Fact Sheet 

U.S. Department of Labor 

Employee Benefits Security Administration 

April 2011 

MEWA Enforcement 

Background 

Multiple Employer Welfare Arrangements (MEWAs) provide health and welfare benefits to employees of two or 

more unrelated employers who are not parties to bona fide collective bargaining agreements. In concept, MEWAs 

are designed to give small employers access to low cost health coverage on terms similar to those available to large 

employers. For certain employers they represent the only available option for providing employees with health care 

because insurance companies often will not insure small employers who do not fall within their desirable risk 

category. 

MEWAs generally operate in one of two ways. Employers forward money to the MEWA (often including employee 

contributions) which is used either to pay premiums for a health insurance policy or to pay for benefits directly 

from the MEWA. It is the latter arrangement which more often causes problems. The MEWA organizers may not 

have conducted a prudent analysis to determine the amount of contributions needed in order to fully pay claims. 

Although MEWAs can be provided through legitimate organizations, they are sometimes marketed using attractive 

but actuarially unsound premium structures that generate large administrative fees for the promoters. These high 

fees are often paid before any claims are paid, leaving insufficient funds available to pay for the benefits promised by 

the promoters. In addition, certain promoters will set up arrangements that they claim are established pursuant to a 

collective bargaining agreement and, therefore, are not MEWAs but legitimate benefit plans free from state 

insurance regulations. Often, however, these collective bargaining agreements are nothing more than shams 

designed to avoid state insurance regulation. 

States and the federal government coordinate the regulation of MEWAs pursuant to a 1982 amendment to the 

Employee Retirement Income Security Act (ERISA). This dual jurisdiction gives states primary responsibility for 

overseeing the financial soundness of MEWAs and the licensing of MEWA operators. The Department of Labor 

enforces the fiduciary provisions of ERISA against MEWA operators to the extent a MEWA is an ERISA plan or is 

holding plan assets. State insurance laws that set standards requiring specified levels of reserves or contributions are 

applicable to MEWAs even if they also are covered by ERISA. 

EBSA Enforcement Efforts 

The Department has devoted significant resources to investigating and litigating issues connected with abusive 

MEWAs created by unscrupulous promoters who sell the promise of inexpensive health benefit insurance, but 

default on their obligations. Particular emphasis has been put on identifying ongoing abusive and fraudulent 

MEWAs, and working to shut down such operations. 

Enforcement Efforts To Date 

To date, the Department has: 

 Initiated 800 civil and 276 criminal investigations and obtained monetary results of over $225 million. 

There are currently 51 civil and 85 criminal investigations open. 

 Filed 99 civil complaints. 
 Indicted 168 individuals with 130 convictions or guilty pleas. 

 Published technical assistance materials, including a booklet explaining federal and state regulation of 

MEWAs. 

 Issued numerous advisory opinions to assist state prosecutors and regulators to enforce state insurance laws 

against MEWAs. 

 Convicted individuals have been sentenced to total prison terms of approximately 500 years. Most of these 

investigations have been jointly investigated with other agencies, including the Department’s Office of 

Labor Racketeering and Fraud Investigations, the FBI, the U.S. Postal Inspection Service, and the Internal 

Revenue Service’s Criminal Investigative Division. 

Recent Civil Litigation Cases 

W.I.N. Association (WIN) - The Department filed a complaint on February 22, 2011 in District Court against 

the W.I.N. Association, Michael Ray Bianchi, President, and the W.I.N. Association Health Plan for the failure to 

make payments on health care claims, excessive fees, disgorgement of profits, self-dealing, and the non-disclosure of 

fees to the employers. The complaint was filed in the U.S. District Court, Southern District of Texas, Houston 

Division. The Department’s suit alleged that Michael Bianchi withdrew funds from the Plan with no justification 

that such expenditures were associated with reasonable and necessary expenses for the Plan’s administration and 

management. The suit also alleged that Bianchi and W.I.N. mismanaged Plan assets causing the Plan to incur 

unpaid health claims, failed to prudently operate the Plan, and failed to properly segregate Plan assets and corporate 

funds. The Department’s investigation found at least $198,000 in unpaid claims to be outstanding. 

