Reality Show

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Hundreds of reality television shows currently air during prime viewing hours. They range from documentaries and competitions to makeovers, renovations, dating and talent shows. Today’s fraudsters from St. Paul, Minnesota planned to fund a reality show about their own lives using federal funds illegally collected through healthcare and tax fraud.

The three defendants at the center of today’s conspiracy include twin brothers, who ran multiple health care businesses that received Medicare and Medicaid funds from the federal government and the State of Minnesota, and one of their wives. The twins ran separate healthcare companies that employed nurses, personal care attendants and office staff to take care of their clients, who were Medicaid and Medicare beneficiaries. (They used public healthcare payments to live lavish lifestyles, which included luxury housing, a Caribbean cruise and designer retail purchases. They also withdrew thousands of dollars in cash from the bank accounts of their businesses.)

In addition to scamming their patients, they also took advantage of their employees. The twin brothers collected wages to pay federal payroll taxes and Federal Insurance Contribution Act (FICA) taxes, but neglected to pass them along to the Internal Revenue Service (IRS) over several years. (The U.S. Attorney’s Office reports that these men admitted to deducting and illegally using more than $3.9 million in withheld taxes over seven years. They also used this money to fund their lavish lifestyles.)

This is not the first brush with the law for one of the brothers, who admitted using public healthcare dollars from Medicaid to line his pockets. He was convicted earlier of felony theft by false representation and was prevented from participating in state and federal healthcare programs. He was not allowed to seek reinstatement for up to 20 years. (But he got caught again within that 20-year time limit. Perhaps never being allowed to participate would have been a better requirement.)

The previously convicted brother admitted to founding another healthcare company using his wife’s name, although he ran the business. Court documents showed that the wife was pretty good at spending money from the company’s bank account. (She spent $1,233.66 at a Louis Vuitton boutique, $1,585.85 with Royal Caribbean Cruises, $18,000 to rent a home for her husband and she also wrote an $8,500 check to her sister-in-law.)

Company employees didn’t have a lot of good things to say about the owners. One personal care attendant, who cared for the businesses’ sick and elderly patients, claimed that paychecks were irregular, having gone as long as three months before getting paid. (Minnesota state records show that there were at least seven occasions when the company did not pay its employees.) Other employees said that while workers were not being paid, the owners and their spouses took vacations and documented visits to Las Vegas and Florida on social media channels.

After a three-year long investigation, the two 52-year-old twin brothers pleaded guilty to healthcare and tax fraud charges. The 42-year-old spouse pleaded guilty to evading personal income tax. The three relatives are awaiting sentencing; each faces up to five years in prison. The previously convicted brother could face as many as 10 years in prison. (Let’s hope that they are all banned from reinstatement with the Medicaid and Medicare programs for life.)

As usual, fraudsters don’t think about the reality that Medicaid and Medicare beneficiaries face when fraud occurs. Perhaps part of the punishment should be to finally fund and star in a reality television show that reveals what happens to government healthcare beneficiaries when fraud causes Medicaid and Medicare to cut back on these vital programs. (However, I doubt that they’d want to be featured in the closing shot where the prison doors close behind them. I doubt it would be anywhere near the lavish lifestyle they originally envisioned.)

Today’s “Fraud of the Day” is based on an article entitled, “Employees’ tax dollars spent on reality show dream, personal expenses for company owners,” posted on on September 20, 2017.

ST. PAUL, Minn. (KMSP) Two brothers from St. Paul, accused of using public healthcare money to furnish their lavish lifestyles, pleaded guilty to fraud and tax charges after reaching plea agreements with federal prosecutors.

Roylee and Thurlee Belfrey ran separate companies that purportedly used Medicare and Medicaid money to care for the vulnerable, employing nurses, personal care attendants and office staff.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.