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Colorado health-plan founder indicted for mail fraud, embezzling plan funds and money laundering
Posted By admin On April 5, 2011 @ 12:26 pm In Crime and Justice | Comments Disabled
DENVER – Gerald Rising, Jr., age 59, of Centennial, Colorado, the owner and operator of Rural Health Plans Initiative Administration Company, also based in Centennial, was indicted late yesterday by a federal grand jury for mail fraud, embezzlement from a health care plan and money laundering, the U. S. Attorney’s Office, IRS – Criminal Investigation, and the Department of Labor Employee Benefits Security Administration announced. An arrest warrant was issued, and Rising is expected to be processed on Wednesday, April 6, 2011, where he’ll make his initial appearance.
According to the information contained in the Indictment, Rural Health Plans Initiative Administration Company (RHPI), was a closely held Colorado Corporation, owned and operated by Gerald Rising, Jr. (Gerald Rising). RHPI was a business that promoted, sold and administered health benefit plans and employee welfare plans to entities, including school districts in the States of Colorado, Kansas and Oklahoma, among others. As part of the plans, Rising and RHPI represented that it would retain part of the plan contributions, approximately 20%, for administrative costs, and that the remainder was to be held in a designated trust account to pay claims of covered employees of the particular subscribing entities and to purchase excess loss or stop-loss insurance coverage through established insurance providers like Lloyd’s of London and AIG to cover any claims that exceeded $25,000.00. In truth those policies did not provide coverage on claims until they reached approximately $125,000.00.
Furthermore, Gerald Rising created RHPI Captive Insurance Company, LTD (RHPIC), an offshore corporation, incorporated in Anguilla, British West Indies, which maintained the residual fund contributions after the administrative fees were deducted and which was created in order to avoid regulation and oversight by the Colorado Division of Insurance.
As part of the scheme, Gerald Rising opened and controlled accounts at various financial institutions in Colorado and elsewhere in his name and in the names of business entities in order to receive checks, premiums and monies derived from the scheme. Rising and employees of RHPI promoted the sale of the health care benefit plans to business and governmental entities wherein they falsely represented that monies derived from the plans would be properly maintained in a trust to pay the claims of each plan’s beneficiaries. Instead Rising and RHPI commingled trust funds from various plans in order to pay claims for the aggregated pool of beneficiaries, in violation of the trust agreement.
To further promote the scheme, in 2009 and 2010, Rising began to kite checks between various bank accounts he controlled for himself, RHPI and RHPIC, in order to create a false impression as to the financial status of the businesses as he solicited their sale. Between July 2010 and November 2010, Rising directed employees to falsely represent to various plan beneficiaries and employers that the claims for health care services were in fact paid when they were not, in hopes of allaying their concerns regarding their respective plans, and during this same time Rising directed employees to send balance statements to plan employers that falsely represented balances in their accounts. In 2008 and 2009, Rising increased his salary in order to siphon monies held by RHPIC for the benefit of plan beneficiaries.
“As the indictment alleges, employees and companies trusted the defendant to take care of a vital matter – their health care insurance coverage. He took their money, but betrayed that trust, and will now face the consequences of his actions, ” said U. S. Attorney John Walsh.
“Crimes like this are motivated purely by greed and the plan beneficiaries are the real victims in this case, ” said Sean Sowards, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “IRS will work diligently with our law enforcement partners to investigate such offenders and protect the interests of the people of Colorado. ”
“Rising, through RHPI, in at least 3 states, defrauded both employers and their workers of benefits important to their well-being and that of their families, ” said James Purcell, Acting Regional Director of the Employee Benefits Security Administration in Kansas City.
Rising faces one count of mail fraud, one count of theft or embezzlement in connection with a health care program, and 18 counts of money laundering. If convicted, the defendant faces not more than 20 years imprisonment, and up to a $250,000 fine for mail fraud, not more than 10 years imprisonment for theft or embezzlement in connection with health care program, and not more than 20 years imprisonment, and up to a $500,000 fine (or twice the value of the property involved in the transaction) for each count of money laundering.
This case was investigated by Internal Revenue Service – Criminal Investigation (IRS CI), and the Department of Labor Employee Benefits Security Administration (DOL-EBSA).
The case is being prosecuted by Assistant U. S. Attorney Jaime Peña.
The charges contained in the Indictment are only allegations, and the defendant is presumed innocent unless and until proven guilty.
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