On March 31, 2011, the Department obtained a Consent Judgment and Order against W.I.N. Association, LLC, 

Bianchi, and the W.I.N. Association Health Plan. The Consent Judgment and Order confirmed that the defendants 

violated ERISA from April 2006 through April 2008, when they failed to pay approximately $341,215 in health care 

claims and withdrew approximately $238,383 without authorization from the Plan. Additionally, the Consent 

Judgment and Order permanently enjoined the defendants from violating ERISA or from acting as fiduciaries, and 

authorized the Secretary to bring a collection action for the Plan losses of $579,597 if defendants are found to have 

assets to effect restitution. 

Castleton Group Health Plan - On January 4, 2010 the Department filed a District Court action against the 

Castleton Group, as well as Suzanne Clifton, the Castleton Group’s owner and President, for failure to fund 

accounts maintained for the purpose of paying promised benefits. The Department filed a corresponding 

Bankruptcy Adversary Proceeding against Suzanne Clifton on January 5, 2010. The Department filed its action in 

the U.S. District Court, Eastern District of North Carolina. 

The Castleton Group ceased operations and filed for Chapter 7 bankruptcy protection in December 2007. Suzanne 

Clifton subsequently filed for personal bankruptcy. The Department’s suit alleged that the Castleton Group had 

failed to forward employee and employer contributions to the third party administrator, thereby underfunding 

benefits owed to participants. The amount not remitted to the Plan was estimated to be at least $247,000. 

The Department filed a fully executed Consent Judgment with the District Court on January 7, 2011. The 

Consent Judgment was approved by the District Court on January 19, 2011, and the remaining settlement actions 

were taken, including: payment of insurance proceeds, distribution of $45,000 to the 401(k) Plan in the Castleton 

Group bankruptcy and subsequent reduction of the Plan’s Proof of Claim; payment of $84,000 to the 401(k) Plan 

Special Counsel and subsequent withdrawal of application for fees; withdrawal of the 401(k) Plan Successor 

Trustee's Proof of Claim in the Clifton bankruptcy; recognition of a priority claim of $66,705 on behalf of the 

Health Plan in the Castleton Group bankruptcy; and forwarding of the insurance proceeds to the independent 

fiduciary, in the amount of $265,000 for deposit and distribution. 
Contractors and Merchants Association (CMA) and Small and Independent Business 

Associates, Inc. (SIBA) – The Department sued a purported employer association, a health fund trustee, and 

the fund’s consultant over alleged imprudent management of the Manufacturing and Industrial Workers Benefit 

Fund (MIWU) of Bryan, Texas. The defendants’ actions allegedly resulted in more than $3.4 million in unpaid 

health claims affecting participants in Arizona, California, Florida, Georgia, Illinois, Texas and other states. 

According to the lawsuit, Raymond Palombo, Mitchel Coneley, Leonard Steinberg, Contractors and Merchants 

Association (CMA), and the Small and Independent Business Associates Inc. (SIBA) violated ERISA by causing the 

insolvency of the MIWU health fund and by their failure to hold the fund assets in trust. The defendants permitted 

Palombo to transfer the health claim liabilities of members of his alleged sham employer association, CMA, to the 

MIWU fund. Palombo allegedly diverted plan assets to benefit him, the defendants and others, improperly set 

contribution rates for 880 participants of CMA, enrolled ineligible individuals in the health fund, and failed to 

properly fund the plan. 

The MIWU health fund became financially insolvent in 2005 due to the transfer of CMA members to the fund. At 

the time of the improper actions, Palombo was the president and sole shareholder of CMA, and Steinberg was the 

president of SIBA and provided consulting services to the MIWU health fund through SIBA. Coneley was the 

fund’s trustee. 

The amended complaint, filed July 2, 2008 in the U.S. District Court for the Northern District of Georgia in 

Atlanta, sought to have the defendants restore to the fund all losses with interest, undo all prohibited transactions, 

offset any claims for benefits against the MIWU fund, and permanently bar the defendants from serving in a 

fiduciary capacity to any ERISA-covered plan in the future. In related Department litigation, the court appointed an 

independent fiduciary to pay health claims of affected participants and beneficiaries and to manage the more than 

$1.9 million in fund assets recovered by the Department and collected by the independent fiduciary as of May 2008. 

The Department’s Motion for Default Judgment was granted by the Court against four of five defendants. The 

June 9, 2009 Judgment enjoined the defendants from serving as fiduciaries or service providers, or having control 

over the assets of any ERISA covered employee welfare benefit plan. The Court concluded that defendants CMA, 

Coneley, Steinberg, and SIBA had breached their fiduciary duties under ERISA when the defendants failed to 

establish a reserve or a funding policy to ensure that the MIWU Fund could meet its financial obligations, neglected 

to perform any underwriting activities and failed to discharge their duties under the terms and requirements of the 

documents and instruments establishing the MIWU Fund. The defendants were further found to have engaged in 

self-dealing for their part in assisting Palombo in diverting MIWU Fund assets to CMA and others, and for assisting 

in schemes to allow the enrollment of ineligible participants, all of which personally benefited Palombo. The Court 

also found that Steinberg, as the consultant to the MIWU Fund, was a knowing participant who enabled Coneley to 

breach his fiduciary duties by assisting Coneley with transferring 880 participants into the MIWU Fund with 

unpaid health claims that could not be financially supported by the Fund. The motion against Palombo was initially 

dismissed without prejudice due to his Chapter 7 bankruptcy filing. The Department’s motion that the ERISA 

claims be exempt from the Palombo bankruptcy stay was granted, however, on July 15, 2009, allowing the civil 

prosecution of Palombo to proceed. 

On October 8, 2009, the U.S. District Court for the Northern District of Georgia permanently enjoined Palombo 

from serving directly or indirectly as a fiduciary or service provider to ERISA covered plans. The District Court 

found that Palombo was liable for multiple violations of ERISA for his part in the MIWU fund’s insolvency. 

Further, within 60 days, Palombo must provide a copy of the Order to any person or entity through whom he 

solicited participants for the MIWU, IUPIW and IUIIW Funds. Palombo must also post a copy of the District 

Court Order on his website. The Order binds anyone who has notice of it and works in concert with Palombo. On 

October 26, 2009, the District Court granted the Secretary’s Motion for Entry of Judgment Awarding Monetary 

Relief in the amount of $2.9 million. 

On December 8, 2008, the Department filed an adversary complaint against Palombo’s filing for Chapter 7 

bankruptcy protection, to determine the non-dischargeability of any monetary judgment that the District Court 

might award against Palombo. On December 29, 2010, the Bankruptcy Court ruled in favor of both of the 
Department's two motions: 1) that Palombo was a functional fiduciary with respect to the assets of the 

Manufacturing and Industrial Workers Benefit Fund (MIWU Fund); and had breached his fiduciary duties 

committing an act of defalcation, and 2) the issues decided in an earlier District Court action (default judgment) 

were precluded from being relitigated in the Bankruptcy Court. As a result of the ruling on the first motion, 

Palombo's request in bankruptcy to discharge his debt of $2,958,681 for unpaid health claims to the MIWU Fund 

was denied. 

On March 23, 2011, the Bankruptcy Court issued an order approving the Department’s Motion for Summary 

Judgment. The Bankruptcy Court held that issues decided in the second Default Judgment were precluded from 

being re-litigated in the Bankruptcy Court action, that the District Court’s findings supported a finding of 

defalcation against Palombo, and that Palombo was barred from relitigating facts and issues already adjudicated. As 

a result, the Bankruptcy Court refused to discharge Palombo’s $2,958,681 debt to the MIWU fund. 

Manufacturing and Industrial Workers Union (MIWU) Benefit Fund – On March 28, 2007, the 

Department filed a complaint against Bryan, Texas-based Manufacturing and Industrial Workers Union Benefit 

Fund and against four trustees of the Paramount, California-based International Union of Public and Industrial 

Workers (IUPIW) Canadian Benefit Fund: William Hope, Gary Couch, Roger “Tim” Gue, and Robby Larkin, and 

Pamela Barlow, Secretary-Treasurer of the related IUPIW, for their role in causing the financial collapse and 

ultimate demise of the MIWU Fund in 2005. The action was filed in the U.S. District Court, Northern District of 

Georgia, Atlanta Division, in an effort to secure the MIWU Fund assets, protect the plan participants and halt 

alleged ongoing violations of federal law. The Department’s suit alleged that the defendants mismanaged the Fund 

by admitting large groups of participants into uninsured medical plans without any underwriting and by failing to 

set contribution rates sufficient to fund the benefits offered in violation of ERISA. Further, the complaint alleged 

that the IUPIW Fund officials illegally transferred millions in unprocessed and unpaid claims from the IUPIW 

Canadian Benefit Fund in an effort to preserve IUPIW Canadian Benefit Fund solvency to the detriment of the 

MIWU Fund. The MIWU Fund allegedly owes more than $4.8 million in unadjudicated and unpaid health care 

claims for approximately 2,000 workers and their families in Georgia, Illinois, Texas, Arizona and other states. The 

lawsuit sought restoration of Fund losses, the appointment of an independent fiduciary and other equitable relief. 

On May 11, 2007, the Department obtained a consent judgment appointing an independent fiduciary and barring 

the defendants from continuing to act in a fiduciary capacity with respect to any employee health benefit plan 

subject to ERISA, including the MIWU Fund. The independent fiduciary will terminate the MIWU Fund and 

collect, marshal, and administer any remaining assets, and will process and pay claims. Participants with health 

claims or questions should contact Betty Cordial, the independent fiduciary, at (602) 240-6821. 

Georgia Plumbers Trade Association for Continuing Education, Inc. (GPTA) – On March 15, 

2007, the Department filed a complaint in the U.S. District Court for the Northern District of Georgia, Atlanta 

Division, against Marc Meixner, Leslie E. Smith, David Sherman, GPTA Benefits Group, Inc. and Employers 

Onesource, Inc. The plan sponsor, Georgia Plumbers Trade Association for Continuing Education, Inc. (GPTA), 

located in Griffin, Georgia, is a non-profit organization established in 1994 to provide plumbers in the state of 

Georgia with education and resources to comply with changing plumbing codes. 

The complaint alleges that the defendants mismanaged the GPTA Health Plan by paying illegal commissions and 

fees and by failing to pay plan benefits when due. As a result, $646,875 in benefits has allegedly not been paid. The 

suit seeks a court order requiring that the defendants restore all plan losses with interest and return any illegal 

profits. The suit also seeks to permanently bar the defendants from serving any employee benefit plan governed by 

ERISA in the future and to appoint an independent fiduciary to manage the plan and its assets. 

On January 15, 2008, the Court entered a consent judgment and order requiring Marc Meixner to restore $509,624 

to the Georgia Plumbers Trade Association Health Plan. On February 5, 2008, the Department filed a Complaint 

against the Georgia Plumbers Trade Association, Ron Anderson and Windell Peters. On November 21, 2008 and 

January 6, 2009 the Department obtained consent judgments restoring an additional $250,000 to the GPTA Health 

Plan and requiring the payment of a $50,000 civil penalty. 
International Union of Public and Industrial Workers (IUPIW) Canadian Benefit Fund – On 

November 30, 2005, the Department filed a complaint against the International Union of Public and Industrial 

Workers (IUPIW) Canadian Benefit Fund (Fund) in the U.S. District Court, Northern District of Georgia (Atlanta 

Division). The complaint sought payment of over $1.2 million in unpaid medical claims, as well as the appointment 

of an independent fiduciary to take over operation of the Fund. The suit also sought to bar the current Fund 

fiduciaries from further involvement with any plans covered by ERISA. 

The defendants named in the complaint were the Fund and its fiduciaries, including its four trustees: William Hope 

(Hope), Gary Couch, Robby Larkin and Roger Gue, as well as Pamela Barlow, Secretary-Treasurer of the 

Petroleum Workers Union. The complaint alleges that the fiduciaries repeatedly admitted large groups of 

participants into the Fund's self-funded component even though they knew or had reason to know that many 

individuals in the groups had serious and/or chronic health conditions and, therefore, posed significant risks to the 

Fund's solvency. Since at least 2002, the Fund's fiduciaries imprudently failed to set contribution rates 

commensurate with the level of benefits offered and failed to perform any underwriting activities even when 

admitting large enrollee groups. 

On March 21, 2007, the Department obtained a consent judgment shutting down the International Union of Public 

and Industrial Workers Canadian Benefit Fund. The judgment also restores $542,727 to pay pending health claims 

of more than 2,000 workers and families, removes officials from their positions with the Fund, and appoints an 

independent fiduciary to manage the Fund’s assets of $762,606, terminate the plan and pay health claims. Plan 

officials must pay a civil monetary penalty and are permanently barred from service to any plan governed by the 

Employee Retirement Income Security Act in the future. Participants with health claims or questions should 

contact Betty Cordial, the independent fiduciary, at 602-240-6821. 

Riscomp Industries, Inc. – On November 10, 2005, the Department filed a complaint in Minnesota U.S. 

District Court against the executives of Riscomp Industries, Inc. for their imprudent management of the firm's 

health plan. The health plan was a multiple employer welfare arrangement (MEWA) that provided medical, dental, 

life and death benefits. The complaint alleges that Robert Wood, Kurt Wood, and David Nelson, who were trustees 

of the plan, violated ERISA by retaining more than $1.2 million of health plan contributions from employers and 

employees in the firm's corporate account. When Riscomp filed for bankruptcy protection in November 2002, it left 

over $2.1 million in unpaid claims. 

On February 1, 2007, the Department obtained a consent judgment resolving the Department’s complaint against 

Riscomp Industries, Inc., Robert Wood, Kurt Wood, David Nelson, and the RJ Associates Employee Benefit Plan 

and Trust. Under the Judgment, Riscomp, Robert Wood, Kurt Wood and David Nelson were required to pay 

$512,313 to resolve the unpaid health claims of the MEWA, $207,000 to an independent fiduciary to cover the costs 

of administering the claims payments, and $102,463 in ERISA civil penalties. 

New Jersey Licensed Beverage Association – On November 18, 2004, the Department sued the 

trustees, plan administrators, and other fiduciaries to the New Jersey Licensed Beverage Association health plan in 

Trenton, New Jersey, for mismanagement of the plan. The self-insured health plan left participants with more than 

$6 million in unpaid health claims. The plan ceased operating in August 2003. 

The lawsuit alleged that the defendants violated ERISA by failing to determine and maintain adequate funding 

levels to pay benefits from 1998 to 2003, and did not have adequate contribution rates to support benefit payments. 

The suit names as defendants the New Jersey Licensed Beverage Association, Inc., plan administrator Midlantic 

Healthcare, Inc., and numerous fiduciaries associated with the plan. 

The suit alleged that Midlantic Healthcare, Inc. did not provide information to the plan trustees and fiduciaries 

regarding the financial condition of the plan, and did not manage the plan in a financially sound manner. The plan 

fiduciaries allegedly failed to remove Midlantic and its principal and did not properly monitor the actions of the 

plan administrator. In August of 2003, the plan had an unpaid claim backlog of $6,220,323. 
The New Jersey Licensed Beverage Association, Inc. sponsored the medical plan for as many as 3,895 employees 

who work in bars and restaurants throughout the state of New Jersey and elsewhere. 

On January 5, 2006, Judge Joel A. Pisano for the United States District Court for the District of New Jersey entered 

a stipulation and order pursuant to the All Writs Act that stays all current federal and state court litigation and 

enjoins future suits against the plan, its participants, beneficiaries and fiduciaries for unpaid medical claims pending 

resolution of the Secretary’s suit. 

On March 30, 2007, the Department obtained a partial consent judgment ordering the fiduciaries to make 

restitution of $1.5 million to the New Jersey Licensed Beverage Association Welfare Benefit Plan, less any 

applicable ERISA Section 502(1) penalties, and an additional $150,000 for the court-appointed independent 

fiduciary to marshal the plan’s assets, pay unpaid claims and terminate the plan. The judgment also enjoins each of 

the fiduciaries from serving as a fiduciary or service provider to any ERISA-covered plan based on their 

mismanagement of the plan. This judgment concludes the litigation and follows an earlier Partial Consent 

Judgment that was entered in February 2007 against Midlantic Healthcare, Inc., operated by co-defendant Stephan 

DiTomasso. The Midlantic Judgment provided for restitution of $600,000. 

Team America Corporation – On September 15, 2006, the Department filed a complaint against Team 

America Corporation, Steven Cash Nickerson, Ted Crawford and Andrew Johnson in the United States District for 

the Southern District of Ohio. It is alleged that Team America Corporation, a Professional Employee Organization, 

failed to, among other things, remit employee contributions and employer contributions, which Team America 

received from its client employers, for the payment of insurance premiums. 

The suit seeks the removal and a permanent bar of the plan fiduciaries from serving any employee benefit plan 

governed by ERISA, and asks that the fiduciaries be ordered to make full restitution to the plans, including interest, 

and correct the alleged prohibited transactions. 

On September 6, 2007, the Court entered a Default Judgment against Team America Corporation permanently 

enjoining Team America Corporation and ordering Team America to restore $2,371,193 to all its plans. On April 

25, 2008, the Court entered a Consent Order and Judgment providing for the payment of approximately $950,000 

to the plans and 20 hours of fiduciary instruction for Steven Cash Nickerson, Ted Crawford and Andrew Johnson. 

Mutual Association Administrators, Inc. (MAA) – On July 30, 2008 the Department obtained a default 

judgment requiring Huntington, New York-based Mutual Association Administrators (MAA) to restore nearly $1.8 

million to the Mutual Employees Benefit Trust (MEBT) and permanently barring the firm from providing service 

to plans covered by the Employee Retirement Income Security Act (ERISA) in the future. The judgment resolves a 

lawsuit filed by the Department in the federal district court in Central Islip, New York. 

Mutual Employees Benefit Trust is a multiple employer welfare arrangement that provided health and other welfare 

benefits to 1,912 participants. Mutual Association Administrators was the plan administrator to MEBT. 

The judgment requires MAA to pay $1,779,111 in restitution. The Department sued the defendants on November 

15, 2001, alleging that they and 14 other MEBT trustees diverted the trust’s assets to sham labor unions and the 

corporate defendants. 

On May 4, 2002, the Department obtained a preliminary order requiring four of the trustees to resign, barring 

Leonard and Sharlene Slutsky, Clark Hower, Marketing Motivation Associates Inc., Netscor Inc., VCT Financial 

Services Inc., and Mutual Association Administrators Inc. from serving or exercising control over any ERISAcovered plan, and appointing an independent fiduciary to oversee MEBT. Under prior consent orders, the court 

ordered restitution to the plan and permanently barred MEBT’s owner Susan Fisher from serving as a trustee or in 

any official capacity to any ERISA-covered plan. 

Pennsylvania Builders Association (PBA) – On August 25, 2008, the Department obtained a consent 

judgment in the U.S. District Court for the Middle District of Pennsylvania, in which the Pennsylvania Builders 
Association (PBA), its wholly-owned subsidiary and its trustees agree to restore $5 million to the fund and pay a 

civil penalty of $500,000. The judgment also permanently bars the trustees from using plan assets to pay royalties 

and/or licensing fees to the association, prevents the trustees from contracting with the subsidiary for administrative 

services in exchange for fees, and prohibits the use of trust assets for lobbying purposes. In addition, current and 

future trustees must receive eight hours of fiduciary training annually over the next five years. 

The lawsuit being resolved alleged that PBA of Lemoyne, Pennsylvania; its wholly-owned subsidiary Builders 

Services Inc. (BSI); and trustees Robert Basile, Patrick Brewer, Dennis Brislin, Scott Cannon, James Conner, Brad 

Elliott, Charles Farrell, Chuck Hamilton, David Knipe, Gene Kreitzer, Gary Naeser, Michael Rodino, Toni Rogan, 

Mack Smith, Chauncey Wirsing, Clarence Yeagley, Jack Zimmer and Roger Zimmer violated their fiduciary duties 

to the Pennsylvania Builders Association Benefits Trust. PBA sponsored the trust, and BSI was administrator of the 

trust. 

The suit alleges that PBA received royalty payments and BSI received administrative fees under arrangements with 

BSI and the trust’s third party administrators. The royalties paid to PBA represented a percentage of the 

administrative fees paid by contributing employers. The Department alleged that these royalty payments were 

prohibited because the sponsor had provided its name and endorsement to the trust when it created and named the 

trust. The trustees allegedly misused plan assets to pay royalties to PBA from 2000 to 2007, administrative fees to 

BSI from 2000 to 2007 and for political lobbying from 2002 through 2004. 

