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Press Release

Another Co-founder of Medical Charity in St. Joseph Pleads Guilty to $8 Million Fraud Scheme

For Immediate Release
U.S. Attorney's Office, Western District of Missouri
‘Christian Health Care Sharing Ministry’ Defrauded Hundreds of Members

KANSAS CITY, Mo. – Another co-founder of a so-called Christian health care sharing ministry in St. Joseph, Mo., pleaded guilty in federal court today to his role in an $8 million wire fraud conspiracy that cheated hundreds of members, and to making false statements on a personal tax return.

James L. McGinnis, 77, of St. Joseph, waived his right to a grand jury and pleaded guilty before U.S. District Judge Greg Kays to a federal information that charges him with one count of conspiracy to commit wire fraud and one count of making false statements on a tax return.

McGinnis co-founded Medical Cost Sharing, a tax-exempt organization, and served as its chief operating officer from 2014 through December 2022.

Craig Anthony Reynolds, 62, of St. Joseph, another co-founder of Medical Cost Sharing, pleaded guilty to the same charges in a separate but related case on Nov. 14, 2023. Reynolds incorporated and ran Medical Cost Sharing as its president and chief executive officer from 2014 through December 2022.

McGinnis and Reynolds each admitted that he and his co-conspirators used false and fraudulent promises to market Medical Cost Sharing as a “Health Care Sharing Ministry” to defraud hundreds of “ministry members.” They collected more than $8 million in member “contributions,” yet paid only 3.1 percent in health care claims so that they could personally profit and take most of the members’ contributions for themselves.

McGinnis and Reynolds pocketed at least $5,168,268 from the member contributions from December 2015 through December 2022. Thus, McGinnis and Reynolds took at least 64 percent of total member contributions for their personal profit.

McGinnis and Reynolds marketed Medical Cost Sharing as a “Christian Health Care Sharing Ministry” through insurance brokers, radio stations, social media, and its website. Medical Cost Sharing sales materials promoted its 501(c)(3) tax-exempt designation, advertising that it was different from for profit health insurance. The Medical Cost Sharing website claimed, “while we are not an insurance company, many think of us as a Christian Health Insurance, or Christian Medical Insurance because, like conventional insurance plans, we help you pay your healthcare costs. We help you protect your family. But unlike these corporate, profit based plans, we are a healthcare sharing ministry … your healthcare costs are shared with other Christians enrolled in our medical sharing plans.”

Medical Cost Sharing promised its member that if they paid monthly “contributions,” Medical Cost Sharing would pay claims after the members’ “personal responsibility” (deductible) was met.

In reality, McGinnis and Reynolds admitted, Medical Cost Sharing rarely paid members’ health care claims. Sometimes Medical Cost Sharing would pay a part of a claim if the member filed a complaint with their state attorney general and/or hired an attorney to represent them against Medical Cost Sharing.

Medical Cost Sharing paid no claims at all from Feb. 22, 2021, through December 2022, although it collected a total of nearly $1.2 million in dues in 2021 and 2022.

On Dec. 13, 2022, federal agents served search warrants on the Medical Cost Sharing business location and the residences of McGinnis and Reynolds and seized property generated from Medical Cost Sharing proceeds. Medical Cost Sharing continued to try to collect membership dues after the search and seizure warrants. On Dec. 27, 2022, the court entered a temporary restraining order that prohibited Medical Cost Sharing, McGinnis, and Reynolds, from continuing to perpetrate a fraudulent scheme and from processing Medical Cost Sharing member payments, among other actions.

In addition to the wire fraud conspiracy, McGinnis also pleaded guilty today to making false statements on a personal tax return. McGinnis admitted that he filed a return that claimed he had no taxable income in 2019. Reynolds actually received at least $140,881 in taxable income in 2019.

Under the terms of today’s plea agreement, McGinnis must pay restitution to Medical Cost Sharing member victims and to the IRS. McGinnis also must forfeit to the government any property obtained from the wire fraud conspiracy and a money judgment representing all proceeds obtained from the scheme.

Under federal statutes, McGinnis is subject to a sentence of up to 23 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys Kathleen D. Mahoney, Patrick Daly, and John Constance. It was investigated by the FBI and IRS-Criminal Investigation.

FBI Website for Victims of Medical Cost Sharing Fraud

Those who believe they are victims of this fraud and wish to receive restitution for any losses suffered as a result may provide their information through the MCS Victim Information Page that has been established by the FBI.

Updated April 8, 2024