Ex-UAW President in New Jersey Sentenced for Benefit Fraud

Considering what Sergio Acosta stole, and enabled his business partner to steal, he is one lucky man. On January 15, Acosta, formerly president of United Auto Workers Local 2326 and trustee of a related health plan, was sentenced in Trenton federal court to three years of supervised release for scamming the plan and keeping a large portion of claims payouts. He also was ordered to pay $32,000 in restitution. Acosta had pleaded guilty last April to a superseding information count of theft, embezzlement and fund conversion. He and a New Jersey businessman, Lawrence Ackerman, had been charged in January 2017 in the scheme, which resulted in a $6.6 million loss to Horizon Blue Cross Blue Shield of New Jersey. Ackerman, who pleaded guilty in December, is set for sentencing on March 20. The actions follow a U.S. Labor Department probe.

As Union Corruption Update has noted (here and here), Sergio Acosta used his position with the Edison, N.J.-based Local 2326 to coordinate an elaborate scam with a prominent New Jersey businessman, Lawrence Ackerman. Ackerman, who, as chief operating officer of two unionized companies in the state, created two fake companies for the sole purpose of marketing union health care plans on a nationwide basis to persons ineligible for coverage. Through the latter companies, hundreds of enrollees obtained coverage at inflated premiums and then filed benefit claims that typically were even more inflated. Acosta facilitated this scheme by keeping premiums instead of forwarding them, as required, to the insurer, Horizon Blue Cross Blue Shield of New Jersey. The scam initially cost Horizon $5.6 million. But after Horizon rescinded coverage, Acosta for several months retained a portion of the unauthorized plan participants, incurring another $1 million in false claims. This led to a joint investigation by the Labor Department’s Office of Labor-Management Standards, Office of Inspector General and Employee Benefits Security Administration, and the indictments of January 2017.