The trust provided health, life insurance, dental, vision and temporary disability benefits to 12,616 participants as of 

2006. 

International Union of Industrial and Independent Workers Benefit Fund (IUIIW) - On 

September 9, 2008, a federal district court in Atlanta held two former trustees of the California-based International 

Union of Industrial and Independent Workers Benefit Fund (IUIIW) in civil contempt for failing to comply with a 

previous court order barring them from serving in a fiduciary capacity to plans governed by the Employee 

Retirement Income Security Act (ERISA). 

Under the contempt order, Geoffrey Beltz and James Miller are barred from serving in a fiduciary capacity to any 

plans governed by ERISA; communicating with participants of the IUIIW fund, and marketing, selling and 

recruiting employers or employees for plans offering benefits under ERISA. Furthermore, to the extent that Beltz 

or Miller work for any employer, association or labor organization which sponsors an ERISA-covered employee 

benefit plan in the future, the contempt order requires them to notify the directors and officers of such 

organizations of the terms and requirements of the contempt order. 

Under the 2004 court order, the fund’s trustees were required to pay $840,000 in restitution to the fund and to pay 

civil penalties to the federal government. The trustees were also barred from serving as plan fiduciaries. 

The Department alleged in the 2004 lawsuit that improper actions by Beltz, Miller and other trustees to a health 

fund sponsored by the International Union of Industrial and Independent Workers resulted in several million 

dollars in unpaid health claims. The fund, which purported to be a union-sponsored benefit plan, was marketed to 

employers and individuals in Texas, Georgia, Oklahoma, California and many other states. Several states, including 

Oklahoma and Georgia, ordered the fund’s operators to stop all insurance-related activities. 

Beltz and Miller admitted they later violated the 2004 contempt order by directly or indirectly controlling an 

ERISA-covered health plan offered by the International Union of Industrial and Independent Workers Local 30, 

another purported labor organization. The contempt order was entered in federal district court in Atlanta. 

Recent Criminal Prosecutions of Corrupt MEWA Operators 

United States v. Michael L. Millman – On March 24, 2011, Michael L. Millman was sentenced by the U.S. 

District Court, District of Connecticut in New Haven to 63 months of imprisonment, followed by five years of 

supervised release, and ordered to pay restitution of over $975,000 for stealing from a multiple employer welfare 
arrangement. Millman had pleaded guilty in April 2010 to embezzlement from an employee benefit plan of more 

than $1 million, wire fraud and bank fraud. He had owned and managed the Nutmeg Benefit Group, LLC and the 

Nutmeg Welfare Benefit Plan and Trust. The two entities provided life insurance benefits to employees of 

numerous companies. Millman failed to send premiums to insurance companies by taking policy loans against the 

value of participant policies. He also defrauded Essex Savings Bank, which had served as the trustee of the Nutmeg 

Welfare Benefit Plan and Trust. The case was prosecuted by the United States Attorneys Office for the District of 

Connecticut. It was investigated jointly by the Boston Regional Office and DOL Office of Inspector General. 

United States v. Jonathan Hogge – On March 28, 2011, Jonathan Hogge owner of My Smart Benefits was 

sentenced in Federal District Court in the Northern District of Indiana to 84 months in prison and two years of 

supervised release. Restitution was set at $254,425 to be paid to the victims with substantiated unpaid dental claims. 

Hogge had previously pled guilty to one count of conspiracy to commit theft or embezzlement from an employee 

benefit plan (18 U.S.C. 371); nine counts of mail fraud (18 U.S.C. 1341), and one count of wire fraud (18 U.S.C. 

1343). 

Jonathan Hogge and Amy Wadas Hogge had co-owned My Smart Benefits, Inc. (MSB), a third party administrator 

of self-funded direct reimbursement dental plans throughout the United States since February 2000. Jack Lait was 

the V.P. of Operation for MSB. Hogge closed MSB's doors in October 2003 because the company had insufficient 

funds to pay claims or employees' salaries. Hogge and Lait, along with other principals of MSB not charged, 

allegedly marketed and sold this direct reimbursement dental plan to various insurance agents and employers as 

though the plan had a stop loss component, knowing full well that there was no stop loss insurance in place. The 

case was a joint investigation of EBSA’s Chicago Regional Office and the Office of the Inspector General of the 

U.S. Department of Labor. 

