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BITTER MEDICINE

It was bad enough that a jury found a partnership of nine East Valley doctors guilty of defrauding a California couple in a catastrophic real-estate deal in Mesa.

The doctors practically went into cardiac arrest when, based on the jury's verdict, they were found guilty of racketeering. Maricopa County Superior Court Judge Charles Filler told the stunned physicians they'd have to pay treble damages, or $1.1 million, to Monte and Cheryl Maniz under racketeering laws.

Even months after the verdict, the doctors are still in shock. Some of the doctors point out that they didn't know the specifics of the partnership's real-estate deal.

"Racketeer? I am not a racketeer. I am a surgeon," gasps Dr. Edgardo Hernandez. "How could I racketeer anybody?"

Hernandez and the other doctors never paid the $1.1 million. Instead, they settled out of court with the couple from Livermore, California, after working out a deal with the judge and the Manizes' lawyers. The doctors would pay an undisclosed sum, and the judge would throw out the fraud and racketeering ruling and dismiss the case.

Last week, the judge did just that. But the doctors still paid dearly.
Hernandez won't say exactly how much but admits the physicians had to fork over a total of $1.3 million in legal fees to their own lawyers and in payments to the Manizes.

The Manizes' victory ends their nightmare, which started innocently in 1988 when they decided to invest in a new medical building in Mesa. "This is such a relief," says Monte Maniz. "I was down in the dumps, exhausted. Now the check's in the bank. Not in the mail, in the bank!"

It's the doctors, who had formed a partnership to erect the building, who feel victimized--by one another, by lawyers, by antiracketeering laws and by their own lack of business savvy.

Several of the doctors say they've exhausted their life savings and have had to take second mortgages on their homes to pay off their debts.

"This has taken a terrible personal toll," says surgeon Stephen Leonard. "People's marriages are under strain. Their personal lives are under strain. It was a terrible miscarriage of justice.

"I felt like a ball in a pinball machine."
The Manizes don't think the doctors were treated unjustly. In fact, they think the doctors were an arrogant bunch who got just what they deserved.

In 1988, the Manizes, looking for an investment, spent all their cash making a down payment on the medical office building at 6344 East Broadway Road in Mesa. The sellers were nine doctors who'd formed the East Broadway Medical Partnership--Hernandez, Leonard, Randy Campo, Ralph Heap, Stephen Kessler, Alan Rappazzo, Gregory Stevens, David Suber, and Henry Watters.

The partnership had been formed a couple of years before so that the doctors could finance and construct the building. Their original brainstorm was to lease offices for their own practices in a building they owned. They wanted to be near a new hospital. But they soon learned they'd made a mistake. The building's expenses were horrendously high, and the doctors began quarreling among themselves. So they sold the building to Monte and Cheryl Maniz.

Monte Maniz, a firefighter and realtor, had always been lucky with real estate. He had done so well in dabbling with sales of smaller properties that by 1988 he and his wife, an aerobics instructor, had amassed $1.3 million.

The way Maniz sees things, $1 million isn't much in northern California, where the cost of living and housing is high. Several firefighters he knows have that much money tied up in real estate, he says. The Manizes decided to retire in Arizona. They wanted to play golf.

Their first purchase would be the medical building, and they planned to move to Mesa after Monte retired from the fire department. They figured they could live on the rental income from the medical building. In 1988, they sank $352,000 in cash into a down payment on the building. They planned to get financing for the remaining $1.5 million they would owe the doctors.

But the Manizes couldn't get financing. In 1989, they returned the building, claiming that the doctors defrauded them by saying the building was fully occupied. The Manizes say the banks wouldn't lend them the money unless the building was fully occupied.

The doctors claimed that the Manizes couldn't get financing because the Valley's real-estate market was crashing.

The dispute revolved around a piece of paper attesting that one of the building's suites was occupied. The Manizes claimed the paper was an attempt by the doctors to defraud them about whether the building was fully occupied. Some of the doctors point out that they didn't even know about the disputed piece of paper.

The doctors began squabbling among themselves and with the Manizes. When the Manizes filed suit the spring of 1989, tempers flared.

After a process server handed legal papers to Dr. Stephen Leonard, the doctor fired off a letter to the Manizes that began: "At 10:30 last night, a disreputable-looking character who had apparently been skulking behind my neighbor's bushes approached me outside my house. At first, I assumed he was a drug addict planning a burglary. Imagine my surprise to discover that he was an associate of your attorney . . . "

When the case went to trial in January 1991, the doctors claimed that the Manizes simply were trying to weasel out of the deal because they were unable to obtain financing.

The judge and jury did not agree and ruled that the doctors' partnership had acted fraudulently.

"All we wanted to do was sell a building, and suddenly we're pictured in court as these horrible doctors who are scheming and racketeering," says Gregory Stevens, an internist. The father of five young children, Stevens says he makes about $60,000 a year and will be hard-pressed to pay his share of the debt.

The surgeon Hernandez says the case has left him feeling "ripped off." "There is a big misconception about doctors being deep pockets," he says. "We are silent, misunderstood members of society." And then he talks about how doctors care for people who are uninsured and take great risks to save lives. "It is lonely to be a doctor," he adds.

Leonard, also a surgeon, says the doctors "were gulping and waiting for justice to be done and for a big hand to come down from the sky and say `It's not true!' But instead, we were `racketeers.' We consider our jobs are to make people whole again. To be accused of preying on them is too much."

So why didn't the doctors appeal the verdict? Leonard says they figured it would be cheaper to settle. An appeal might have cost at least $1 million in legal fees. And if the verdict were overturned, the doctors would have to take their chances at another trial.

In the meantime, the doctors still own the building and are making payments on the $1.5 million mortgage.

Monte Maniz still plans to retire from his firefighting job at the end of the year, and the Manizes still plan to move to Arizona.

Now that the trial's over, Monte Maniz can crack a joke. When they move to Arizona, Maniz says, he and his wife will be very careful about choosing their doctors. "I don't want my toe sewed to my head," he says.

"How could I racketeer anybody?"

"We consider our jobs are to make people whole again. To be accused of preying on them is too much.

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Terry Greene