CEO, CFO of Kentucky medical clinics sentenced for pocketing employees' benefit contributions

The former CEO and CFO of several Kentucky healthcare companies recently were sentenced to prison and ordered to pay restitution for their involvement in a yearslong scheme in which they collected federal taxes from employees and failed to turn them over to the government, the U.S. Department of Labor announced Oct. 19. 

Former CEO Ann Sonderman Giles was sentenced to 30 months in prison and former CFO Lu Anne Wallace was sentenced to 33 months. They were executives for several companies, including GW Management, Clark Medical Ventures, Madison Primary Care, Paragon Kentucky and Primary Care of the Bluegrass, all registered to do business in Kentucky. 

The pair were sentenced after a joint investigation by the U.S. Labor Department and IRS. The investigation revealed that Ms. Giles and Ms. Wallace failed to pay IRS-mandated trust fund taxes on the revenue earned by their companies and their employees from January 2014 to July 2017. 

"While the pair withheld Social Security and Medicare taxes from their employees' paychecks, they knowingly and willfully failed to turn over the money to the U.S.," the Labor Department stated. 

For the first half of 2014, Ms. Giles and Ms. Wallace also withheld insurance premiums from paychecks for employees at GW Management and did not transfer those funds to Humana or any other health insurer. 

Ms. Giles and Ms. Wallace conspired to defraud the federal government of more than $1.5 million, according to the Labor Department. 

 The women also were ordered to pay $1.5 million in restitution. 

The sentencing came after the pair reached a plea agreement with prosecutors. As part of the agreement, the federal government dismissed four counts of an indictment from June 2019 in which a grand jury charged Ms. Giles and Ms. Wallace with embezzling healthcare plan funds. 

More articles on legal and regulatory issues:
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Surgeon sues Cincinnati Children's, alleges retaliation for reporting peer's practices

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