Texas: Derek R. Schwartz Charged to Defraud

Texas: Derek R. Schwartz Charged to Defraud

Texas Man, Derek R. Schwartz Charged with Conspiring with Michael Mann to Defraud Lenders

ALBANY, N.Y (STL.News) Derek R. Schwartz, age 52, of Coppell, Texas, was indicted yesterday and accused of conspiring with ValueWise CEO Michael T. Mann to defraud companies that loaned millions of dollars to ValueWise subsidiaries.

The announcement was made by Acting United States Attorney Antoinette T. Bacon and Janeen DiGuiseppi, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI).

Schwartz was charged with conspiring to commit wire fraud, along with four counts of wire fraud, and will be arraigned at a later date.  The charges in the indictment are merely accusations.  The defendant is presumed innocent unless and until proven guilty.

According to the indictment, Mann obtained millions of dollars in loans from two financing companies, located in New York and Colorado, by falsifying his companies’ receivables.  Mann falsely told the financing companies that Minnesota-based UnitedHealth Group Incorporated (“UHG”), and its subsidiary OptumInsight Inc. (“Optum”), owed millions of dollars to his companies.  Mann routinely created fake invoices reflecting the fictitious debt and assigned them to the financing companies as collateral for loans.

Schwartz was a high-level executive at Optum, and then began working for ValueWise in about October 2013.  Until about August 2016, he operated TrueHR, LLC, a ValueWise subsidiary based in Dallas, Texas.

According to the indictment, in or about October 2013, Schwartz recruited a UHG/Optum employee, Luke Steiner, to falsely represent to the financing companies that the fake invoices created by Mann were valid and payable by Optum.  With Schwartz’s encouragement and direction, Steiner regularly made these false verifications for six years, ending in August 2019.

Schwartz also allegedly took other actions in furtherance of the fraudulent scheme, including, according to the indictment:

In 2014 and 2015, he recruited at least two other UHG/Optum employees to verify false invoices that Mann submitted to one of the financing companies.

From 2014 through 2019, he made misrepresentations directly to one of Mann’s lenders, identified in the indictment as “Financing Company-2.” Mann falsely represented to Financing Company-2 that one of his companies, Weitz & Associates, needed loans in order to pay its vendors.  As part of its due diligence process, Financing Company-2 verified, with Weitz’ purported vendors, that they were receiving payments from Weitz.  One such purported vendor was TrueHR, a ValueWise company operated by Schwartz.  In fact, TrueHR was not a Weitz vendor, and Schwartz regularly lied to Financing Company-2 about TrueHR receiving payments from Weitz – and continued to do so even after TrueHR ceased to exist as a company.

Schwartz worked with Mann to fabricate Weitz vendors.  Mann told Financing Company-2 that, in additional to TrueHR, Weitz had a number of other vendors.  Mann, with Schwartz’ help, fabricated the names and contact information of non-existent people working at fake Weitz vendors.

If convicted of any of the charges in the indictment, Schwartz faces up to 20 years in prison, and up to 3 years of post-imprisonment supervised release.  A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.

Mann pled guilty to various crimes in connection with his fraudulent scheme, and was sentenced earlier this month to 144 months in prison.  Steiner, age 33, of Minneapolis, Minnesota, pled guilty in February 2020 to conspiring with Mann, and is pending sentencing.

This case is being investigated by the FBI, and being prosecuted by Assistant U.S. Attorneys Michael Barnett and Cyrus P.W. Rieck.

SOURCE: USDOJ.Today

About Waqar Nawaz 3727 Articles
Waqar Nawaz has published content for STL.News for approximately three years. He is dedicated to publishing news released by the US Department of Justice. He actively monitors the web for fresh releases to help keep the public informed.