Insurance company owner pleads guilty to $40M scheme to steal sick pay from customers and defraud lenders | USAO-SDNY

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ANTHONY RICCARDI, an owner and manager of Connecticut insurance company Employee Benefit Solutions LLC (“EBS”), appeared in federal court in White Plains today has pleaded guilty to conspiracy to commit wire fraud and bank fraud. Between 2015 and 2019, RICCARDI and his co-conspirators used EBS as part of a widely publicized $40 million scheme to abuse and steal healthcare funds from customers and defraud multiple lenders. RICCARDI pleaded guilty before US District Judge Philip M. Halpern today.

US Attorney Damian Williams said: “Anthony Riccardi admitted today that for nearly five years he directed a brazen, widespread scheme to abuse his position of trust by stealing millions in trust money intended to to cover important expenses for the health care of the employees. To keep the program going, Riccardi also cheated lenders out of millions. Thanks to the tireless efforts of our law enforcement partners to uncover this fraud, Riccardi will now be held accountable for these serious crimes.”

According to the indictment, complaint, other court filings, and statements made during the trial:

From at least 2015 to 2019, ANTHONY RICCARDI was a 50% co-owner and Executive Vice President of EBS, which provided a variety of health insurance-related services to its clients. EBS provided, among other things, third-party health claims management (“TPA”) services to clients who chose to “self-fund” (or self-insure) their employee health plans. As a TPA, EBS would reportedly administer, process and pay for health claims for its customers’ employees for an administration fee.

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From at least 2015 to 2019, EBS represented a chain of car dealerships (“Company-1”) headquartered in Westchester County, New York. During this time, EBS served as the TPA for Company-1’s self-funded employee health program and purported to process and pay claims to medical providers who treated Company-1 employees. To this end, EBS prepared Company-1 bi-monthly “Check-Register” bills detailing all healthcare expenditures of healthcare provider employees during that two-week period. EBS also maintained a bank account on behalf of Company-1 for the express purpose of paying for Company-1 health claims. Company-1 would fund each check register by paying the bill with the expectation that EBS would promptly pay the healthcare provider debt. During this period, Company-1 transferred approximately $26 million to EBS to pay for health claims.

In reality, a significant number of purported checks listed on the “check register” EBS invoices were never actually deposited by healthcare providers. Instead, approximately $17.87 million in Company 1 healthcare payments was misappropriated, with the vast majority simply being transferred by EBS to its own operating account, where it was used by EBS’s managers and owners for non-healthcare expenses. For example, a review of bank records shows that RICCARDI and his co-conspirators used Company-1 health care funds to pay for their home mortgages and a personal credit card account with expenses on boating, luxury cars, and golf.

EBS, through RICCARDI and his co-conspirators, made decisions about which few Company-1 health claims they paid based on which healthcare providers were likely to complain if they did not receive payment, or if the claims were related to Company-1 executives.

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The “check registers” sent to Company-1 also contained millions of dollars in fraudulent or inflated health claims, which were eventually paid for by Company-1. At the direction of RICCARDI and his co-conspirators, EBS routinely inflated Company-1’s control registers. Such efforts were typically conducted by RICCARDI and his co-conspirators, who instructed others to manually create fraudulent entries in the EBS claims processing software, including bogus claims under the name of a RICCARDI-controlled company. RICCARDI and his co-conspirators also took steps to hide their fraud from Company-1 by creating and mailing manipulated and forged bank statements and checks to make it appear that health claims were being paid by EBS, when in fact they were not was.

In mid-2017, as EBS collapsed amid mounting outstanding fiduciary obligations, RICCARDI and his co-conspirators began an elaborate effort to conceal and perpetuate the ongoing scam at Company-1 by soliciting multiple fraudulent bank loans and cash advances from merchants, in part aimed at payment of various ones fiduciary obligations owed by EBS to Company-1. RICCARDI and his co-conspirators fraudulently applied for and obtained millions of dollars in loans to fund the purchase of updated billing software for EBS, which involved RICCARDI and his co-conspirators submitting fake invoices from a fake company that allegedly sold the billing software.

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RICCARDI, 46, of New Canaan, Connecticut, pleaded guilty to one count of conspiracy to wire fraud and bank fraud, which carries a possible maximum sentence of 30 years in prison. In connection with the guilty plea, RICCARDI agreed to pay $14,870,653.36 in damages and forfeit $2,000,000.00.

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The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes only, as each conviction of the accused is decided by the judge. Sentencing is scheduled for July 20, 2023.

RICCARDI’s co-defendant, Patricia Riccardi, previously pleaded guilty before Judge Halpern to a count of conspiracy to commit wire and bank fraud. Patricia Riccardi’s sentencing is scheduled for June 20, 2023.

RICCARDI co-conspirator Erin Verespy was previously sentenced to 66 months in prison after pleading guilty before United States District Judge Cathy Seibel to a count of conspiracy to commit wire and bank fraud.

Mr. Williams commended the excellent investigative work of the US Postal Inspection Service and the Special Agents of the United States Attorney’s Office. Mr. Williams also thanked the US Department of Labor, the Employee Benefits Security Administration; the US Department of Labor, Office of the Inspector General; and the United States Secret Service, who are assisting in the investigation, and the United States Attorney for the District of Connecticut.

Law enforcement is conducted by the bureau’s White Plains Division. Assistant US Attorney Nicholas S. Bradley is responsible for the prosecution.