According to the announcement, before closing its doors in October 2003, My Smart Benefits administered over 1,100 direct reimbursement dental plans in 35 states. The indictment alleged that between approximately February 2001 and October 2003, Hogge made false and fraudulent representations to induce companies to sign up for the My Smart Benefits dental plans.
As part of the scheme, he falsely represented that the dental plans were protected by “stop loss insurance” and falsely assisted in creating documentation and forged policies to convince others that the plans were covered by this insurance, the announcement said. Hogge also falsely represented that the health care funds sent in under each plan were being kept in segregated accounts for the benefit of each individual customer.
In addition, Hogge charged higher fees than were allowed under My Smart Benefits’ contracts.
The indictment alleged that in reality all of the money was being pooled into a few accounts, and that much of the money was misused by Hogge for other purposes. Particularly, the indictment alleges that, rather than providing dental benefits with customer funds, Hogge purchased My Smart Benefits’ office building; obtained ownership in Anthony’s Café, a restaurant in Highland, Indiana; and purchased condominiums in San Diego, California.
According to the indictment, Hogge illegally transferred approximately $2,108,000 of client funds out of client trust accounts which caused a net loss to the clients of My Smart Benefits of at least $1.12 million.
Jack M. Lait, Vice-President of Operations, was also charged in the indictment and previously pleaded guilty to conspiracy to defraud. Sentencing has been set for Hogge on July 28, 2009, and Lait is scheduled to be sentenced on June 17, 2009.
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