(STL.News) – U.S. Attorney Peter G. Strasser announced that that JOSEPH A. BORINO, age 62, a resident of Spring Hill, Texas was charged on November 21, 2019 by a federal grand jury in an eight-count Indictment for his role in the marketing and operation of what claimed to be a Medical Reimbursement Program, Classic 105. In particular, BORINO were charged with conspiracy to defraud the United States and to make false statements and representations in connection with a multiple employer welfare arrangement (MEWA), in violation of Title 18, United States Code, Section 371 (Count 1); making false statements in connection with a MEWA, in violation of Title 29, United States Code, Sections 1131(b) and 1149 (Counts 2-6), and wire fraud, in violation of Title 18, United States Code, Section 1343 (Counts 7-8).
According to the Indictment, The Total Financial Group (TTFG) was a Louisiana business incorporated by Denis and Donna Joachim with the Louisiana Secretary of State on about January 6, 2005, that was most recently located at 406 N. Florida Street, Covington, Louisiana. BORINO was employed as the National Executive Marketing Director for TTFG. In that capacity, BORINO supervised, trained, and instructed TTFG’s regional sales personnel. BORINO also represented himself to be Denis Joachim’s “right hand man” in the operation of TTFG.
TTFG and its owners, with BORINO and others, created and marketed a Medical Reimbursement Account program called “Classic 105.” Classic 105 claimed to be a multiple employer welfare arrangement that was marketed to employers as a supplemental benefits plan for their employees to reimburse them for medical expenses such as co-pays and deductibles; participants in Classic 105 were required to have a primary health insurance plan unrelated to and in addition to Classic 105. Classic 105 claimed to be comprised of several components: a tax-exempt contribution of between $1,000 and $1,600 per month made by an employee (which reduced the employee’s taxable income), a loan from a lender back to the employee to make up for the contribution, an insurance policy payable to the lender at the employee’s death to repay the loan, and fees paid by the employee and the employer directly to TTFG. TTFG told prospective employer-clients that participants would never have to make out-of-pocket payments to repay the loan and that as a result of the tax savings, most participants would receive an increase in their net take home pay. TTFG’s marketing program told prospective employer-clients that the contributions would be stored in a unique account for each employee-participant and that any money not used by the end of each calendar year would revert to TTFG. TTFG also charged employee-participants a fee of between $150 and $250 per month and the employer a fee of five percent of each employee’s contribution amount. At its peak, over 350 employer-clients and 4,400 employee-participants nationwide were enrolled in TTFG’s Classic 105 program.
According to the Indictment, TTFG never obtained a single loan or insurance policy for the Classic 105 program, and participants never made any actual contributions. Moreover, as early as September 2014, BORINO, Denis Joachim, and others all participated in email exchanges that discussed that there were no third-party lenders or insurance policies to fund the loans. Rather, TTFG and its executives, including BORINO, arranged for the contribution, loan, and insurance policy to appear as a series of transactions that, in effect, did nothing more than reduce participants’ taxable wages and employers’ FICA payments improperly, without their knowledge of the impropriety. Consequently, TTFG, BORINO, and the Joachims caused federal FICA taxes and personal income taxes to be underpaid, amounts for which the employer-clients and employee-participants are individually responsible. In at least one instance, a former participant did not qualify for unemployment benefits based on her participation in Classic 105.
If convicted, BORINO faces a maximum term of imprisonment of 95 years, a fine of up to $2,000,000.00, three years supervised release after imprisonment, and a mandatory $100 special assessment (for each count of conviction). He may also be subject to forfeiture.
U.S. Attorney Strasser praised the work of the Internal Revenue Service – Criminal Investigations; Federal Bureau of Investigation; and United States Department of Labor – Office of Inspector General and Employment Benefits Security Administration and expressed appreciation for the support provided by Senior Trial Attorney Rebecca Pyne, Department of Justice, Organized Crime and Gang Section, Labor-Management Racketeering Unit. Assistant United States Attorneys Jordan Ginsberg and Maria Carboni and Department of Justice Trial Attorney Jared Hasten are in charge of the prosecution.