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Federal Court Sentences Brentwood, Tennessee, Resident to 66 Months in Prison after U.S. Department of Labor Investigators Uncover Health Insurance Scam
NASHVILLE, TN – After a U.S. Department of Labor Employee Benefits Security Administration (EBSA) investigation, the U.S. District Court for the Middle District of Tennessee in Nashville has sentenced Timothy Wayne Thomas of Brentwood, Tennessee, to serve 66 months in prison for his criminal conduct in marketing and misrepresenting health insurance plans. The sentence also requires him to forfeit $1,500,000 and pay more than $2,500,000 in restitution to the victims of the fraud scheme.
EBSA investigators determined Thomas – as owner of United Benefits of America LLC – directed the sales of association memberships of third-party companies by targeting customers who had been denied traditional health insurance due to pre-existing conditions. The memberships were bundled to include limited-benefit health plans, prescription drug discount cards, accidental death and dismemberment benefits, and lifestyle benefits. Thomas admitted that his salespeople often misrepresented and omitted details to make customers believe they were buying traditional health insurance.
In 2010, the Federal Trade Commission filed a lawsuit against Thomas and his company, and an order was issued freezing his assets and placing his company into receivership. Despite the asset freeze, Thomas immediately withdrew more than $100,000 from a brokerage account and deposited it into a friend's account for his later use.
Thomas's ex-wife, Kennan Dozier Thomas of Franklin, Tennessee, was also charged with criminal contempt, for violating the order related to the asset freeze. She pleaded guilty in September 2016 and was sentenced last week to time served and placed on two years of supervised release, the first 90 days of which will be spent in a half-way house.
"Fraudulently misrepresenting health insurance is a serious crime that can severely impact the lives of innocent individuals," said Employee Benefits Security Administration Regional Director Isabel Colon, in Atlanta. "The U.S. Department of Labor will continue to utilize all tools at our disposal to seek out and hold those individuals accountable who disregard the law and prey on the vulnerable."
The U.S. Attorney's Office in the Middle District of Tennessee prosecuted the case.
Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Additional information can be found at https://www.dol.gov/agencies/ebsa/.