How a New Jersey man allegedly defrauded BCBS of $10M

A man in New Jersey was charged Dec. 17 with conspiring to defraud several Blue Cross Blue Shield affiliates of more than $10 million, according to the Department of Justice.

Jonas Knopf, CEO of Lakewood, N.J.-based Madison Financial Services and a licensed insurance salesman, allegedly conspired with others to scam BCBS from 2009 to 2017. The government alleged Madison Financial Services was the parent company of 11 sham companies that Mr. Knopf helped create to market health insurance coverage to people who were not his employees.

Mr. Knopf and his co-conspirators claimed hundreds of people worked at sham companies in Pennsylvania and Virginia, according to the Justice Department. Mr. Knopf's clients allegedly paid him inflated insurance premiums and funds for payroll. In exchange, Mr. Knopf issued fake payroll checks to give the false impression that the clients were actually employees being paid for services rendered, according to the Justice Department.

The scheme allegedly caused the health insurers to pay out more than $10 million in fraudulent claims.

Mr. Knopf was charged with one count of conspiring to defraud three BCBS affiliates. Conspiracy to commit healthcare fraud carries a maximum penalty of 10 years in prison and a $250,000 fine.

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