Texas Company and CEO face 30 years jail term for insurance fraud

Posted on Thursday, September 19th, 2013 at 6:44 pm    

On Wednesday, September 11, a company in Texas and its CEO entered a guilty plea for carrying out a fraudulent health insurance scheme involving Virginia Tech students. The Frisco, Texas-based GM-Southwest Inc. Company and its CEO John Paul Gutschlag Sr., both pleaded guilty to charges of racketeering and money laundering.

According to the indictment, GM-Southwest, which supervises health insurance of students, was said to have overstated claims by charging higher premiums to Virginia Tech students and illegally monopolizing the business. In order maximize profit, its 73-year-old CEO Gutschlag and the company he used to own confessed to having overstated claims by over $1 million from 2003 up to 2010.

The fraudulent operation was said to have been conducted extensively and resulted in significant damage to Virginia Tech and its students, according to a written statement by U.S. Attorney Timothy J. Heaphy.

Gutschlag is facing a prison term of up to 30 years for the charges, including a $1.2 million restitution that is expected for Virginia Tech and the students based on the plea deal.

If you feel that your insurance provider is not keeping its part of the coverage deal, get in touch with our Dallas attorneys at Smith Kendall, PLLC. We can help you assess the situation and possibly take appropriate legal action when you call 214-361-6124.