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April 11, 2013 Newswires
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Administrator Of Student Health Insurance Indicted

Targeted News Service

ABINDGON, Va., April 10 -- The U.S. Attorney for the Western District of Virginia issued the following news release:

United States Attorney Timothy J. Heaphy announced today that a Federal Grand Jury sitting in the United States District Court for the Western District of Virginia in Abingdon has charged GM-Southwest Inc., and the company's former owner, with racketeering, conspiracy, money laundering and fraud charges.

In a sealed indictment returned April 8, 2013 and unsealed today, the grand jury has charged John Paul Gutschlag Sr., 73, of Aubrey, Texas and GM-Southwest, Inc., in a 57-count indictment. Gutschlag, the former owner of GM-Southwest and the corporation have been charged with one count of racketeering, one count of conspiracy to commit wire fraud, seven counts of wire fraud, one count of conspiracy to commit mail fraud, 41 counts of mail fraud, one count of money laundering conspiracy and five counts of money laundering. The Indictment also seeks forfeiture of real and personal property, including business and personal bank accounts associated with the defendants.

According to the indictment, under the direction of Gutschlag, GM-Southwest was in the business of collecting health insurance premiums from students and universities, paying claims and providing reports related to the premium collection and claims payment both to the university and the carriers. The carriers, in turn, paid GM-Southwest a set commission or fee, typically a percentage of the gross premium collected.

From August 2003 through the end of the 2010-2011 school year, GM-Southwest, under the direction of Gutschlag, provided student health insurance for Virginia Tech's undergraduate and graduate students. The indictment alleges that in 2005, Gutschlag, and others, devised a scheme to defraud colleges and universities by providing false and fraudulent claims reports and other misrepresentations designed to increase the income of GM-Southwest and to personally enrich Gutschlag. They did this by devising and utilizing a "claims modifier" to alter the claims numbers to produce an inflated dollar amount which overstated the claims paid and loss ratios, causing students and Virginia Tech to pay significantly higher premium costs.

The indictment accuses Gutschlag and GM-Southwest of overstating the amount of claims paid on behalf of Virginia Tech by over $9 million from 2003-2004 through the 2009-2010 academic years.

If convicted, Gutschlag faces a maximum possible penalty of up to 20 years in prison on each count and/or fines ranging from $250,000</money> to $500,000 on each count. GM-Southwest Inc. faces corporate probation and/or fines ranging from at least $500,000 per count.

The investigation of the case is being conducted by the Internal Revenue Service Criminal Investigation. Assistant United States Attorneys Anthony Giorno and Randy Ramseyer will prosecute the case for the United States.

TNS MGD-130411-4289224 StaffFurigay

Copyright:  (c) 2013 Targeted News Service
Wordcount:  445

 

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