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Scientology benefits when Miami dentist runs up patient bills

MIAMI

Rosa Hernandez remembers this about her dentist: He sure could close a deal.

She and her husband, Mauricio, had gone to Dr. Rene Piedra with a host of concerns. She had sensitive gums and a paralyzing fear of dentists. He needed bonding.

Piedra, dressed in a business suit instead of a dental coat, showed them computerized models of how he would fix their teeth. He offered them a discount because they came in together, and helped them with a loan application.

"He made you feel like he was part of your family," recalled Mrs. Hernandez, 52, a schoolteacher. "It was like, 'Oh my God, you're going to be okay. Don't worry about it. We are going to take care of you with love.' "

The couple walked out with a "treatment plan" covering several months.

Cost: $17,189 charged to the Capital One account the doctor set up for them. They had no idea, going in, that they would spend that kind of money.

Piedra closed hundreds of patients this way, signing them up for extensive treatment packages that generated millions. When patients wanted out and asked for a refund, many got the runaround.

But Piedra always seemed to have money for his favorite cause: the Church of Scientology.

From 2005 to 2008, court records show, Piedra's practice transferred $715,364 to several Scientology entities, including the church's spiritual headquarters in Clearwater.

A partial tally:

• Nearly $150,000 to the Scientology church in Kansas City.

• $121,500 to the International Association of Scientologists, which funds the church's social campaigns and legal actions.

• $55,000 to the Scientology entity raising money to complete the mammoth "Super Power" building in downtown Clearwater.

• $83,000 to the World Institute of Scientology Enterprises, a nonprofit corporation that helps businesses put Scientology principles to work.

Piedra's contributions helped land him in bankruptcy, owing $3.9 million to a long list of creditors. A lawsuit in Miami alleges that Scientology groups played a key role in his downfall.

Bankruptcy trustee Barry Mukamal contends Piedra schemed "to defraud patients in order to transfer large sums of money" to the Church of Scientology and related groups.

Involved, Mukamal alleges, were nine Scientology-related entities, three church members and a Pinellas County management training firm run by Scientologists. He sued them all, seeking to recover the thousands they got from Piedra.

Scientology denies any involvement.

The Scientology defendants "are innocent third parties drawn into a controversy they did not create," church spokesman Tommy Davis said. He said the church didn't manage Piedra's practice and isn't responsible for how he handled his creditors.

Piedra, 41, declined to be interviewed or answer written questions, citing advice from his lawyer.

In a hard-fought settlement expected to be approved this month, the church will pay $350,000 to make the case go away for the Scientology defendants. It has agreed to do so on the condition that the judge bar Piedra's creditors or other parties to the suit from suing the Scientology entities.

Still unresolved are the trustee's claims against other defendants, key among them Indira Blyskal, 38, a Scientologist who managed Piedra's practice.

"My prosecution of the case to the benefit of (Piedra's creditors) is not over," Mukamal said in an interview.

The St. Petersburg Times spent months examining hundreds of documents in the bankruptcy case and interviewing patients, former Piedra employees and other principals.

What emerges is a rare, detailed look at how a struggling South Florida dentist bought into Scientology's business philosophies and transformed his practice into a money machine for his church.

The more cash that rolled into Piedra's Coral Gables practice, the more he gave to Scientology groups. But as his bank account dwindled, he borrowed money and shortchanged creditors, including a dental supplier, the media companies who ran his ads and the IRS.

He also began denying refunds to more and more patients. Many are still making credit card payments for dental work they never got.

A college student asked Piedra about a check-up and came away with a $5,000 plan for new braces. A construction worker left with $29,000 in credit card debt. A lawyer said his account was charged $3,200 without his permission.

"Dr. Piedra, I am a poor person using my credit to pay you," Alfonso Maldonado wrote in an April 2008 letter after the dentist kept $1,118 of his money. He asked Piedra to reconsider but got silence. While holding Maldonado's money for nine months, Piedra gave more than $25,000 to Scientology groups.

Rosa Hernandez recalled how Piedra smiled and leaned forward the day he became her dentist.

