News and Press Releases

Two Plead Guilty To Tax And Health Care Fraud Charges

FOR IMMEDIATE RELEASE
February 2, 2011

Greensboro, N.C. – United States Attorney for the Middle District of North Carolina Ripley Rand announced today that two individuals charged with income tax offenses and Medicaid fraud have entered guilty pleas.

Ruben D. McLain, age 40, and Michelle Judge McLain, age 38, both of Winston-Salem, North Carolina, were charged in a multi-count Indictment filed September 27, 2010. On January 24, 2011, the McLains entered pleas of guilty to Count One, conspiracy to defraud the United States, Count Nine, failure to pay over withholding taxes, Count Twelve, health care fraud, and Count Twenty-Five, tax evasion. In addition, Michelle Judge McLain entered a plea of guilty to Count Eight, false entries involving a health care benefit program.

Sentencing for both defendants is set for May 6, 2011 in Winston-Salem, North Carolina.

The punishment for Counts One and Eight is imprisonment for a term of not more than five years, a fine of up to $250,000, or both. The punishment for Count Nine is a term of imprisonment of not more than five years, a fine of up to $10,000, or both. The punishment for Count Twelve is imprisonment for a term of not more than ten years, a fine of up to $250,000, or both. The punishment for Count Twenty-Five is a term of imprisonment of not more than five years, a fine of up to $100,000 and the costs of prosecution, or both. The Court may also include as part of the sentence on each count a term of supervised release of not more than three years, and may order that restitution be paid to the Internal Revenue Service and to the person or program directly harmed by a defendant’s conduct.

The McLains did business in Winston-Salem as Universal Services, Inc., Reynolds Home Care, and Triage Behavioral Health Systems. The factual basis filed at the time of the plea stated the McLains established a bank account for Universal Services, Inc. using a false tax identification number. The factual basis further stated the defendants used business bank accounts to purchase personal items for their home, to pay school tuition for their children, and to purchase jewelry. The McLains pleaded guilty to a charge which alleged that from 2004 through 2007, they either failed to file tax returns or filed false tax returns which did not declare their true income.

The McLain companies provided personal care and mental health services to qualified recipients, paid for by the Medicaid program. The McLains pleaded guilty to submitting a false enrollment application to the North Carolina Division of Medical Assistance which concealed their involvement through the use of a nominee and a fictitious person.

The McLains also pleaded guilty to a charge which alleged that they withheld income, social security, and Medicare taxes from their employees’ wages without paying over these withholdings to the Internal Revenue Service.

The case was investigated by special agents of the Internal Revenue Service Criminal Investigation Division, Health and Human Services Office of Inspector General and the North Carolina Medicaid Fraud Unit.

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