By: Joe H. Dickerson, CFE
Franky O., another businessman, and three attorneys were indicted by a federal grand jury in Philadelphia for racketeering, fraud, and theft as a part of a “massive health-care scheme” that cost 560 small businesses more than $5.7 million, according to J.W. De La Rosa, who was Inspector General of the U.S. Department of Labor.
Some of the victims were then unable to get health insurance because of “pre-existing conditions” or serious illnesses contracted while the scam was in progress.
All five defendants were reportedly associated with several related but now defunct firms once based in Denver, Colorado, including Med-Kare Plan Trust, authorities said.
None of the firms were licensed to sell insurance, according to the grand jury, yet managed to conduct business in 14 states. To avoid a lengthy prison sentence, Franky O, reportedly turned state’s evidence and began working undercover for the US Organized Crime Task Force, while also continuing to commit massive civil fraud.
On two separate occasions over the next few years, I was retained by judgment creditors to help recover their significant judgments against Franky O. With the help of an outstanding and extremely aggressive Colorado civil attorney, we were able to recover 100 percent for both judgment creditors.
I was then contacted by a third client who said he had lost $200,000 to Franky O. in another fraud. This client was uncertain whether he should pursue criminal or civil remedies. With the clients permission, I called Andrew L. Quiat, Esq., the civil attorney with whom I had worked successfully on many cases, including the two Franky O. cases. We invited Franky to join us for Saturday brunch at a local country club. Over brunch, I explained my new client’s situation to Franky. After reflecting on our previous success and the possibility of his facing up to triple damages on a judgment up to $600,000, plus legal fees, costs, and interest, Franky thought it best to just settle with our client out of court for $250,000 cash.
After reaching our mutually agreeable civil settlement agreement, Andy and I asked Franky why he chose his line of work, considering the fact that he obviously was well educated and very bright. Franky shook his head, grinned from ear to ear, and asked for my yellow pad and pen so he could “explain the economies to us.” He drew the following inverted pyramid and explained: