A St. George, Utah, man who faked his death on Pine Valley Mountain last summer and then fled to Australia pleaded guilty to one count of conducting a false or fraudulent scheme to obtain fees or services, a second-degree felony.
Bryan Butas, 35, will undergo a psychological evaluation and will be required to pay restitution to Washington County for search and extradition costs.
Prosecutors said the former Marine applied for a $250,000 life-insurance policy that named his estranged wife, their two sons and a stepdaughter as beneficiaries. Butas told friends on July 30 he was going hiking alone in the Oak Grove area of Washington County, according to an affidavit filed in August.
When he didn’t return to work on Aug. 1, authorities and dozens of volunteers began a fruitless search lasting 10 days, until sheriff’s investigators traced him to Cairns, Queensland, Australia.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Operator of Employers Mutual Convicted of Fraud Scheme
A Southern California man was found guilty of federal fraud charges for bilking the customers of Employers Mutual LLC, which purported to provide healthcare coverage to more than 20,000 people nationwide, but left more than $20 million in unpaid claims for medical services when it was shut down.
James Graf, 44, who is presently incarcerated but formerly resided in Canyon Lake, Calif., was convicted of one count of conspiracy, five counts of mail fraud, 10 counts of misappropriation in connection with a healthcare benefit program, six counts of money laundering and one count of obstruction of justice.
Graf is the second person convicted in connection with the Employers Mutual scheme. Kari Hanson, a 44-year-old Canyon Lake resident, pleaded guilty to misappropriation in connection with a healthcare benefit program and subscription to a false tax return. In August 2005, a third defendant-William Kokott, of Burbank, Calif., an owner of Employers Mutual, who at times called himself chairman of the company-died with charges pending.
Between the Fall of 2000 and December 2001, the three defendants collected more than $14 million in premiums purportedly to provide healthcare coverage under Employers Mutual’s plans.
Authorities said Graf misrepresented to insurance agents and the public that Employers Mutual’s plans were insured through legitimate insurance companies, including Sun Life of Canada, United Wisconsin Life Insurance Co. and Golden Rule Insurance Co. Graf and his co-conspirators also committed fraud by taking more than $3.3 million in premiums, and not paying most of the claims.
While state laws, such as those in California, require an insurance company to obtain a certificate of authority before offering insurance coverage, Graf purported to operate Employers Mutual pursuant to ERISA, the Employee Retirement Income Security Act of 1974. ERISA allows employers and certain organizations such as unions to offer healthcare coverage plans. Employers Mutual’s claim of ERISA compliance shielded the scheme from the scrutiny of the California Department of Insurance, which previously had sanctioned Graf for running an unauthorized health insurance business.
Between August and October 2001, insurance commissioners for Florida, Colorado, Texas, Oklahoma and Nevada ordered Employers Mutual to cease transacting insurance business in their states.
Graf is scheduled to be sentenced on March 6, 2006. He faces a maximum possible sentence of 200 years in federal prison.
Hanson is scheduled to be sentenced on Jan. 23, and she faces a maximum possible sentence of 23 years in prison.
On March 3, 2004, the U.S. General Accounting Office issued a report that examined the actions of Employers Mutual and similar entities. The report, “Private Health Insurance: Unauthorized or Bogus Entities Have Exploited Employers and Individuals Seeking Affordable Coverage” (GAO 04-512T), was presented to the Senate Committee on Finance for Congress’ consideration.
Employers Mutual, LLC is unrelated to Employers Mutual Insurance Co. of Des Moines, Iowa.
Topics California Fraud
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