The owner of a bankrupt rural health insurance brokerage was indicted by federal agents in Denver for embezzlement, fraud and money laundering.
Gerald Rising Jr., 59, owner of Centennial-based Rural Health Plans Initiative, will be arrested on appearance Wednesday and faces up to 20 years imprisonment and potentially millions in fines, according to U.S. Attorney for the District of Colorado John Walsh.
Rising sold himself and his company as a third-party administrator for small non-profits and private companies who had trouble finding affordable health insurance for employees. He signed up a number of school districts, small town administrations, nursing companies and others, and promised to handle their claims and provide backup insurance for catastrophic illnesses.
Last summer and fall, many of those businesses began learning their claims with hospitals and doctors had never been paid by Rising, and they and their employees were on the hook for hundreds of thousands of dollars each in medical bills. The Denver Post reported that Rising was under federal scrutiny; he is also the subject of private lawsuits seeking damages.
The indictment, from a federal grand jury late Tuesday, says Rising mixed self-funded premiums from many clients into central accounts, contrary to trust agreements. It says Rising promised the self-funded plans he had bought backup insurance from Lloyd’s of London that would begin at a $25,000 claim, but that his re-insurance only started at $125,000.
Rising allegedly created an offshore insurance company in Anguilla in order to avoid oversight by the Colorado Division of Insurance. The indictment also claims Rising began kiting checks between various bank accounts in 2009 and 2010 to make his business appear stronger. He falsely told the employers their claims were being paid, and at the same time boosted his salary “in order to siphon monies” meant to be held by RHPI for the plan holders.
The indictment also alleges, Rising created false balance statements for the employers to cover the money problems.
The indictment, after joint investigation by the U.S. Attorney, the IRS and the Department of Labor, which oversees self-funded employer plans, says Rising and RHPI defrauded employers in at least three states. Past Denver Post stories detailed major unpaid bills and administrative nightmares for entities like the city of Burlington, the Genoa-Hugo School District and other employers in Gunnison, Yuma and elsewhere.
RHPI’s bankruptcy filing showed the firm had $8.7 million in revenue in 2009, down to $2.9 million through most of last year. A private lawsuit for fraud is trying to recover any leftover assets for the various employers.
Michael Booth: 303-954-1686 or mbooth@denverpost.com
