Plea bargain settles $800,000 dispute

Bill Gang

Tuesday, May 4, 1999 | noon

Criminal allegations that anesthesiologist Dr. John Sheldon Smith bilked his partners out of about $800,000 in a purported kickback scheme -- with much of the money being used to buy a Montana ranch -- has been resolved in a plea bargain.

On the morning their trial was to begin on five felony counts, Smith and his co-defendant, Brian Vandendries, pleaded no contest Monday to misdemeanor charges of failing to maintain proper business records.

They were fined $2,000 each by District Judge Joseph Pavlikowski to end the criminal prosecution -- almost.

The deal also required them to repay $400,000 to Smith's former partners, whose partnership for years had serviced the University Medical Center Trauma Unit and operating room, according to Deputy District Attorney Valerie Adair.

And there still is a civil lawsuit that is scheduled to go to trial on June 7 over additional funds still in question.

Smith and Vandendries originally were indicted by a Clark County grand jury on 13 felony charges, but eight counts were dismissed by the judge because of statute of limitation problems and other technical issues.

Adair said Monday's plea bargain is a "reasonable resolution on both sides" since a trial likely would have taken a month and, even if convicted, there was little chance the two men with clean records would be imprisoned.

A check for the restitution was presented at the time the plea bargain was formalized. The felony charges had alleged that for four years Smith circumvented his two partners in a kickback deal that took cash out of their pockets.

But after the charges were filed in April 1995, Smith's attorney, Dominic Gentile, suggested that Smith's partners didn't uphold their obligations to work for their corporation. He said that Smith went his own direction, using the corporation name to make hundreds of thousands of dollars.

The money, according to the indictment, was funneled by Smith to Vandendries, either directly or through a medical billing and financial service that he owned. Some of the allegedly pilfered funds were used to purchase the 222-acre "Sleeping Child Ranch" in Montana, which was held in the name of Vandendries' company until October 1992 when it was turned over to Smith, the indictment alleged. Smith, according to the indictment that was obtained by the district attorney's major fraud unit, was "the de facto owner of the property."

Gentile and Vandendries' lawyer, Richard Wright, had contended the criminal case was merely a tool by Smith's partners to force restitution.

Smith began his partnership with his fellow anesthesiologists in Resident Anesthesia Services Inc. in 1988. The company won a contract with University Medical Center to provide services in the operating rooms and trauma center.