According to a news release from US Attorney Debra Wong Yang from the Central District of California, Employers Mutual LLC purported to provide medial coverage for more than 20,000 people across the US, but left $20 million in unpaid claims when it shut down.
Graf was convicted of one count of conspiracy, five counts of mail fraud, 10 counts of misappropriation in connection with a health care benefit program, six counts of money laundering, and one count of obstruction of justice. He faces a maximum possible sentence of 200 years in federal prison.
While California state law requires an insurance company to obtain a certificate of authority before offering insurance coverage, Graf purported to operate Employers Mutual according to the Employee Retirement Income Security Act (ERISA), according to the release.
Earlier this year, Karl Hanson pleaded guilty of misappropriation in connection with a health care benefit program and subscription to a false tax return. Hanson faces a maximum possible sentence of 23 years in federal prison. William Kokott, who claimed to be chairman of the company, died with charges pending.
Between August and October of 2001 insurance commissioners for the states of Florida, Colorado, Texas, Oklahoma, and Nevada ordered Employers Mutual to cease transacting insurance business in their states.
Employers Mutual LLC is unrelated to Employers Mutual Insurance Company of Des Moines, Iowa.