Fraud Pyramid

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Just as pyramids are wide at the bottom leading to a point at the top, many fraudulent schemes start with a broad base of criminal supporters and lead up to a mastermind. Such is the case for today’s “Fraud of the Day,” where 30 people participated in a scam led by a mastermind who illegally billed the Department of Labor’s (DOL) Office of Worker’s Compensation Program for millions of dollars.

The focus of today’s article is on two U.S. Postal Service workers who received punishment for their participation in this scam. One of the defendants was a woman, who worked as a clerk with responsibility for a parcel post distribution machine. She filed disability claims upon three occasions stating that she suffered from a variety of injuries. She was granted workers’ compensation and received more than $340,000 over about nine years. After that time, she applied for and received approval for disability retirement. (That’s definitely one way to save for a retirement, although the payout in the end was not exactly what she had hoped for.)

The other co-defendant mentioned in the article was a man, who was a mail handler equipment operator. Over 23 years, he filed eight disability claims. He falsified forms regarding travel that was related to the medical services he received. (He collected more than $68,000 in workers’ compensation payments.) After retiring, he continued to collect disability medical care through the DOL.

What was the connection to the broader pyramid scam? These two fraudsters were part of a greater plan that involved 20 claimants, four doctors, a DOL senior claims examiner, a claims representative, a postal employee working at the Postal Service Health Resource Management Office and a medical provider’s employee.

Who was the mastermind?  A licensed professional counselor who operated four companies that provided counseling, pain management, chiropractic services, physical therapy and massage services. (They were the building blocks for this fraud pyramid.) The counselor’s patients were former postal and Veterans Affairs employees who experienced on-the-job injuries.

The counselor paid his patients $100 to falsify medical documentations called “mood inventories” that indicated they had received services on days they had not. (The woman received about $6,000 in kickbacks for falsifying the forms, while the man received about $3,000.) Altogether, the 20+ co-defendants involved in the scheme fraudulently billed the federal government more than $9.5 million.

A Texas judge sentenced the 52-year-old woman to 21 months in federal prison and ordered her to pay $98,888.73 in restitution. The 69-year-old man received the same prison sentence. The counselor previously pleaded guilty to one count of conspiracy to commit health care fraud and must serve 78 months in federal prison. He must also pay $7.7 million in restitution.

Congratulations to all the government investigators from multiple agencies who were involved in stopping these criminals. This case is proof that the government will fervently pursue individuals who seek to steal government benefits from those who deserve them. These nefarious co-defendants’ scheme has been condemned and their foundation demolished.

Source: Today’s “Fraud of the Day” is based on an article entitled, Former Postal Worker Sentenced in Texas For Federal Workers’ Comp Fraudpublished by the Insurance Journal on August 1, 2017.

A U.S. district judge in Texas has sentenced a former postal employee to 21 months in federal prison for participating in a scheme to defraud the Department of Labor’s (DOL) Office of Worker’s Compensation Program (OWCP).

U.S. Attorney John Parker of the Northern District of Texas reported that on July 27 U.S. District Judge Sam A. Lindsay also ordered Tonya Evans, 52, to pay $98,888.73 in restitution.


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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.