View this article online: https://www.claimsjournal.com/news/southeast/2006/06/28/69940.htm
Steve Edwards of Durham, N.C. has been sentenced to 12-and-a-half years in prison in an insurance fraud case that left North Carolinians with unpaid workers’ compensation and health insurance claims estimated in excess of $3 million according to Insurance Commissioner Jim Long. Edwards entered a guilty plea in federal court on two counts of mail fraud, one count of theft of health care funds and one count of tax evasion.
Edwards was ordered to pay more than $8.3 million in the form of cash and forfeiture of personal belongings, including a motor home, a pickup truck and two Harley Davidson motorcycles.
Edwards’ business, the Magna Corp. formerly of 5317 Highgate Drive in Durham, was a professional employer organization providing services to small- and medium-sized businesses across North Carolina, with additional clients as far away as Kansas. The services provided by the Magna Corp. included payroll management, payment of employee taxes, and procurement of workers compensation insurance and health insurance for clients’ employees.
A complaint to the Department of Insurance’s Investigations Division in 2000 opened a case that revealed Edwards had collected insurance premium payments from dozens of client companies in North Carolina, and then failed to remit the payments to the insurance companies. Investigators suspect Magna issued false certificates of insurance to his clients, leading them to believe that their employees were covered with workers’ compensation and health insurance policies. When these employees later filed claims, they found they had no coverage. One victim officials interviewed had nearly $200,000 in unpaid claims alone.
“All the evidence points to this being a crime of greed,” Long explained. “Edwards lived a lifestyle of big spending and extravagant purchases, while hard working people across this state were left without insurance and up to their necks in medical bills. This was a shameful crime.”
Investigators have been unable to identify all of Edward’s victims or the total amount of money lost, but a partial list include businesses in the Triangle area, Greensboro and Burlington, Wilmington, Rocky Mount and Asheville. The types of businesses range from a Baptist church to a city parks department. Most businesses were construction-related, and would have been considered high risk from an insurance standpoint.
“This may have been one way Edwards was able to win business, by offering coverage to companies other insurance agencies did not wish to cover,” Long said.
The department’s investigators conducted the initial investigation with assistance from the North Carolina Industrial Commission; later the U.S. Department of Labor and the Internal Revenue Service became involved. The U.S. Attorney’s Office for the Middle District of North Carolina prosecuted the case, which was heard by U.S. District Judge William L. Osteen.
Source: North Carolina Department of Insurance