For Release: May 27, 2010
For media inquiries only, contact: Brian J. Gottstein
Email: bgottstein@oag.state.va.us
Phone: 804-786-5874
Woman who embezzled from Virginia Birth Injury Fund sentenced to 10 years in prison
- Successful prosecution a result of collaboration between Virginia attorney general and federal prosecutors -
RICHMOND (May 27, 2010) – A former claims manager at the Virginia Neurological Birth Injury Fund (BIF), was sentenced today to 10 years in prison for defrauding the fund of approximately $755,000.
Attorney General Ken Cuccinelli and U.S. Attorney Neil MacBride, announced today the sentencing of Iris F. Allen, 45, of Richmond, by U.S. District Judge Henry Hudson. Allen is also subject to a forfeiture money judgment of nearly $1.3 million.
“The length of the sentence imposed reveals the serious nature of the crimes as well as the unique nature of the victims,” said Cuccinelli. “The Birth Injury Fund serves some of the most vulnerable citizens of the Commonwealth – children permanently injured at birth and suffering from debilitating conditions who need assistance with daily living activities.”
“As a claims manager, Iris Allen was expected to act for the good of BIF families,” said MacBride. “Instead, Allen exploited these families and pocketed more than $750,000 that belonged not to BIF, but to the many children and their caregivers who benefit from that fund.”
“This was such a despicable act,” said Cuccinelli. “When my office was investigating this case, our attorneys realized that state law limited how much money could be recovered from Allen to pay back the fund. That’s when we decided that a special assistant U.S. attorney from my office would work with our partners in the U.S. Attorney’s Office to prosecute under federal law, which provided the best mechanism for recovery and for addressing Allen’s criminal conduct.”
BIF was created by the Virginia General Assembly in 1987 to provide lifetime medical benefits to participating infants born with severe birth-related neurological injuries. BIF is currently funded by participating physicians and hospitals.
On February 8, Allen pled guilty to health care fraud and aggravated identity theft as a result of a fraudulent billing scheme she began in July 2006. During her employment at the fund, from 2004 to 2009, Allen submitted false invoices to BIF for payment to one of two companies she created. The businesses – Paratransit Company of Virginia and Dandridge Design and Construction, L.L.C. – were listed as the vendor or contractor on numerous false or inflated invoices. Unknown to the BIF representative issuing payments, Allen was the sole owner of both companies. Allen also used the names of 28 different BIF children or parents to create the appearance of legitimate invoices submitted to BIF.
In some instances, the invoices were for services never rendered, and in others, Allen submitted inflated invoices above the total cost for actual services provided by other vendors. The total amount of fraudulent claims Allen submitted, including inflated invoices, was nearly $1.3 million; however, the actual loss to the fund was approximately $755,000.
The attorney general’s office began investigating the case as a state process, but quickly recognized that state law possessed limitations on asset forfeiture that would not provide maximum recovery from Allen to the fund. Attorneys worked with the U.S. Attorney’s Office to prosecute under federal statutes (health care fraud and aggravated identity theft) to maximize the recovery and the penalty. She received 96 months for the health care fraud charge and 24 months for aggravated identity theft charge.
The end result was a collaborative process with joint federal/state cooperation at all levels from investigation through sentencing. The case was investigated by the FBI, the U.S. Marshal’s Service, and the Virginia State Police. Special Assistant United States Attorney and Assistant Attorney General Shannon Y. Dion and Assistant United States Attorney Laura Colombell Marshall prosecuted the case on behalf of the United States.
You can contact the BIF legal team at the attorney general’s office: Mike Favale, 804-786-4319.
Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.
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