A prominent Wichita woman didn’t show up in court. Now she has to pay $11 million

Nancy Martin — the prominent Wichita woman sued after two medical businesses she kept books for said she’d embezzled from them for more than a decade — has been ordered to pay millions in compensatory and punitive damages after she didn’t show up to a court hearing last month to protest such a payout.

Sedgwick County District Judge Jeffrey Goering awarded physician-owned Mid-Kansas Wound Specialists and Emergency Services more than $11 million from Martin and her businesses in a default judgment following the July 24 hearing, court records show. A default judgment is a ruling in favor of one party to a lawsuit when the other side doesn’t respond or ignores a court summons.

It’s unclear why Martin, longtime business administrator and an officer for the businesses, has failed to appear in court or file any written responses answering the embezzlement allegations contained in a civil lawsuit filed last October against her, her husband and 11 limited liability corporations the couple owns.

But the absences proved costly when Mid-Kansas Wound Specialists and Emergency Services in a July 10 motion asked the court to immediately award them $6.2 million — the full amount Martin is accused of stealing as well as lost profits — plus punitive damages in an amount determined by the court.

In Kansas, a party to a civil lawsuit can’t seek punitive damages, which are meant as a punishment, without the court’s permission, and they must show that the person or entity accused of harming them acted fraudulently or willfully. In the case against Martin, a judge granted Mid-Kansas Wound Specialists and Emergency Services that ability this summer.

Before handing down the $11 million ruling, Goering heard testimony from witnesses, looked at documents and considered lawyers’ arguments at the July 24 hearing, court records show. None of it came from Martin; she didn’t attend court that day.

“There is no just reason for delay,” a July 27 court document about the ruling says about issuing the award.

The total amount Martin, a living trust she has and three of her businesses — Marco LC, Nancy’s LC and Vacations LLC — were ordered to pay is $6,265,221.06 in compensatory damages plus $2,950.50 in costs and $4,859,823.96 in punitive damages.

She’ll also have to pay 6.5 percent interest per year on the judgment until it’s paid off, according to court records.

Martin hasn’t responded to The Eagle’s attempts to contact her by phone or email, nor does she have an attorney fighting the case on her behalf. The claims against her include breach of fiduciary duty, theft and conversion, civil conspiracy and aiding and abetting, and fraudulent transfers.

A court document filed with the court last year said that at the time her net worth was only about 25 percent of the damages sought by Mid-Kansas Wound Specialists and Emergency Services and that “virtually all the assets that make up her net worth are not liquid.” The medical businesses have sought to freeze her and her estranged husband’s assets except for reasonable expenses, which include attorneys fees.

Her husband

The $11 million ruling does not include any damages from Martin’s estranged husband, Thomas Martin, or his businesses. Nor does it resolve the claims against him.

He’s accused in the civil lawsuit of aiding and abetting his wife. The lawsuit also alleges the couple used some of the stolen money to support their businesses, including farming agricultural land in Kansas that a trust owned by Thomas Martin profited from.

Unlike his wife, Thomas Martin and his lawyers have been active in the case, court records show — including providing written answers to the allegations and turning over financial information demanded by attorneys for the businesses that are suing.

Asked by The Eagle for comment about the judgment against Nancy Martin and what’s next in the case, one of her husband’s lawyers wrote in an email: “Because of the pending litigation, we have no comment at this time.”

A jury trial expected to last 10 days is scheduled for July 2019, court records show.

An attorney representing Mid-Kansas Wound Specialists and Emergency Services did not return messages from The Eagle. Mid-Kansas Wound Specialists provides wound care services at Wichita’s Wesley Medical Center while Emergency Services provides emergency medicine services.

The Martins are well-known in Wichita. Nancy Martin served on the Wichita State University Foundation board and the university’s National Advisory Council, as well as on the University of Kansas Endowment 4-Wichita board, which fundraises for the KU School of Medicine-Wichita. She’s also served as a Wichita Art Museum board member and has ties to other entities.

Her husband has served on the Wichita Community Foundation board.

As of Friday, no criminal charges had been filed in connection with the alleged embezzlements. Dan Dillon, spokesman for the Sedgwick County District Attorney’s Office, said the office “has never been contacted about the case.”

The details

The businesses’ lawsuit details how they say Nancy Martin stole millions “on a regular and systematic basis”:

Martin worked as business administrator for Emergency Services for more than 30 years and held the same role with Mid-Kansas Wound Specialists since it started in 1997. She oversaw operations for the businesses by handling their financial books, records and payroll, wrote checks, paid bills and reconciled bank accounts — allowing the physicians who own them to focus on their work.

But in May 2017, Mid-Kansas Wound Specialists owner Francie Ekengren learned that the business had been under an Internal Revenue Service audit for two years and that Martin was handling it.

When confronted, Martin confessed that she had, in her eyes, borrowed some money from the business and paid some of it back, the suit says. An accounting firm the businesses hired to investigate found that millions of dollars were embezzled between 2012 and 2017.

When Mid-Kansas Wound Specialists looked at its books from 2006 to 2012, it discovered millions more missing.

The business claims in court records that it suffered $3,708,284.85 in actual losses from the thefts. Emergency Services says it suffered $2,537,997.81 in losses. The latter’s cash flow was so severely impacted by the embezzlement, records add, that it went from being a direct contractor with Wesley Medical Center to being a subcontractor, resulting in “significantly reduced” profits.

The cost to investigate the embezzlement through November 2017 was nearly $19,000.

Court documents allege Martin fraudulently and willfully embezzled the money by writing business checks directly to herself, to her husband and to the couple’s companies and gave herself larger paychecks than she was due. They further allege she regularly wrote business checks to retailers, including Saks Fifth Avenue, Neiman Marcus and Aaron’s Rent to Own, and credit card companies American Express, Chase Card Services and Aviator Mastercard.

She changed the date, check number and payee information in the business’ accounting software to cover her tracks and had a ghost bank account for Emergency Services without the owners’ knowledge, according to the documents. The manipulations to the checks resulted in the accounting software only showing those checks that were issued to legitimate payees of Mid-Kansas Wound Specialists and Emergency Services, they said.

“Only upon accessing the audit trail, which is not a normally used feature (of the software), could one see that the payee, amount and/check number were altered to conceal the true payee,” court documents say.

The money paid “to maintain an extravagant lifestyle” for the Martins — including high-dollar real estate and art purchases, trips around the world and charitable donations — that they “could not otherwise afford,” court documents allege.

This story was originally published August 3, 2018 at 5:51 PM.