Fresno- and Visalia-Based Health Care Company President Charged with Fraud, Embezzlement and Money Laundering
FRESNO, Calif. — A federal grand jury returned a 20-count indictment today against Mark Merrill Reynolds, 60, of Fresno, charging him with embezzlement, mail fraud, and money laundering, Acting United States Attorney Phillip A. Talbert announced.
According to court documents, Reynolds was the president and sole shareholder of Ben-E-Lect and Ben-E-Lect of Visalia. These companies operated in Fresno and Tulare Counties. Ben-E-Lect processed health care claims on behalf of its clients, which were small- to medium-sized businesses that purchased high deductible, fully insured group medical plans from independent insurance carriers and then self-insured beneficiaries for amounts up to the amount of the high deductible. Ben-E-Lect processed the claims using funds that its clients paid into an account known as the Ben-E-Lect Employer Elect account. Ben-E-Lect was required to hold these funds in a fiduciary capacity and to withdraw clients’ funds only for specific purposes, none of which included Ben-E-Lect’s own operational expenses or Reynold’s personal gain.
According to the indictment, Reynolds embezzled funds from the Ben-E-Lect Employer Elect account over a five-year period. He allegedly used the embezzled funds for Ben-E-Lect’s business operating expenses, personal mortgage payments, personal vehicle loan payments, personal credit card payments, the purchase of a 30 percent interest in a payroll company, deposits into a personal investment account, and cash withdrawals. All the funds diverted from the Ben-E-Lect Employer Elect account were allegedly first moved into different accounts to conceal their source before being used and spent. The indictment alleges that Reynolds embezzled approximately $6,089,500 from the Ben-E-Lect Employer Elect account, but reimbursed that account approximately $1,613,500, netting a loss of approximately $4,476,000. During the time period alleged in the indictment, Ben-E-Lect serviced over 3,200 clients across 22 states.
This case is the product of an investigation by the Federal Bureau of Investigation and the California Department of Insurance. Assistant United States Attorneys Mark J. McKeon and Patrick Delahunty are prosecuting the case.
If convicted of embezzlement, Reynolds faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. If convicted of mail fraud, Reynolds faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. If convicted of money laundering, Reynolds faces a maximum statutory penalty of 20 years in prison and a fine of $500,000 or twice the value of the property involved in the transaction, whichever is greater. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.