United States v. Meixner – On November 10, 2009, Marc Harris Meixner, an insurance broker for the 

Georgia Plumbers Trade Association (GPTA), pleaded guilty to a criminal information in the U.S. District Court of 

the Northern District of Georgia. He admitted to having intentionally misappropriated assets of a health care 

benefit program sponsored by the GPTA, in violation of Title 18 U.S.C. Section 669. For nearly a year, from June 

2003 through April 2004, Meixner defrauded the GPTA by sending invoices that overstated the amount of the 

monthly contributions. Meixner was sentenced to five years probation. In his plea agreement, Meixner promised 

to pay restitution of $348,672.86 to the plan. EBSA worked this case jointly with the Federal Bureau of 

Investigation, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and the 

Georgia Department of Insurance. 

United States v. Andrea Mills – On September 21, 2009, Andrea Mills was sentenced in the Federal District 

Court of the Southern District of West Virginia to 37 months imprisonment and three years supervised release. She 

was also ordered to pay criminal restitution of $2,311,428.81. Mills had pleaded guilty to one count of 

embezzlement from an employee benefit plan in March 2009. Andrea Mills had been the owner of Allied Benefit 

Administrators, Inc., a third-party health benefit claims administrator located in Huntington, West Virginia. From 

March 2006 to January 2008, Mills had collected monthly premiums for reinsurance from various ERISA-covered 

employee health benefit plan clients. Rather than using the premiums to purchase insurance for her clients, Mills 

had instead converted the money to her own use and the use of her business. As a consequence, Mills’s clients 

sustained losses exceeding $2 million for health claims that should have been covered by the reinsurance. The 

investigation was conducted by the Washington District Office of the PRO, the DOL OIG, and the FBI. 

United States v. Pullen – James Pullen was sentenced on May 12, 2009 in the Federal District Court of 

Kentucky, Northern Division to 20 months imprisonment and three years supervised release for one count of mail 

fraud. Pullen was also ordered to pay criminal restitution totaling $312,113.14 to a number of his former clients. 

Pullen had owned the Triple Crown Financial Group, a self-funded health care benefit program that he marketed 

to private employers. The operation was based in Florence, Kentucky. In the plea agreement he filed in December 

2008, Pullen admitted that he had used at least a portion of his clients' health care premium contributions to pay 

company expenses from July 2003 until November 2004. Instead of depositing the employers’ monthly health care 

contributions in an appropriate bank account, Pullen had transferred his clients’ payments to his own company's 

bank account. 
United States v. Costello – On April 9, 2009, Ralph and Julie Costello (husband and wife) were sentenced in 

the Federal District Court, Northern District of Indiana, to 48 months incarceration, three years subsequent 

supervised release, and criminal restitution of $2,979,350.88. The Costellos had each pleaded guilty to one count of 

embezzlement from an employee benefit plan (18 U.S.C. § 664). Ralph and Julie had worked as the president and 

vice president, respectively, at CASI, Inc., a licensed third party administrator for employee health care plans. 

CASI contracted with employers who had self-funded health care plans to gather and review employee health care 

claims, determine the validity of claims, and pay the claims with funds from the employer. Between November 

2004 and February 2006, the Costellos essentially created a Ponzi scheme, commingling employer premiums into 

their own bank accounts. While CASI, Inc. did pay some health care claims and premiums for stop loss insurance, 

when the company collapsed in February 2006, it left many of its client companies high and dry, with outstanding 

employee medical claims and unpaid stop loss insurance. 

This fact sheet has been developed by the U.S. Department of Labor, Employee Benefits Security Administration, Washington, DC 20210. It 

will be made available in alternate formats upon request: Voice phone: 202-693-8664; Text telephone: 1-202-501-3911. In addition, the 

information in this fact sheet constitutes a small entity compliance guide for purposes of the Small Business Regulatory Enforcement Fairness 

Act of 1996.