Two former chief executive officers of Primary Health Network, a non-profit medical organization based in Sharon, Pennsylvania, have been sentenced to prison on charges of conspiracy to commit wire fraud and money laundering, according to an April 24 announcement by United States Attorney Troy Rivetti.
Drew Pierce, age 58, of West Middlesex, Pennsylvania, received a sentence of 40 months in prison on April 23. Jack Laeng, age 72, of Lake Milton, Ohio, was sentenced on April 16 to serve 24 months. Both sentences were handed down by United States District Judge J. Nicholas Ranjan.
Court documents showed that Pierce carried out several schemes over nearly ten years to defraud the organization. Laeng joined him in two of these schemes. In one case, Pierce and Laeng arranged contracts with a developer on behalf of Primary Health Network in exchange for kickback payments equal to half the funds paid by the organization. The board was not aware of these arrangements; losses from this scheme exceeded $1.5 million. Laeng served as CEO at the start of this scheme from 2011 until about 2014 when Pierce took over.
Another scheme involved using a company called TopCoat as an unnecessary middleman between Primary Health Network and its legitimate vendors. The network paid TopCoat—which performed no real work—while TopCoat then paid actual vendors less than it received from PHN. The board did not know that TopCoat was made up entirely of insiders connected with PHN; this resulted in losses exceeding $400,000 for the organization.
Pierce also participated separately in another kickback arrangement and used company funds for personal expenses disguised as business costs.
A co-defendant involved in some schemes is scheduled for sentencing next month. Assistant United States Attorneys William B. Guappone and Jeffrey R. Bengel prosecuted the case.
United States Attorney Rivetti praised investigators from the Federal Bureau of Investigation and Internal Revenue Service–Criminal Investigation for their work leading to these convictions.
The Department of Justice recently created a National Fraud Enforcement Division dedicated to investigating those who misuse taxpayer dollars as part of President Trump’s Task Force to Eliminate Fraud.
