News and Press Releases

FORMER MADIGAN ARMY MEDICAL CENTER EMPLOYEE CHARGED IN CONNECTION WITH BRIBERY AND FALSE BILLING SCHEME
Civilian Employee Conspired with Upholstery Shop Owner, Splitting More than $50,000 from Fake Billings

FOR IMMEDIATE RELEASE
February 2, 2007

LUIS CRUZ, 43 , of Lakewood, Washington, was charged today in U.S. District Court in Tacoma with Theft of Honest Services, and Accepting a Bribe to Aid in the Commission of a Fraud on the United States. CRUZ was employed as a Tool and Parts Attendant at the U.S. Army’s Madigan Medical Center until he was fired in April 2005, for drug use. Following his dismissal, an investigation revealed that CRUZ had been using his government issued credit card to pay for services never ordered or received by the military. Working with a co-conspirator who processed the charges, CRUZ and the co-conspirator pocketed more than $50,000 in cash for which they had falsely billed the government.

According to charging papers filed in U.S. District Court, the scheme began in mid-2002, when CRUZ approached the owner of Bobbin’s Custom Upholstery about re-upholstering some hospital beds for Madigan. CRUZ paid for the upholstery job up front, but only brought about one-third of the mattresses in for upholstery work. CRUZ later suggested to the owner that he would mark that all the beds had been done, and that the two should split the excess cash for the work. They continued this scheme until they realized someone would likely count the number of mattresses allegedly re-upholstered, and would realize it was more than the total number of beds at Madigan.

The men then entered a scheme where Bobbin’s Custom Upholstery served as a third party billing entity to process payments to other Madigan Army Medical Center vendors for fraudulent bills. CRUZ would fabricate documents for service or repair of equipment, when no such work had been done. Payment would be made via the government credit card, and processed through Bobbin’s Custom Upholstery. CRUZ and Bobbin’s owner would split the cash generated in the scheme. More than $52,000 in charges on CRUZ’s government issued credit card was processed through Bobbin’s credit card processing company using this scheme.

A complaint contains allegations that have not yet been proven at trial beyond a reasonable doubt.

If convicted, CRUZ faces up to 20 years in prison.

The case is being investigated by United States Army Criminal Investigation Division Command (USACIDC), Major Procurement Fraud Unit (MPFU), and the FBI. The case is being prosecuted by Assistant United States Attorney David Reese Jennings.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.

Return to Top

USAO Homepage
USAO Briefing Room
Justice 101
Community Outreach

Engaging in outreach in order to prevent crime, respond to community needs, and promote good citizenship.


Victim Witness Assistance

Making sure that victims of federal crimes are treated with compassion, fairness and respect


Project Safe Neighborhoods

Our nation-wide commitment to reducing gun crime in America


Oficinas de los Fiscales de Estados Unidos En Español