DALLAS (AP) — Texas Attorney General Greg Abbott's office accused Dallas County prosecutors of handing a "sweetheart deal" to a dentist in a Medicaid fraud case, in a squabble involving two prominent politicians from opposing parties.
Dallas County settled a case three years ago against Dr. Richard Malouf and his former company, All Smiles Dental Center, for about $47,000, The Dallas Morning News reported (http://dallasne.ws/XqtJlA ). Abbott's spokesman, Jerry Strickland, said Malouf allegedly bilked taxpayers for 15 times that amount.
The AG's office originally referred the case to Dallas County. Strickland blamed Watkins' office for a "lack of cooperation and mishandling of the case," adding that "we no longer have confidence in his ability to handle the matter appropriately."
"As a result, while there is an active and ongoing investigation, we will not pursue the case with or through the Dallas County District Attorney," he said in a statement.
Watkins' top deputy, First Assistant District Attorney Heath Harris, said prosecutors examined the case and decided a settlement was the best course of action.
"It's just politics," Harris said. "We don't have any confidence in them, either."
Abbott is one of the most popular Republicans in the state and a rumored candidate for higher office. He hasn't said whether he'll seek re-election as attorney general next year or enter the governor's race, possibly challenging incumbent Gov. Rick Perry.
Watkins has said he will run for a third term as Dallas district attorney. While Watkins has won plaudits for his office's work in freeing the wrongfully convicted, he has been mired in a string of recent battles over the handling of other cases. He's currently fighting a subpoena to testify about whether he intervened in the mortgage fraud case of an heir to the H. L. Hunt oil fortune.
The settlement money was paid to the state Medicaid program, and Malouf and All Smiles did not admit any criminal wrongdoing. The settlement also called for Malouf to not bill Medicaid for any services he personally provided for 18 months. Two months afterward, Malouf sold a majority stake in All Smiles for more than $50 million, according to bankruptcy court records.
A federal settlement last year netted $1.2 million, after the FBI and state investigators found that All Smiles submitted improper Medicaid claims for orthodontic work. Federal charges were not filed.
Strickland called the Dallas settlement a "huge loss for the taxpayers."
Harris said the AG's office investigator working with them knew about the settlement. But Strickland said the investigator "was excluded from the process despite her repeated requests to be consulted about the criminal investigation that she referred for prosecution."
The attorney general's office is now pursuing a civil case against All Smiles in Travis County, where Austin is located, and has referred a criminal case to the Travis County DA's office, Strickland said. A spokesman for that office did not return a phone message.
Gregory Shamoun, an attorney for Malouf, blamed Abbott and "frivolous media attention" for the case being continued.
"There was no basis for the complaint to begin with," Shamoun told The Associated Press. "It's just the attorney general's office pounding their chest. They've got an action filed in a lawsuit that they can't prove."
Shamoun rejected the allegation that his client received unfair treatment.
"Craig Watkins doesn't do sweetheart deals," Shamoun said. "Dr. Malouf didn't obtain any sweetheart deal."
The deal came months after Watkins returned a $10,000 campaign check from the dentist's wife, Leanne Malouf. Watkins sent Leanne Malouf a letter saying he could not accept her donation because her husband was under criminal investigation, according to a copy of the letter.
Information from: The Dallas Morning News, http://www.dallasnews.com