Former eHealth Technologies CEO accused of defrauding company out of $455K

Gavel money handcuffs fraud
The former CEO of a health IT company allegedly defrauded the company out of $455,000. (Getty Images/alfexe)

The former CEO of eHealth Technologies is accused of defrauding the Rochester, New York-based health IT company and was indicted on multiple charges by a federal grand jury last Friday.

Michael Margiotta was indicted on 15 counts, including wire fraud, money laundering, and filing a false tax return.

Margiotta, who faces up to 20 years in prison, was arraigned Friday in U.S. District Court in Rochester in front of U.S. Magistrate Judge Marian W. Payson and released, the Department of Justice said in a release.


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According to the U.S. Attorney’s Office in the Western District of New York, during a three-year period, Margiotta caused eHealth Technologies to pay about $455,000 in false and fraudulent invoices, with most of these funds transferring into his personal brokerage accounts.

The company is a provider of medical record retrieval and organization services and image-enabled Health Information Exchanges. Margiotta served as CEO between May 2011 and January 2014, according to Assistant U.S. Attorney John Field, who is handling the case.

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eHealth Technologies issued a statement on Friday from its chief general counsel and chief privacy officer, Michael Sciortino, stating that Margiotta’s employment with the company ceased in 2014. “He has not been involved in its operations since that time. The investigation focused on Mr. Margiotta’s actions, and not on eHealth Technologies nor any of our current employees, directors, officers, or business partners,” Sciortino said.

In the statement, the company also said, “This news has no effect on eHealth Technologies, and our ability to provide the highest-quality service and adhere to the principles, ethics, and values that the healthcare community nationwide has come to expect.”

According to Sciortino, Margiotta is the current chairman and CEO of Chartfill Inc., iPatientAxis Inc., and PatientIP, also health IT companies. “Since 2016, eHealth Technologies has fully cooperated with federal authorities with respect to their investigation of Mr. Margiotta who was indicted by a federal grand jury,” he said.

U.S. authorities allege that Margiotta entered into a contract with Healthcare Network Alliance for employment recruiting services.

“According to the contract, HCNA received a fee totaling 20% of an eHealth employee’s base salary for the first year for each employee referred by HCNA and hired by eHealth. Margiotta caused HCNA to issue fraudulent invoices to eHealth and then directed subordinate employees at eHealth to pay the invoices,” Field said in a statement.

In addition, according to the criminal complaint, Margiotta allegedly caused an individual to submit fraudulent invoices to eHealth for services actually provided to an unrelated entity known as Action Against Child Maltreatment (AACM) and then directed eHealth employees to pay the invoices. U.S. authorities claim that AACM is Margiotta’s charity.

Between 2011 and 2014, Margiotta allegedly falsely overstated his business expenses or understated his business income on personal income tax returns. U.S. authorities allege he evaded approximately $341,000 in taxes owed to the United States.

Margiotta is also accused of filing false tax returns for his charity, AACM, for tax years 2013 to 2014, in order to conceal the improper transfer of $80,000 of AACM’s assets to himself.

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