News and Press Releases

Karen Anderson-Bagshaw was sentenced to twelve months and one day imprisonment followed by two years supervised release, and ordered to pay restitution to the Department of Labor

January 20, 2012

Mike Tobin, Public Affairs Specialist, (216) 622-3651

Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, today announced that on Wednesday, January 18, 2012, Karen A. Anderson-Bagshaw, 49, of Geneva, Ohio, was sentenced by U.S. District Court Judge James S. Gwin to twelve months and one day imprisonment followed by two years supervised release, and ordered to pay $71,887.50 in restitution to the Department of Labor.

On October 19, 2011, after a week long trial, a federal jury returned verdicts finding Anderson-Bagshaw guilty of one count of mail fraud and 13 counts of worker’s compensation fraud. The charges arose out of Anderson-Bagshaw’s employment as a letter carrier with the U.S. Postal Service and worker’s compensation payments she received between June 2002 and June 2011.

Evidence established that the defendant failed to report that she was self employed and actively was involved with the operation and maintenance of K&J Alpacas, an alpaca farm. Anderson-Bagshaw designed a scheme to defraud the Department of Labor and the United States Postal Service by misrepresenting her continued entitlement to worker’s compensation benefits.

In addition to finding the defendant guilty of several counts of misrepresentations made on the required forms she submitted, the jury returned verdicts of guilty on counts involving the defendant concealing her true medical condition and physical abilities from her treating physician, and the following false statements made to a federal employee who interviewed her regarding her continued entitlement to receive worker’s compensation: Bagshaw stated that her husband took care of the alpacas and ran the business; that she had nothing to do with the physical care of the animals; Bagshaw failed to disclose that they sold an alpaca and she had received sales commissions on another business venture she engaged in involving Young Living Essential Oils; Bagshaw claimed that she did not drive in relation to the farming activities; she failed to disclose that she regularly engaged in trips outside the State of Ohio; and she claimed that she could not perform a limited duty position with the United States Postal Service because of her physical limitations. Her original claim was based on a back injury related to her thoracic spine.

The case was prosecuted by Assistant U.S. Attorneys Phillip J. Tripi and Chelsea S. Rice. The investigation preceding the indictment was jointly conducted by the U.S. Postal Service Office of Inspector General (OIG) and the Department of Labor Office of Inspector General (OIG).

Eastern Area Special Agent in Charge Elizabeth A. Farcht, U.S. Postal Service Office of Inspector General, stated: “The U.S. Postal Service pays over $1 billion annually in workers’ compensation costs. The majority of postal employees who collect federal workers’ compensation benefits have legitimate claims due to on-the-job injuries and are truly unable to perform any work. A small percentage, however, abuse the system and cost the Postal Service millions of dollars in fraudulent claims. This conviction and sentencing should put those who choose to defraud the system on notice that Special Agents with the USPS Office of Inspector General will aggressively investigate these cases, and present them to the U.S. Attorney’s Office for criminal prosecution when appropriate. Last year, our workers’ compensation fraud investigations resulted in more than 90 arrests, nearly 40 convictions, and saved the Postal Service $185 million in future payments.”

James Vanderberg, Special Agent in Charge for the Chicago Region of the U.S. Department of Labor Office of Inspector General, stated: "Today’s sentence highlights the OIG's determination to investigate fraud against the Federal Employees' Compensation Act (FECA). The OIG is firmly committed to aggressively pursuing and investigating those who would defraud this and any other Department of Labor Programs."


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