Awand takes plea deal in fraud

Howard Awand once made a fortune helping Las Vegas doctors and lawyers coordinate treatment of plaintiffs in personal injury cases.

Now, the former medical consultant is bankrupt and awaiting sentencing in two criminal cases.

On Monday, Awand became the third and final defendant in a high-profile fraud case to accept a plea bargain. He pleaded guilty to a charge called misprision of felony and admitted that he failed to report the criminal activity of his co-defendants in the case.

"He's 65 years old, and obviously he wants to get on with his life," said Los Angeles attorney Harland Braun, who represents Awand.

The plea agreement, which comes two months after a jury convicted Awand and his wife of willfully failing to pay $2.5 million in income taxes, means federal prosecutors have resolved the fraud case without a single fraud conviction. Nevertheless, prosecutors said they are pleased with the outcome, which resulted in three felony convictions.

Surgeon Mark Kabins pleaded guilty in November to misprision of felony and later was sentenced to five years of probation. Attorney Noel Gage pleaded guilty last month to obstruction of justice. Gage, who entered a type of guilty plea that required him to admit only that prosecutors could prove their case against him, is awaiting sentencing.

Ruth Cohen, whose work as a civil lawyer for the federal government led to the fraud investigation, said she was unhappy with the outcome of the prosecution. She said she always envisioned the matter as a racketeering case with 10 to 12 defendants.

Cohen said a racketeering prosecution could have resulted in the seizure of defendants' assets and sent a clear message that the government meant business.

"I do know that the outcomes were minimal compared to the time, money and effort that was put into the case," she said.

Cohen, who left the U.S. attorney's office in January 2007, was defending the government in a personal injury case when she made discoveries that led to the criminal investigation. She said some of the evidence she saw suggested wrongdoing by judges, including some who have left the bench.

"It just seems to me: If you want to get away with a crime, make it huge and make it federal, and you're home free," she said.

Cohen, who now works in private practice, worked as a civil lawyer for the government for 21 years. Before that, she prosecuted cases for eight years as an assistant U.S. attorney.

Attorney Stan Hunterton, who has prosecuted and defended racketeering cases during his career, said he doubts the case would have had a different finish if prosecutors had charged the defendants with racketeering.

But, as a lawyer, Hunterton wishes the case had gone to trial.

"I think this kind of thing hangs a pall over the legal profession, and I would have rather seen it decided in the ring, if you will," he said.

Even so, Hunterton said he thinks lawyers on both sides of the case did excellent work.

"This is just a hard-fought standstill," he said.

Greg Brower, Nevada's U.S. attorney from December 2007 until October , said he considers it significant that the prosecutions of all three defendants in the fraud case led to felony convictions.

"It's a very positive sign that the investigation has been successful, and we'll see what happens next," he said.

Although Brower is no longer privy to the inner workings of the U.S. attorney's office, he said he assumes the investigation is continuing.

First Assistant U.S. Attorney Steven Myhre, one of the lawyers who prosecuted the fraud case, said he is prohibited from discussing the status of investigations.

"We're pleased with the outcome of these cases based on all the circumstances of the cases," he said.

As a rule, Myhre said, the decisions of prosecutors are "guided by the facts and the evidence."

He noted that Awand and Kabins each admitted, through their plea agreements, that fraud had occurred.

As part of Awand's plea agreement, he admitted he knew that Kabins and Gage had committed mail or wire fraud, that he concealed "material information" about the crime and that he did not report it to the proper authorities as soon as possible.

The original indictment against Awand alleged he conspired for two years with unidentified attorneys and health care providers to inflate personal injury settlements and judgments "to the detriment of the best interests of the clients they were hired to represent and serve."

According to the indictment, Awand "directed excessive and aggressive medical care of clients, promised and paid kickbacks to others, and promised and provided protection from malpractice lawsuits to health care providers," while concealing those activities from clients.

Gage and Kabins later were added as defendants in the case. Two surgeons, John Thalgott and Benjamin Venger, were granted immunity in exchange for their testimony.

Over time, rulings in the case led prosecutors to pare down the charges. The remaining charges centered on the medical malpractice case of Melodie Simon, who was paralyzed after Thalgott and Kabins operated on her in 2000.

Gage represented Simon in the malpractice case. Rather than sue Thalgott or Kabins, the lawyer sued an anesthesiologist.

The malpractice case settled for $2.3 million, but prosecutors argued it was worth much more. After attorney fees and costs were deducted, Simon received $1.3 million.

Kabins' plea agreement required him to pay her an additional $3.5 million, and Gage's deal required him to pay her about $700,000. Thalgott voluntarily paid Simon $1.5 million in restitution.

Although Awand's plea agreement mentions that Senior U.S. District Judge Justin Quackenbush may order the defendant to pay restitution, it does not specify an amount. Rather, it states that both parties may argue whether the judge should impose restitution and, if so, what amount.

"Remember, he's not a lawyer or a doctor, so he really had no fiduciary duties to Melodie Simon," attorney Braun said after Monday's hearing.

Quackenbush is scheduled to sentence Awand on June 25.

In January, Awand and his wife, Linda, each were convicted of four counts of willful failure to pay income taxes. The crime is a misdemeanor, and U.S. District Judge Kent Dawson is scheduled to sentence the couple on April 7.

During the tax trial, prosecutors alleged the Awands maintained a lavish lifestyle during the years they failed to pay their taxes: 2001 through 2004.

From 2001 through 2005, according to evidence presented at trial, the Awands spent about $2.9 million on renovations of three homes, $1 million on antiques, $696,000 on real property, $215,000 on automobile purchases, $213,000 on art and furnishings, $87,000 on a birthday party for Howard Awand and $60,000 on wine.

They paid about $642,000 during that time toward their taxes.

Braun said the Awands' medical consulting business collapsed in 2005. He said they now live 900 miles apart, managing independent bed-and-breakfast facilities while they go through Chapter 11 bankruptcy proceedings. Howard Awand runs an inn in Indiana, while his wife runs an inn in Vermont.

In court on Monday, Howard Awand said his education consisted of two years of college in New York.

Contact reporter Carri Geer Thevenot at cgeer@reviewjournal.com or 702-384-8710.