Two former chief executive officers of Primary Health Network, a non-profit medical organization based in Sharon, Pennsylvania, have been sentenced to prison after being convicted of conspiracy to commit wire fraud and money laundering, United States Attorney Troy Rivetti announced on April 24.
The case highlights the impact of financial crimes on organizations that provide essential community services. According to information presented in court, Drew Pierce and Jack Laeng participated in several schemes over nearly a decade that resulted in millions of dollars being stolen from PHN.
United States District Judge J. Nicholas Ranjan sentenced Pierce, age 58 and from West Middlesex, Pennsylvania, to 40 months in prison on April 23. Laeng, age 72 and from Lake Milton, Ohio, received a sentence of 24 months on April 16. The court heard that both men entered into contracts with a developer on behalf of PHN in exchange for kickback payments amounting to half the funds the developer received from PHN. The board of directors was not aware of these payments. This scheme caused losses exceeding $1.5 million while Laeng served as CEO from 2011 until about 2014 before Pierce took over.
Pierce and Laeng also inserted a company called TopCoat between PHN and its legitimate vendors so that PHN paid TopCoat—which provided no actual services—a higher price than what was paid out to true vendors. The board was unaware TopCoat was made up entirely of insiders at PHN; this arrangement led to more than $400,000 in additional losses for the organization. In addition to these joint schemes with Laeng, Pierce also engaged alone in another kickback operation as well as using PHN accounts for personal expenses disguised as business costs.
Another 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 for the government. United States Attorney Rivetti said he commended “the Federal Bureau of Investigation and Internal Revenue Service–Criminal Investigation for the investigation leading to the successful prosecution of the defendants.” He also referenced recent efforts by federal authorities: “On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division…to zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars.”
