertility clinic that the three doctors ran.

Wheeler said he and other jurors were not persuaded by Stone’s explanation that he was following a policy used by teaching hospitals across the nation. That policy required him to bill for his partners--instead of medical residents who did the actual work--even though the partners were not present during some operations.

The nine mail fraud counts on which Stone was convicted involved reports that he--not his partners--dictated. Those reports, which were used for billing insurance companies, suggested that both a surgeon and an assistant surgeon were present during a surgery. Records from the operating room revealed only one surgeon present.

Barnett had argued that the insurance companies were billed for services performed and that if the doctors didn’t bill the way they did, the companies would have received some services free.

Stone was acquitted on the 11 mail fraud counts that involved reports his partners had dictated but which listed him as being present.

On their decision to acquit Stone of tax evasion, Wheeler and other jurors said they did not believe the prosecution presented compelling evidence to show that Stone deliberately intended to cheat on his taxes.

Bienert and Assistant U.S. Atty. Wayne Gross had contended that the doctors kept two sets of books to hide large amounts of cash they skimmed from the clinic and did not report to the IRS.

The charges against Stone grew out of a massive investigation into allegations that human eggs and embryos were taken from some of the clinic’s women patients and transplanted into other women or shipped to medical research laboratories without the donors’ permission.

Asch and Balmaceda left the country shortly after the scandal broke in the fall of 1994, and the Center for Reproductive Health was eventually shut down.

Both state and federal prosecutors concluded that there was no statute specifically outlawing the misappropriation of human eggs and embryos, and instead charged the doctors with mail fraud and income tax evasion.

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

Melanie Blum, an attorney representing several former patients of the fertility clinic, said the verdict against Stone was a step forward, but that there will be no justice for her clients until Asch and Balmaceda are brought to trial.

But Daniel Callahan, an Irvine attorney representing Balmaceda, said the verdict vindicated his client, saying he hoped that prosecutors would drop the case.

Callahan said Balmaceda was somewhere in South America, but declined to comment further.

The jury’s deliberations, which lasted three days, appeared wrenching.

Early Thursday morning, juror Lynda Schultz sent a note to the judge asking if the jury had the power to decide whether the law was being justly applied.

When the judge responded that they had to follow the evidence and the law, Schultz said she relented and voted guilty on the nine counts.

“He did not intend to break the law, but I had to obey the instructions of the judge,” Schultz said. “There was nothing else I could do.”

Both Schultz and Thompson complained that jury instructions were too rigid because they required jurors to find Stone guilty of mail fraud even though they believed his testimony that he never intended to commit a crime.

“I think he was being railroaded,” said Thompson. “He was a busy doctor. He was in surgery. When did he have a chance to check on all the billing?”

Stone’s eyes were downcast as clerk Kathy Peterson read the verdicts.

Outside court, Stone hugged Taillon, telling her “It’s God’s will.” He greeted several of the jurors with hugs and handshakes, thanking them for their service. Some offered him their apologies.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Stone Found GuiltyDr. Sergio C. Stone’s conviction arising from the UCI human egg and embryo scandal could cost him five years of freedom.

Convictions: Nine counts of mail fraud. Jury says Stone dictated false operating room reports, charging fees for former partners when none were present. He says he followed routine procedure used at UCI and teaching hospitals in the United States.

Acquittals: One count of conspiring to commit tax fraud; two counts of filing false income tax returns; 11 counts of mail fraud.

Possible sentence: 14 to 63 months

Sentencing date: Feb. 9, 1998