Founder of medical charity in St. Joseph pleads guilty to $8 million fraud scheme

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The founder of a so-called Christian health care sharing ministry in St. Joseph, Mo., pleaded guilty in federal court to leading an $8 million wire fraud conspiracy that cheated hundreds of members, and to making false statements on a personal tax return.

Craig Anthony Reynolds, 61, of St. Joseph, waived his right to a grand jury and pleaded guilty before U.S. District Judge Greg Kays to a federal information that charges him with one count of conspiracy to commit wire fraud and one count of making false statements on a tax return.

Reynolds incorporated and ran Medical Cost Sharing, a tax-exempt organization, as its president and chief executive officer from 2014 through December 2022.

By pleading guilty, Reynolds admitted that he and his co-conspirators used false and fraudulent promises to market Medical Cost Sharing as a “Health Care Sharing Ministry” to defraud hundreds of “ministry members.” Reynolds and his co-conspirators collected more than $8 million in member “contributions,” yet paid only 3.1 percent in health care claims so that they could personally profit and take most of the members’ contributions for themselves.

The co-conspirators included an executive vice president and chairman of Medical Cost Sharing, who ran the organization with Reynolds. This co-conspirator, identified in court documents as “CC1,” has not been charged.

Reynolds marketed Medical Cost Sharing as a “Christian Health Care Sharing Ministry” through insurance brokers, radio stations, social media, and its website. Medical Cost Sharing sales materials promoted its 501(c)(3) tax-exempt designation, advertising that it was different from for-profit health insurance. The Medical Cost Sharing website claimed, “While we are not an insurance company, many think of us as a Christian Health Insurance, or Christian Medical Insurance because, like conventional insurance plans, we help you pay your healthcare costs. We help you protect your family. But unlike these corporate, profit-based plans, we are a healthcare sharing ministry … your healthcare costs are shared with other Christians enrolled in our medical sharing plans.”

Medical Cost Sharing promised its members that if they paid monthly “contributions,” Medical Cost Sharing would pay claims after the members’ “personal responsibility” (deductible) was met.

In reality, Reynolds admitted Medical Cost Sharing rarely paid members’ health care claims. Sometimes Medical Cost Sharing would pay a part of a claim if the member filed a complaint with their state attorney general and/or hired an attorney to represent them against Medical Cost Sharing.

Non-profit organizations file IRS Forms 990, which are accessible to the public. Medical Cost Sharing filed false Forms 990 for tax years 2016 through 2019 that understated Reynolds’s and CC1’s compensation. Medical Cost Sharing filed no tax returns for tax years 2020 – 2022.

According to the plea agreement, Medical Cost Sharing collected more than $8,035,544 in member contributions from 2015 through 2022. During that time, Medical Cost Sharing paid no more than $245,982 in claims, which constitutes only 3.1 percent of the member contributions collected. The $245,982 includes payments to members who filed complaints with their state attorney general and/or hired legal counsel to represent them against Medical Cost Sharing.

Medical Cost Sharing paid no claims at all from Feb. 22, 2021, through December 2022, although it collected a total of nearly $1.2 million in dues in 2021 and 2022.

Reynolds admitted that he and CC1 pocketed at least $5,168,268 from the member contributions from December 2015 through December 2022. Reynolds and CC1 took at least 64 percent of total member contributions for their personal profit.

On Dec. 13, 2022, federal agents served search warrants on the Medical Cost Sharing business location and Reynolds’s residence and seized property generated from Medical Cost Sharing proceeds. Medical Cost Sharing continued to try to collect membership dues after the search and seizure warrants. On Dec. 27, 2022, the court entered a temporary restraining order that prohibited Medical Cost Sharing, Reynolds, and CC1 from continuing to perpetrate a fraudulent scheme and from processing Medical Cost Sharing member payments, among other actions.

In addition to the wire fraud conspiracy, Reynolds also pleaded guilty to making false statements on a personal tax return. Reynolds admitted that he filed a return that claimed he had no taxable income in 2019. Reynolds actually received at least $354,292 in taxable income in 2019.

Under the terms of the plea agreement, Reynolds must forfeit his gain from Medical Cost Sharing as well as any property obtained from his criminal activity, including two residences in St. Joseph, the contents of his bank account, and a 2022 Harley Davidson motorcycle. He must also pay $167,799 in restitution to the government.

Under federal statutes, Reynolds is subject to a sentence of up to 23 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys Kathleen D. Mahoney, Patrick Daly, and John Constance. It was investigated by the FBI and IRS-Criminal Investigation.

FBI Website for Victims of Medical Cost Sharing Fraud

Those who believe they are victims of this fraud and wish to receive restitution for any losses suffered as a result may provide their information through the MCS Victim Information Page that has been established by the FBI.

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