Ex-New Jersey UAW Boss Pleads Guilty to Massive Benefit Fraud

Given what he and his partner in crime stole, Sergio Acosta might wind up getting off lightly. Last Friday, April 6, Acosta, formerly president, and then representative, of the Edison, N.J.-based United Auto Workers Local 2326, pleaded guilty in Trenton federal court to a superseding information count for theft, embezzlement and fund conversion related to a scheme to defraud a union-sponsored health care plan and a Blue Cross Blue Shield affiliate out of a combined $6.6 million by recruiting hundreds of ineligible participants. He and Lawrence Ackerman, a New Jersey business executive, each had been indicted in January 2017 following an investigation by the U.S. Labor Department’s Office of Labor-Management Standards, Office of Inspector General and Employee Benefits Security Administration.

According to prosecutors, Acosta, formerly a resident of New Jersey and now a resident of Puerto Rico, used his union positions, including that of benefit fund trustee, to coordinate an elaborate scam with Lawrence Ackerman. A resident of Old Tappan, N.J., Ackerman was chief operating officer of two unionized companies, Atlantic International Group and Pro-Tech Automotive Services. In addition to those firms, he created two shell companies for the sole purpose of marketing health care plans on a nationwide basis to persons ineligible for UAW Local 2326 plan coverage. Through the latter companies, the enrollees, eventually numbering 700 to 800, obtained coverage at inflated premiums and then filed benefit claims. Acosta facilitated this scheme by keeping the premiums instead of forwarding them, as required, to Horizon Blue Cross Blue Shield of New Jersey.

The scam proved lucrative. Acosta and Ackerman over roughly a decade defrauded Horizon Blue Cross Blue Shield out of $5.6 million in claim payments. What the straw participants collected, in other words, far exceeded their monthly premiums. Ackerman took a cut of the action, though Acosta’s lawyer says that his client didn’t receive any money. Eventually, Horizon caught on and rescinded their coverage. Acosta, not quite satisfied, for several months retained a portion of ineligible participants, incurring another $1 million in false claims. But the U.S. Department of Labor now had been alerted. The DOL conducted a multi-agency probe, concluding that insurance fraud worth $6.6 million had taken place. This led to a Justice Department probe and the charges of last January. Acosta faces a maximum of five years in prison and a $250,000 fine at sentencing this September. Under the superseding indictment, prosecutors dropped the fraud charges. The charges against Ackerman are still pending; he is set for trial this October. For his sake, he might consider copping a plea.