Friday, April 20, 2012

Man Sentenced to 2-years for Healthcare Fraud at Non-Profit

Edward Payton
The former Executive Director for the non-profit community mental health agency Mecklenburg County Open Door (“MOD”) was sentenced today in U.S. District Court to serve 18 months in prison for converting the funds of a health care benefit program and failing to file a tax return and pay taxes, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.

U.S. District Judge Max O. Cogburn, Jr. also sentenced Edward Gerard Payton, 52, of Charlotte, to serve two years under court supervision after he is released from prison and ordered Payton to pay $131,169 in restitution.

U.S. Attorney Tompkins is joined in making today’s announcement by Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; and Kay B. Jernigan, Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

Payton was the Executive Director of MOD from 2006 until 2010.  In April 2011, Payton plead guilty to knowingly and willfully converting without authority moneys, funds, property, and assets of MOD and failing to file a tax return for 2008. During sentencing, Edward Payton admitted to unlawfully converting at least $147,000 by taking unauthorized pay “advances” from MOD, a health care benefit program which provides mental health services and housing to mentally ill individuals in the Charlotte area.

According to court documents and court proceedings, Payton also admitted to using an MOD corporate credit card and automobile for his personal use, in violation of MOD policy. In his plea agreement, Payton admitted that the total loss resulting from his criminal conduct at MOD was between $70,000 and $120,000 and that, as part of his criminal conduct, he abused his position of trust with MOD. Although Payton plead guilty to failing to file a tax return and pay taxes for tax year 2008, at sentencing the court found that Payton was responsible for failing to pay taxes for tax years 2007 and 2009.

At sentencing, Judge Cogburn noted, “It’s amazing to me that someone could go for a number of years and not file these [tax] returns.” In imposing a term of imprisonment, the Judge also observed that the criminal conduct “didn’t happen on just one day. [It] wasn’t a snapshot. It happened over a period of time.”

Upon designation of a federal facility, Payton, who is released on bond, will be transferred into custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

The investigation was led by FBI and IRS. Both agencies are part of the Western District’s joint Health Care Fraud Task Force. The task force is a multi-agency team of experienced federal and state investigators and prosecutors, working in conjunction with criminal and civil Assistant United States Attorneys, dedicated to identifying and prosecuting those who defraud the health care system, and reducing the potential for health care fraud in the future.