Franky O., another businessman, and three attorneys were indicted by a Federal Grand Jury in Philadelphia for racketeering, fraud, and theft as part of a “massive health care fraud 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 unable to then 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 Cabot Day Insurance Co., Morgan-Puttmann Insurers Ltd., and Equity 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 U.S. Organized Crime Task Force while continuing to also commit massive civil fraud.
On two separate occasions over the next few years, I was retained by judgment creditors to help recover their significant losses. With the help of an outstanding and extremely aggressive Denver civil attorney, we were able to recover 100% for both judgment creditors.
I was then contacted by another client who said he had lost $200,000 to Franky O. in another fraud. This client was uncertain if he should pursue criminal or civil remedies. With the client’s permission, I called the civil attorney I previously worked successfully with on two Franky O. cases recovering 100%. 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 facing up to triple damages on a judgment up to $600,000, plus legal fees, costs, and interest, Franky thought it best for him to just settle with our client out of court for $250,000 cash. Which our client was happy to accept.
After reaching our mutually agreeable civil settlement agreement, the attorney and I asked Franky why he chose this 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: