Three Individuals Charged in Connection with Scheme to Defraud New Jersey Health Care Program of More Than $4.5 Million
TRENTON, N.J (STL.News) Three New Jersey residents were arrested today for allegedly participating in a long-running scheme to defraud the New Jersey Traumatic Brain Injury Fund (TBI Fund), a publicly funded health care benefit program, of more than $4.5 million, Acting U.S. Attorney Rachael A. Honig announced.
Harry Pizutelli, 62, of Edison, New Jersey, and C.R. Kraus, 55, and Maritza Flores, 43, both of Toms River, New Jersey were arrested by special agents of the FBI and IRS this morning and are charged by criminal complaint with conspiracy to commit health care fraud. They are scheduled to appear later today by videoconference before U.S. Magistrate Judge Tonianne J. Bongiovanni.
According to documents filed in this case and statements made in court:
The TBI Fund is a publicly funded program run by the New Jersey Division of Disability Services, a component of the New Jersey Department of Human Services. The TBI Fund’s purpose is to provide New Jersey residents who have suffered a traumatic brain injury with services and support in order to maximize their quality of life when funding from insurance, personal resources, or other programs is unavailable to meet their needs. Services funded by the TBI Fund include physical, occupational, and speech therapy; service coordination; assistive technology; cognitive therapy; neuropsychological services; pharmaceuticals; wheelchair ramp installation and other home modifications; and general home management and maintenance.
After a prospective patient applies for services, TBI Fund personnel review the application and, if approved, the patient is authorized to secure designated services from a third-party vendor. Once a patient receives services approved by the TBI Fund, the vendor or service provider submits an invoice to the TBI Fund for payment. When an invoice is received, TBI Fund personnel review the invoice to ensure that the patient had been approved to receive the services. If the invoice is approved, an internal payment voucher is generated, authorized by TBI Fund personnel, and then submitted to the New Jersey Department of the Treasury for payment, which issues a check directly to the vendor.
Pizutelli was the manager of the TBI Fund and was responsible for the its day-to-day operation. He supervised, managed, and oversaw the process by which third-party vendors were paid for services rendered to eligible TBI Fund patients. From 2009 through June 2019, Pizutelli, Kraus, Flores, and others conspired to defraud the TBI Fund by misappropriating more than $4.5 million in fraudulent vendor payments for purported services that were never actually provided. Pizutelli orchestrated the distribution of fraudulent vendor payments to Kraus, Flores, and others by generating and processing false invoices and internal payment vouchers. Pizutelli generated these invoices and vouchers to give the appearance that Kraus, Flores, and other conspirators had provided approved services to eligible patients when, in fact, they had not provided any services. Pizutelli then approved and transmitted the internal payment vouchers so that his conspirators received vendor payments even though they had performed no services to eligible patients. Pizutelli orchestrated these fraudulent payments to maintain and further romantic and/or sexual relationships with Flores and other conspirators.
Pizutelli orchestrated the fraudulent payment of more than $4.5 million from the TBI Fund to members of the conspiracy, including more than $4 million in fraudulent distributions to Kraus and Flores, which they used for their own personal benefit and enrichment. To obscure their fraudulent conduct, Kraus and Flores also made material misstatements on their federal income tax returns, by significantly underreporting the income they had derived from the fraudulent scheme.
The health care fraud conspiracy charge carries a maximum penalty of 20 years in prison and of $250,000 or twice the gross receipts to the defendants or gross loss sustained by any victims, whichever is greater.
Acting U.S. Attorney Honig credited special agents of the FBI, Newark Division, Red Bank Resident Agency, under the direction of Special Agent in Charge George M. Crouch Jr., and special agents of the IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez, with the investigation leading to the charges. She also thanked the New Jersey Attorney General’s Office, Division of Law, and the New Jersey Department of Human Services, for their assistance.
The government is represented by J. Brendan Day, Attorney-in-Charge of the Trenton Branch Office of the U.S. Attorney’s Office.
The charges and allegations contained in the complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.