Texas Man Pleads Guilty to Conspiring with Former ValueWise CEO Michael Mann to Defraud Lenders
ALBANY, NEW YORK – Derek R. Schwartz, age 54, of Coppell, Texas, pled guilty today to conspiring with former ValueWise CEO Michael T. Mann to defraud companies that loaned millions of dollars to ValueWise subsidiaries.
United States Attorney Carla B. Freedman and Alfred Watson, Acting Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI), made the announcement.
Schwartz pled guilty to one count of conspiring to commit wire fraud and four counts of wire fraud.
Mann obtained millions of dollars in loans from two financing companies, located in New York and Colorado, respectively, by falsifying his companies’ receivables. Mann falsely told the financing companies that Minnesota-based UnitedHealth Group Incorporated (“UHG”) and its subsidiary OptumInsight Inc. (“Optum”) owed millions of dollars to his Clifton Park-based companies. Mann routinely created fake invoices reflecting the fictitious debt and assigned them to the financing companies as collateral for loans.
Schwartz was a high-level executive at Optum, and then began working for ValueWise in October 2013. Until about August 2016, he operated TrueHR, LLC, a ValueWise subsidiary based in Dallas, Texas. He continued to work for ValueWise until its collapse in September 2019.
Schwartz was indicted in August 2021. In pleading guilty today, he admitted that in October 2013, he and Mann asked Luke Steiner, a UHG/Optum employee whom Schwartz used to supervise at Optum, to represent to the financing companies that the fake invoices created by Mann were valid and payable by Optum. With Schwartz’s encouragement, Steiner regularly made these false verifications for six years, ending in August 2019.
Schwartz also admitted he took these other actions in furtherance of the fraudulent scheme:
- In 2014 and 2015, he asked two other UHG/Optum employees to verify false invoices that Mann submitted to one of the financing companies, identified in the indictment as “Financing Company-1.” Schwartz instructed these employees to respond to Financing Company-1’s inquiries in the same manner as Steiner.
- From 2014 through 2019, Schwartz lied directly to one of Mann’s lenders, identified in the indictment as “Financing Company-2.” Mann falsely represented to Financing Company-2 that one of his companies, Weitz & Associates, needed loans in order to pay its vendors. As part of its due diligence process, Financing Company-2 verified, with Weitz’ purported vendors, that they were receiving payments from Weitz. One such purported vendor was TrueHR, a ValueWise company operated by Schwartz. In fact, TrueHR was not a Weitz vendor, and Schwartz regularly lied to Financing Company-2 about TrueHR receiving payments from Weitz – and continued to do so even after TrueHR ceased to exist as a company.
Sentencing is scheduled for January 24, 2024, before Senior United States District Judge Lawrence E. Kahn. On each count, Schwartz faces up to 20 years in prison and up to 3 years of post-imprisonment supervised release. The Government will be seeking $12,968,505.20 in restitution. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.
Mann, formerly of Saratoga County, New York, pled guilty to various crimes in connection with his fraudulent scheme, and was sentenced in August 2021 to 144 months in prison. Steiner pled guilty in February 2020 to conspiring with Mann and is scheduled for sentencing on November 9.
The FBI investigated this case, and Assistant U.S. Attorneys Michael Barnett and Cyrus P.W. Rieck are prosecuting this case.