Employee Charged With Defrauding Memorial Herman Hospital System Of Nearly $10 Million In False Invoicing Scheme
HOUSTON – Kenneth Joseph Wild II, 49, of Katy, has been arrested for allegedly defrauding his employer, Memorial Herman Health Systems (MHHS), of nearly $10 million over a 14-year period, announced United States Attorney Kenneth Magidson.
Wild is expected to make his initial appearance before U.S. Magistrate Judge Mary Milloy at 10 a.m. today, at which time the government is expected to request he be detained pending further criminal proceedings.
The complaint alleges that on or about Feb. 23, 2001, Wild was appointed the manager of Printing and Mail Services, a division within MHHS which outsources the creation of all informational and promotional materials disseminated by MHHS. In this role, Wild had the responsibility for approving invoices submitted for printing services utilized by MHHS and for forwarding those invoices on to accounts payable for payments to be remitted via checks delivered by U.S. mail.
According to the complaint, on or about March 8, 2001, just two weeks after Wild’s promotion to management, an entity named Digital Designs Limited began submitting invoices to MHHS for printing and data conversion services purportedly provided to MHHS. These invoices were submitted by the Printing Services Division and Wild allegedly authorized the payments to Digital Designs. For the next 14 years, the complaint alleges Digital Designs submitted more than 200 invoices to MHHS, varying in frequency and amount each year. The Digital Designs invoices directed all payments to be remitted to a Post Office box in Houston. To date, MHHS has mailed well more than $9 million in payments to Digital Designs at that address, according to the complaint.
On March 11, 2015, MHHS’s chief audit and compliance officer received an anonymous, hand-written letter alleging the Digital Designs account was an anomalous, ghost account and asking for an investigation, according to the allegations. As a result, MHHS swiftly conducted a preliminary review of the account and immediately reached out to law enforcement to report the incident.
According to the complaint, the investigation revealed that Wild allegedly opened the Post Office box where the Digital Designs payments were sent and that he had previously obtained an assumed name certificate for “Digital Designs of Texas, P.O. Box 36345, Houston, TX 77236.”
The investigation further revealed that payments remitted to Digital Designs were allegedly deposited into a bank account which was assigned to Wild with a dba of Digital Designs. The complaint further alleges that a preliminary review of the activity in that account indicates no actual business operations, but appears to be a pass-through account for Wild to allegedly disseminate payments to himself to his other bank accounts. The other accounts appear to show a pattern of significant expenditures for Wild’s credit card payments, substantial interior home improvements and enormous cash withdrawals, according to the allegations in the complaint.
If convicted of mail or wire fraud, Wild faces up to up to 20 years in federal prison and a possible $250,000 maximum fine.
The charges are the result of an investigation by U.S. Postal Inspection Service. Assistant U.S. Attorney Jason Varnado is prosecuting the case.
A criminal complaint is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.