A Covington couple who used a phony medical reimbursement account program to defraud over 350 firms and 4,400 employees out of $48 million have been stripped of their ill-gotten wealth and sentenced to prison.
Denis Joachim, 55, was sentenced on Thursday by U.S. District Judge Carl Barbier to eight years and one month in prison, as well as three years of supervised release. Donna Joachim, 55, was sentenced to 12 months and one day in jail, as well as three years of supervised release after pleading guilty.
Barbier, who was appointed to the court by President Bill Clinton, will examine whether to compel restitution during a hearing on June 9.
A total of $6.3 million in assets must be surrendered by the defendants, including a 26-foot boat and personal watercraft, as well as automobiles such as a Chevrolet Corvette, Dodge Wrangler, and Mercedes-Benz CL 550, among others; their home and two other residences in Madisonville; and 40 acres of land in Bush and 125 acres of land in Spring City, Tennessee.
Reimbursement plans are available.
The couple’s company, The Total Financial Group, apparently provided companies with a supplemental benefits plan that reimbursed employees for their co-payments, deductibles, and other medical bills, according to the indictments. Classic 105 was the name of the radio show.
Classic 105 was claimed to be made up of several components, according to the U.S. Attorney’s office, including a tax-exempt contribution of between $1,000 and $1,600 per month made by an employee (which reduced the employee’s taxable income),
a loan from a lender back to the employee in order to make up for the contribution, an insurance policy payable to the lender upon the employee’s death in order to repay the loan, and fees paid by both the employee and the employer.
Total Financial Group “told prospective employer-clients that participants would never have to make out-of-pocket payments to repay the loan and that as a result of the tax savings, the vast majority of participants would see an increase in their net take-home pay,” according to the investigation.
Rather than securing a single loan or insurance policy, the company orchestrated a series of paper transactions that “did nothing more than lower participants’ taxable wages and employers’ Social Security payments,” without receiving any financing or insurance coverage.
‘Inflaming public skepticism’
Denis Joachim pleaded guilty to conspiracy to commit money laundering, and Donna Joachim pleaded guilty to conspiracy to defraud the United States of America in 2019.
In a statement, U.S. Attorney Duane Evans said that the defendants targeted naïve companies, leading them into a fraudulent scheme that resulted in significant tax consequences for both the firms and their employees.
“Such schemes have a huge impact on their victims, not only in terms of the cash lost in the plan and the time and effort required to repair the negative impacts of the fraudulent plot but also in terms of instilling public distrust in the perpetrators.”