Connecticut insurance firm owner pleads guilty to $40 million fraud scheme

According to a statement from the office of the US Attorney for the Southern District of New York, Riccardi and his co-conspirators used EBS as part of a massive $40 million fraud scheme that involved stealing clients’ healthcare funds and defrauding multiple lenders.

From 2015 to 2019, EBS represented an auto dealership chain in Westchester County, NY by serving as the dealership business’s TPA for its self-funded employee healthcare program. EBS purported to process and pay claims to medical providers that treated the dealership’s employees, and even provided bimonthly “check register” invoices for the company that listed all employee healthcare expenses. In addition, EBS administered a bank account on the dealership’s behalf, meant to pay for the healthcare claims. During this time period, the dealership business transferred about $26 million to EBS to pay for healthcare claims.

However, it was found that a “significant” number of purported checks listed on the EBS “check register” invoices were never deposited by the healthcare providers. Approximately $17.87 million worth of the dealership’s payments were misappropriated, with most of the cash transferred to EBS into its own operating account, where it was used for non-healthcare expenses by the managers and co-owners of EBS.

It was also found that the check registers sent to the dealership business contained millions of dollars in fraudulent and inflated healthcare claims, which were paid by the dealership. EBS had “routinely” inflated the dealership’s check registers at the direction of Riccardi and his co-conspirators.

By mid-2017, EBS had financially buckled under increasing fiduciary obligations. To conceal the fraud scheme, Riccardi and his co-conspirators applied for multiple fraudulent bank loans and merchant cash advances to supposedly finance the purchase of new billing software – but the company EBS was buying the software from was fake, and the fraudsters fabricated invoices so that the loans could pay for the obligations EBS owed.

The office of the US Attorney noted that a review of bank records revealed that the healthcare funds were used by Riccardi and his co-conspirators to pay home mortgage expenses, and a personal credit card account. The credit card account had expenses related to boating, luxury cars, and golf.

EBS also made decisions on which of the dealership’s healthcare claims they actually paid, based on which healthcare providers were likely to complain if they did not receive payment, attorneys said. To further conceal the deceit, the insurance company also took care to pay for the claims of the dealership’s executives, it was suggested.

Riccardi pleaded guilty to one count of conspiring to commit wire fraud and bank fraud, which carries a maximum potential sentence of 30 years in prison. He also agreed to pay $14,870,653.36 in restitution and forfeit $2,000,000.00.

In other insurance fraud-related news, former insurance magnate Greg Lindberg has been indicted by a federal grand jury for his role in a fraud scheme that defrauded thousands of policyholders. Lindberg – whose insurance companies since 2019 have been placed into rehabilitation or liquidation – allegedly sidestepped regulatory requirements meant to protect policyholders and hid the true financial condition of his companies.

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