"Do you trust me?" she remembered him asking. "Do you think I am a good person?"

"I trust you," she said. "You look like my son. … Why?"

Because his word was good, Piedra told her. When he said he would reimburse her for any unused care, he meant it.

"I'm telling you the truth."

He still owes her $8,598.

Practice management

Key episodes in Piedra's rise and fall are detailed in his May 6, 2010, deposition.

Piedra testified he struggled to get his career going after graduating in 1998 from Tufts University School of Dental Medicine.

In 1999, his fledgling practice generated just $103,000 in revenues. He strained to pay his mortgage and keep up with school and business loans. He worked part time at another practice, but his professional life was "a perpetual nightmare."

Piedra was on pace for another poor showing in 2000 when he got a postcard from MGE Management Experts Inc., a Pinellas Park company that trains dentists and other health care professionals how to manage their practices.

Run by Scientologists, MGE bases its training on the works of the church's founder, L. Ron Hubbard. His bust adorns the lobby at company headquarters on 118th Avenue N.

Scientology spokesman Davis said MGE is not a part of the church, nor is it run, managed or directed by the church or church staff. MGE chairman Luis A. Colon did not respond to interview requests.

Among MGE's specialties: training dentists how to attract new patients and persuade them to commit to comprehensive "treatment plans" rather than piecemeal dental work.

Seminars advertised on MGE's website offer courses on how to "handle objections to full treatment plans" and "actually get patients to want" them.

The philosophy echoes Hubbard's "hard sell" mandate, written in 1961 to guide church members who sell Scientology counseling services known as auditing. "One must discover what is best for the applicant and then control him into obtaining it," he wrote in one of his "policy letters," the vehicles he used to communicate how Scientology organizations should be run. Hubbard wrote: It's against a person's interests to let him decide for himself whether he wants the service.

Dentists giving testimonials for MGE reported monthly collections four, five and six times higher.

Piedra took a few of MGE's introductory courses in 2000, then bought its "Power Program." It trains students in marketing, financial planning, managing with statistics and selling treatment plans.

His monthly collections doubled.

By 2002, his annual revenues surpassed $800,000.

Even better years were on the way.

Piedra's revenues soared to $2.7 million in 2003 and $4.7 million in 2004. His personal income eclipsed $1 million for the first time. He bought a million-dollar home and a $450,000 townhouse.

Patients streamed into his sedation dentistry practice, drawn by a robust ad campaign geared to "high fear" patients Piedra once described as "the people that nobody wanted to see."

At its height, his practice employed a staff of more than 20, including seven dentists.

His name was all over Spanish and sports talk radio and on buses and billboards. The once down-and-out dentist who almost sold his practice had become one of the most recognized names in South Florida.

The practice touted itself as the largest sedation dentistry outlet in the nation, with a patient base of 31,000.

"Any time you'd turn on the radio, you'd hear Dr. Piedra," said Adi Amit, a Fort Lauderdale attorney who was drawn in by Piedra's ads and became a patient. "Every time you opened the Herald or Sun-Sentinel, you saw him."

Most patients didn't have the money to cover Piedra's total bill up front so he steered them to his sales staff, which arranged financing with Capital One Healthcare Finance or GE Money Bank's CareCredit program.

The credit card companies advanced the money to Piedra's practice, and patients were responsible for paying the loans, which were interest-free for a promotional period, usually 18 months. Hefty interest rates were applied if patients missed a minimum monthly payment.

Patients left their initial consultations with Piedra with a list of appointments and credit card balances that ranged from a couple of thousand dollars to $45,000 — advance payments for months of procedures. For many of those in pain, it was worth it.

But dozens of patients had second thoughts and tried to back out.

Piedra made it hard to walk away.

A patient demanding a refund had to schedule an appointment with Piedra and his finance coordinator. They would try to talk the person into continuing. If the patient wouldn't budge, he had to arrange an appointment with a third person, the office refund manager. Another meeting. Release forms. A liability waiver. All with a notary present.

Cancellation fees of $180 were assessed for each of the remaining appointments in the treatment plan. A $230 administrative fee was tacked on for processing.

