Gregory White, United States Attorney for the Northern District of Ohio, reported that a federal grand jury returned an indictment against John D. Chiappetta, 60, of Richmond Heights, Ohio, charging him with two counts of embezzlement from a health care benefit program sponsored by his now-defunct company, Euclid & Wickliffe Services Inc (“E&W”).
According to the indictment, Chiappetta was the president and principal owner of E&W, and controlled E&W’s operations and finances, including directing or approving all checks issued by the company.
The indictment alleges that E&W sponsored a health care benefit program by which it provided medical and health benefits through a group insurance policy with United HealthCare of Ohio and United HealthCare Insurance Company (jointly referred to as “UHC”).
Under the program, eligible employees who elected coverage contributed a portion of the premium for their group policy coverage, which E&W collected through withholdings from their weekly paychecks to be forwarded to UHC. In addition, some former employees elected to continue coverage (known as COBRA coverage), which they maintained by paying their full premiums to a third party administrator, which in turn sent the premiums to E&W to forward to UHC.
The indictment alleges that E&W was consistently in arrears on premiums owed to UHC due to the fact that Chiappetta caused E&W to make substantial expenditures for his personal benefit and for other E&W business purposes, while at the same time failing to make timely payments of the monies withheld from employee checks for their shares of the premiums and COBRA premiums received on behalf of former employees, as well as the employer share of the premiums.
The indictment further alleges that E&W paid the delinquent premiums through the end of 2000, but paid no premiums to UHC in 2001, despite withholding monies from employees’ paychecks and receiving COBRA premiums for coverage from January through May 2001, resulting in UHC canceling the group policy on June 4, 2001, retroactive to Dec. 31, 2000.
Count 1 charges Chiappetta with embezzling $29,137.50 of premiums withheld from the payroll of 90 employees; Count 2 charges him with embezzling $2,199.33 of COBRA premiums paid by two former employees.
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