THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, November 15, 1995 TAG: 9511150270
SECTION: LOCAL PAGE: B7 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: PHILADELPHIA LENGTH: Medium: 68 lines
A former Virginia Beach resident now living in Pennsylvania was sentenced Tuesday to 68 months in federal prison for masterminding a health insurance fraud that bilked thousands of people in 26 states and left at least $1 million in unpaid medical bills.
U.S. District Judge John Padova, calling the crime ``despicable,'' imposed the sentence on Edward M. Zinner, 36, who moved in September to Johnstown, Pa., from Virginia Beach.
The judge also ordered Zinner to make restitution of $485,000 to the victims, of which $410,000 already has been collected by the government through forfeiture of the defendant's real estate, cars and boat.
``I will pay back all the money,'' Zinner promised the judge before sentencing.
``It is a fair sentence,'' said Assistant U.S. Attorney Pamela Foa. ``It reflects the judge's understanding ot the seriousness of the crime, and the thousands of persons who suffered, and still suffer, from this nationwide health insurance fraud.''
She had sought a sentence of 87 months.
Zinner's lawyer, Albert Mezzaroba, said, ``I thought the judge was fair.''
Specifically, Zinner pleaded guilty last March to one count of racketeering and one count of forfeiture of $1 million. He was indicted with three other men in connection with the operation of his Atlantic Healthcare Benefit Plan and American Fidelity Plan.
Two of the others - Mark Waldron, 38, of Portsmouth and Jeffrey Neal of Virginia Beach - previously pleaded guilty to charges that they participated in the scheme to defraud by selling health care insurance without proper assets to pay claims. The third, William Moulton Jr. of Virginia Beach, pleaded guilty to a lesser charge in the indictment.
The two firms marketed premiums by fraudulently claiming they were properly insured, when they weren't; that they had sufficient reserves to pay claims, when they didn't; and that they were exempt from state regulation, which they weren't.
The firms did business in Pennsylvania, Arizona, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, Nevada, New York, North and South Carolina, Oklahoma, Rhode Island, Tennessee, Virginia, West Virginia and Wisconsin.
Zinner, who had a rock band called Southern Legends, employed his musicians as insurance salesmen for the two health plans. He also diverted funds from the health scheme to operate a Virginia Beach restaurant, New England Lobster and Clam House.
Padova conducted a daylong hearing before imposing the sentence after the government filed a memorandum saying Zinner had impeded the investigation ``by deliberately refusing to disclose his income since the time of his plea agreement'' in January.
Foa also charged Zinner was not entitled to any reduction in sentencing because he failed to accept responsibility in providing more money for restitution.
Mezzaroba, however, said that Zinner came forward after he was indicted, pleaded guilty and cooperated with the government in other cases that already have brought indictments.
``He wasn't deliberately misleading anyone,'' Mezzaroba said. ``The case was a monster that got away from him. He was greedy, and he is sorry over what happened.'' by CNB