In 2005, Piedra's practice took in $7 million and he reported personal income of $1.1 million.

Piedra was regularly sending his employees to Pinellas County for training at MGE, sometimes on a rented bus or in a small plane he flew himself. His practice paid for their hotel, food and course fees. All told, the practice paid MGE $127,121 in the four years before the bankruptcy filing in June 2008.

Piedra's revenues rose to $8.2 million in 2006, his best year.

The same year, Miami construction worker Orly L. Maldonado chose Piedra over another dentist and came away with a $29,000 treatment plan for implants and other major work. He said Piedra never completed the plan and never gave a refund, leaving Maldonado with payments of about $400 a month.

Maldonado said he still needs dental work but the debt he incurred makes it impossible to pay another dentist.

"I don't want to mess up my credit," he said. "I fight a long time to get my credit."

MGE preaches patients are happier when they take care of all their dental problems at once. And dentists who sell that are more profitable.

A win-win.

Money "is not the most important issue," MGE's vice president Gregory A. Winteregg writes in an essay on the company's website. "You're a doctor, right? Well, I hate to break this to you, but you are also a sales person … Selling is about helping people. There is nothing wrong with that."

Church and business

As Piedra's practice expanded, so did his interest in Scientology.

His closest aide, Indira Blyskal, the office manager he hired in 2001, embraced Scientology, too. Piedra immediately sent her to MGE for management training, which she later described on her website as a "bachelor's degree in commerce."

Piedra then named her chief operating officer. Blyskal did not respond to requests for an interview.

MGE never mentioned Scientology to Piedra or suggested he join the church, he said in his deposition. "One thing had nothing to do with the other."

Within a year, however, Piedra and Blyskal were active in the World Institute of Scientology Enterprises, the nonprofit that promotes the use of Hubbard's "management technology" in the business world. The "tech" also is considered part of Scientology scripture.

Staffed by church workers, WISE has boasted over the years that its members bring numerous business people into Scientology. Spokesman Davis confirmed it's not uncommon for people to study Hubbard's writings about Scientology after being exposed to his ideas about business.

WISE also sets up local "charter committees" to mediate business disputes between Scientologists, who are encouraged to keep their disagreements out of the court system.

In 2002, Piedra and Blyskal sat on Miami's charter committee.

The next year WISE's magazine, Prosperity, billed them as top members "leading by example." Another church magazine named Blyskal as completing several Scientology services, including "objective processing" and the "sunshine rundown."

Things were good, Piedra reported in a testimonial praising MGE. He and his wife, fellow dentist Anita Pandey, had a child on the way, and with the practice almost running itself, he looked forward to spending only a few hours a week at the office. MGE's Power Program "will change your life forever," he wrote.

Piedra reported to the IRS that his practice gave $107,862 to Scientology groups in 2003. A year later, those payments tripled to one-third of his personal income.

In 2005, his practice paid a Scientology group every month. Examples: $45,000 to the Church of Scientology Religious Trust in January and February; payments totaling $52,800 to the Kansas City church in April and June; more than $48,000 to WISE over the course of April, May and July.

Piedra and Blyskal had infused the dental practice with Scientology's unique culture. Prospective employees had to take a personality test. Each employee, no matter what their "post," was assigned a production statistic and told to keep it from "downtrending." An "org board" kept track of everyone's function. Employees were expected to learn and apply Hubbard's principles, but were carefully informed that it shouldn't be seen as having anything to do with religion.

Piedra and Blyskal hired local Scientologists to round out the staff. At one point, the practice put on the payroll two staffers from the Scientology church in Kansas City. Davis said they did clerical work from Kansas City to supplement their income, unrelated to their church work.

It was a hard-driving work environment. Front desk worker Vanessa Estevez remembers daily staff meetings that focused on high production. The pressure was on to fill up appointment slots, she said. And when openings occurred she was told to call patients in that day if possible, even if it meant taking appointments into the evening.

"They didn't really think about the patient first," Estevez said. "They thought about, 'Well maybe we can add something else to get more money out of the patient.' And that's what their main focus was on."

