Mutual fund magnate Tom Marsico was at the Vail Valley Medical Center on July 3, tending to his son-in-law, Dr. Steven Milo, who’d been hit by a black, 2010 Mercedes while bicycling.

The driver fled the scene, leaving Marsico’s son-in-law bleeding on the pavement.

Marsico, whose own father had done reconstructive surgeries, said he was shocked at his son-in-law’s face. He worried about brain hemorrhaging, spinal-cord injuries, and an asphalt-ground knee — and whether Colorado ski-town doctors could handle it.

Marsico, founder of Denver-based Marsico Funds and a former star money manager for Janus mutual funds, was also thinking about his daughter, Jennifer, who was more than seven months pregnant, and his wife, Cydney. And about how tragically life can turn in a second.

Into the ER rolls Martin Erzinger, a wealth adviser who oversees more than $1 billion in accounts at Morgan Stanley Smith Barney in Denver.

Erzinger says hi to Cydney.

“Marty and I have been acquaintances for some 20 years,” Marsico explained. “I said, ‘Geez, Marty, is there anything I can do for you? He said, ‘Oh, no, I’m just in for some preliminary tests.'”

Erzinger was in and out in 20 minutes, Marsico recounted: “He checked out just fine.” But Marsico’s mind raced. Black Mercedes? Erzinger? “I was putting two and two together and I thought, ‘Oh, God. No. This can’t be.”

It was Erzinger who had done this to his family. Erzinger.

Marsico, 55, recounted this tale in Colorado’s Eagle County District Court last week. He’d come for justice. The court gave him none.

Erzinger, 52, of Greenwood Village, Colo., pleaded guilty to two misdemeanors under a plea bargain. He was sentenced to a year of probation, with no driving privileges, and given a suspended 90-day jail sentence, which he can avoid through 45 days of community service.

Milo, 34, had demanded Erzinger be charged with a felony, but Eagle County District Attorney Mark Hurlbert expressed concern that Erzinger might lose his job if he was so charged. (Hurlbert is famed for prosecuting rape charges against NBA player Kobe Bryant that were dismissed in September 2004.) After Hurlbert’s remark, this tragic story took on a life of its own among bicyclists, bloggers, socialites and others who view hit-and-run as a felonious act. Erzinger complained in court of a media campaign against him, and of receiving death threats.

What was Erzinger’s defense? He didn’t realize he’d hit anyone.

Maybe it was the smell of his new Mercedes.

“Harmful and noxious gases emitted from the upholstery can infiltrate the driver’s compartment and potentially alter the driver,” an investigator that Erzinger hired wrote for the court’s consideration.

Then came a better theory: Undiagnosed sleep apnea. The disease may explain why Erzinger fell asleep at the wheel, hit a bicyclist, drove into a culvert, fled the scene and failed to call police, Erzinger’s doctor testified.

Police found Erzinger outside an abandoned Pizza Hut, putting pieces of his damaged car in his trunk and calling tow-truck companies.

Marsico said Erzinger called him later: “He said, ‘Tom…very unfortunate event. I want you to know I have no recollection of what happened.’ And I said, ‘Martin, we need to stop there. You’ve caused great pain to my family. I don’t believe that this is the case.'”

Milo was just getting his career launched as a liver transplant anesthesiologist at Mount Sinai Hospital in New York City.

He suffers debilitating headaches, tingling and numbness that put his career in question.

“Accidents happen,” Milo told the court. “I understand…All I wanted was for someone to acknowledge that had happened.”

Instead, Milo said, Erzinger offered up “manipulations, avoidance, and just a strategic plan, coming up with these fairy tales of sleep apnea and a leather car smell…It’s gotten to be embarrassing and insulting.”

Milo’s attorney, Harold Haddon, who once represented John Ramsey in the infamous JonBenet Ramsey murder, had asked the court to reconsider the plea bargain: “Does this deal smell bad, and if so why?”

Erzinger presented himself as a Christian and a fellow bicyclist.

“It is unconscionable that anyone would think I wouldn’t stop if I knew a cyclist was involved, or any human being,” he said. “When I called and spoke to Tom Marsico…he described it as a surreal situation.”

Erzinger said he told Marsico: “I am devastated that this has happened to your family that I respect. I am very sorry.”

These words fell flat. Marsico said Erzinger has dodged responsibility from the moment he fled the scene.

Marsico complained that Erzinger not only failed to file an accident report but failed to report a felony charge against him to the Financial Industry Regulatory Authority.

“I also put the blame on Morgan Stanley because they’re not following up on this,” Marsico said.

I contacted Morgan Stanley about this remark, and spokesman James Wiggins responded: “We were in contact with FINRA on this matter as early as last July, and we believe we have met all reporting responsibilities.”

FINRA rules require brokers to disclose if they’ve ever been charged with a felony. Erzinger was initially charged with a felony, but struck a plea bargain for misdemeanors.

As a sentencing requirement, Judge Fred Gannett ordered Erzinger to report to FINRA that he’d been charged with a felony. As of Monday, this was still not noted on FINRA’s website.

“I have seen many different scams,” Marsico told the court. “It’s very disheartening to me because people don’t take a high standard as to how they treat their clients.

“This gets to the root of what this country is based upon, which is capital formation, providing new jobs as we’re trying to get out of this recession. And here we’re being duped again.”

Al Lewis: 212-416-2617 or al.lewis@dowjones.com; read his blog at tellittoal.com