A Connecticut woman has been sentenced to 66 months in prison for her role in an insurance and loan fraud scheme worth $33 million.
Erin Verespy, 50, was accused of misappropriating client healthcare funds and defrauding multiple lenders. The chief financial officer of Employee Benefit Solutions LLC (EBS), Verespy pleaded to one count of conspiracy to commit wire fraud and bank fraud before the US District Court for the Southern District of New York in April 2021. Her prosecution is currently being handled by the Southern District of New York Office's White Plains Division.
According to information from complaints, court proceedings and documentation, EBS offered third party healthcare claims administration (TPA) services to clients that chose to self-insure their employee healthcare plans. From 2015 to 2019, EBS administered the employee healthcare program of a certain automobile dealership chain based in Westchester County, NY – the specific dealership was kept anonymous and identified only as “Company-1” in court proceedings.
EBS generated “check register” invoices for Company-1 twice a month that detailed employee healthcare expenses from healthcare providers within a two-week period. EBS also administered a bank account for the dealership, which was established to pay for Company-1’s healthcare claims. Within the 2015-2019 period, Company-1 transferred about $26 million to EBS to pay for its healthcare claims.
However, a good portion of the purported checks listed on the EBS “check register” invoices were not deposited by healthcare providers, court documents said. It was found that approximately $17.87 million in Company-1 healthcare payments were misappropriated, with most of the cash being transferred by EBS into its own operating account, which was used by EBS’ managers and owners for personal expenses such as home mortgage payments, boats, luxury cars, and even golf.
Verespy and her co-conspirators helped EBS choose which few Company-1 healthcare claims they paid, based on which healthcare providers were likely to complain if no payment was made. Court documents also noted that EBS also paid for claims connected to Company-1’s executives. It was also found that Verespy had discussed the timing of payments for Company-1’s “VIPs,” and had mentioned a contentious “Not VIP” claim over phone calls. Additionally, it was uncovered that the “check registers” sent to Company-1 by EBS contained fraudulent or inflated healthcare claims to the tune of millions of dollars, that the dealership was forced to pay.
But by mid-2017, EBS began to face increasing outstanding fiduciary obligations. Court documents stated that Verespy and her co-conspirators had applied for multiple fraudulent bank loans and merchant cash advances – under the guise of financing upgraded billing software – to pay its obligations to Company-1. To accomplish this, the schemers submitted invoices from a fake billing software company.
For her involvement in the scheme, Verespy made over a million dollars, court documents said.
Patch.com reported that in addition to her prison sentence, Verespy has been ordered to pay over $16 million in restitution, forfeit another $1 million, and serve five years of supervised release.