Scientology beliefs came into play when patients were sedated, said Estevez and Michael Pechan, a dentist who worked at the practice. Neither became a member of the church.

They said staffers, including the non-Scientologists, were told to always remain quiet near sedated patients, reflecting a church teaching that a person's "reactive mind" records perceptions even in moments of unconsciousness. The smallest comment could produce an "engram," a mental picture that might later affect the person in harmful ways.

Scientology auditing, its core spiritual practice, seeks to clear the "reactive mind" of upsets holding a person back in life. Through one-on-one counseling sessions with an auditor, a Scientologist moves up the "Bridge to Total Freedom," often a years-long process that can cost hundreds of thousands of dollars.

Blyskal attained the state of "clear," according to Scientology magazines. She then worked to become an "operating thetan" or "OT" and also took a spiritual program known as "the Ls," which can cost from $100,000 to $150,000, according to a recent church price list.

In March 2006, Piedra and his wife ended their six-year marriage with a settlement that required him to pay $8,000 a month in alimony and child support.

Five months later, he and Blyskal took a three-day trip together on Scientology's cruise ship, the Freewinds. There, Piedra took the "Success Congress Course."

By September they had made joint contributions to the International Association of Scientologists earning them "patron" status.

Piedra reported to the IRS he contributed more than $270,000 to Scientology groups that year, more than half his personal income.

The amounts Scientologists spend on their church are a hot button topic among former parishioners and staffers, who contend the church in recent years has pressured its members to give more than they can reasonably afford.

Those allegations "are without foundation," spokesman Davis said.

"Millions of Scientologists freely donate to their churches and to the International Association of Scientologists to support the globally recognized humanitarian work of the church."

Piedra's contributions were voluntary and the church had no role in his business and financial decisions, Davis said.

Schemes and objectives

Mukamal, the trustee in Piedra's bankruptcy case, is a veteran at picking up the pieces when businesses and relationships fall apart.

An accountant, he has sold failed real estate ventures, divided assets in high-profile divorces, finished stalled construction projects and investigated financial fraud schemes.

Confronted with the ruins of Piedra's practice, Mukamal commissioned a forensic audit of the dentist's books, studied the players, developed a conclusion and filed a lawsuit.

Mukamal discovered Piedra's many entanglements with Scientologists and Scientology — his relationship with MGE, the staff he brought in from Kansas City, the steady flow of his money into Scientology organizations.

And Mukamal learned about the many patients who walked into Piedra's practice and left the same day with pricey treatment plans and hastily approved loans.

His lawsuit asserts: "The objective of (the practice) was not to provide dental services but to sign up patients to receive advanced funds to transfer to (Scientology) entities."

The complaint called it "a fraudulent scheme," naming Blyskal a key figure.

She had complete authority over the practice's finances, the lawsuit alleges. She helped facilitate donations to Scientology entities and breached her "fiduciary duty" to assure Piedra's practice used its funds properly, according to the suit.

The practice paid her $1.3 million in the four years before Piedra filed for bankruptcy. Mukamal sued her separately to get it back.

Blyskal's response, filed in court, said she acted in good faith, "often working seven days a week and up to 18 hours a day."

Falling finances

Piedra's practice logged another impressive year in 2007, pulling in $7.3 million. But he was headed for a fall.

Throughout the year, the practice continued to send tens of thousands of dollars to various Scientology entities.

The names of Piedra and his 4-year-old son, Gabriel, showed up in a Scientology publication as donors to the Super Power building in Clearwater. They were listed as "Key Contributors," signifying a donation of at least $100,000.

As money flowed out, Piedra began to borrow more heavily, public records show.

In May, he secured $96,972 in working capital from GE Healthcare Financial Services. That month, the practice transferred $17,244 to Scientology groups.

In August, he modified a 4-year-old loan with Wachovia Bank to get an additional $400,000. Out went $500 to a church human rights group and Blyskal was touted as a "Cornerstone" donor — minimum $35,000 — to the Super Power project in Clearwater.

In October, Piedra took out a home-equity line of credit with Wachovia for $139,000. He closed out the quarter making seven payments to Scientology groups totaling $13,500.

He admitted in his deposition that his practice didn't hold in reserve any of the patients' up-front payments. That was "definitely a factor" in his practice's demise, he conceded.

"I mismanaged the office,'' he testified. "I lost control of it when the economy turned down. . . . I didn't maintain good relations with patients, creditors and things of that sort.''

He blamed refund delays on understaffing, saying his refund manager was overwhelmed.

By 2008, the finance companies that fueled his business were turning against him.

Capital One sent him a letter demanding he give back $180,000 in prepaid dental fees to 14 patients who had demanded refunds for treatment not delivered.

The practice had sent three refund checks to Capital One, but they all bounced. The lender later said in a lawsuit that Piedra had been dishonest and was "unjustly enriched."

That May, GE Money Bank pulled its Care­Credit financing program out of Piedra's practice. "We saw an elevated number of disputes'' from borrowers seeking refunds, said GE spokesman Stephen White. "We were less than comfortable in continuing to do business with them.''

CareCredit took a loss, refunding $420,000 to a number of Piedra's patients.

By then, both credit card giants could only get in line with a long list of people trying to get their money back. Piedra filed for bankruptcy that June.

Through it all, his allegiance to Scientology had been so strong that he paid the church before the government. The IRS is listed as one of Piedra's creditors, claiming he owes back taxes and interest of $277,285 dating to 2005.

Realization, but no refunds

Rosa Hernandez had no time for dental visits after her son, a Broward County sheriff's detective, was shot in the head during a traffic stop. Forced to leave work while he recovered, she needed Piedra to return her unspent money.

She repeatedly phoned his staff pleading they send her the $8,600. But they stonewalled and ducked her calls, she said. Hernandez and her husband borrowed from a friend to pay back their loan.

Monica Albarello, an English literature student at Florida International University, stopped in Piedra's office on impulse in 2006 after visiting a doctor next door. Wanting just a checkup, she walked out with a treatment plan for braces and a $5,000 loan from GE CareCredit. After problems delayed her treatment, Piedra said she needed $3,500 in other work before the braces could be finished.

Albarello said no. Piedra got angry with her, she said. "He was like a little kid throwing a tantrum. At that point I knew I was being scammed."

She ended up defaulting on the loan, which inflated to $9,000 when retroactive interest was applied. Albarello managed to pay it off, borrowing from her grandmother. But the episode wreaked havoc with her student loans for law school.

Adi Amit, the Fort Lauderdale lawyer, filed a lawsuit after Piedra's practice charged thousands to a credit card without his permission and then wouldn't refund it.

He said his wife went to see Piedra for teeth whitening, but ended up with a recommendation for extensive work — and an unauthorized charge of $3,218 on his credit card. When Amit objected, they threatened to tack on $700 in cancellation fees. Eventually his CareCredit account was reduced to zero.

Piedra "billed himself as a trustworthy person, and the fact is that he was not," Amit said.

Today, Piedra sees patients in a small office on U.S. 1, a few miles from his former practice. He told the Times he no longer is active in the Church of Scientology.

More than three dozen of his former patients filed claims in bankruptcy court, hoping to get at least some money back. Mukamal said it's too early to know if that will happen.

Two months before Piedra filed for bankruptcy, Carlos Nogueira called Coral Gables police to Piedra's practice because he couldn't get his refund of $8,500.

A Piedra staffer told officers that lawyers had advised they not refund patients because of a pending lawsuit.

But the practice had money for Scientology.

Earlier that week and again the following month, it made six payments to church groups totaling $6,000.

Joe Childs is managing editor/Tampa Bay. He has supervised the Times' coverage of Scientology since 1993. He can be reached at childs@sptimes.com.

Thomas C. Tobin is a Times staff writer who has covered the Church of Scientology off and on since 1996. He can be reached at tobin@sptimes.com.

Scientology benefits when Miami dentist runs up patient bills 11/20/10 [Last modified: Monday, November 22, 2010 8:30am]

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