Texas Man Sentenced in Federal Court in Louisiana for His Role in Fraudulent Medical Reimbursement Account Program

Louisiana – On November 2, 2022, U.S. Attorney Duane A. Evans announced that Joseph Anthony Borino, age 65, a resident of Spring Hill, Texas, was sentenced on November 1, 2022, to 12 months and 1 day in prison by United States District Judge Wendy B. Vitter after previously pleading guilty to a one-count superseding bill of information charging him with misprision of a felony, namely, wire fraud, in violation of 18 U.S.C. § 4, for his role in a wide-ranging scheme that defrauded thousands of individuals and companies across the United States. Judge Vitter also sentenced Borino to one (1) year of supervised release after his release from prison and ordered that he pay a $100 mandatory special assessment fee. Judge Vitter scheduled a restitution hearing for February 13, 2023, at 10:00 am.

According to court filings, The Total Financial Group (TTFG) was a Louisiana business formed on or about January 6, 2005, by Denis and Donna Joachim with the Louisiana Secretary of State. TTFG was most recently headquartered in Covington, Louisiana, and employed at least 13 people as well as 56 independent sales agents. Borino worked for TTFG as its National Executive Marketing Director since 2012. Borino oversaw, trained, and educated TTFG’s regional salespeople in that position. Borino generally handled and resolved concerns experienced by agents, prospective clients, and registered clients.

TTFG and its owners, along with Borino and others, developed and promoted the “Classic 105” Medical Reimbursement Account program. Classic 105 purported to be a multi-employer welfare arrangement promoted to employers as a supplemental benefits plan to repay employees for medical expenses such as co-pays and deductibles. Classic 105 participants were required to have a primary health insurance plan separate from and in addition to Classic 105. Classic 105 claimed to be made up of several components, including a tax-exempt contribution of $1,000 to $1,600 per month made by an employee (which reduced the employee’s taxable income), a loan from a lender back to the employee to make up for the contribution, an insurance policy payable to the lender at the employee’s death to repay the loan, and fees paid directly to TTFG by the employee and the employer. TTFG assured prospective employer-clients that participants would never have to make out-of-pocket payments to repay the loan and that most participants would see a rise in their net take-home pay as a consequence of the tax savings. TTFG’s marketing approach informed prospective employer-clients that donations would be maintained in a separate account for each employee-participant and that any money not used by the end of each calendar year would be returned to TTFG. TTFG also charged employees a monthly fee of between $150 and $250, and the employer a fee of 5% of each employee’s contribution amount. TTFG’s Classic 105 program had over 350 employer-clients and 4,400 employee-participants nationally at its peak.

According to court records, TTFG committed wire fraud as a result of how Classic 105 was actually operated. The Classic 105 program never received a single loan or insurance policy from TTFG, and participants made no genuine contributions. The only money given to TTFG by employers and employees was in the form of fees. As a consequence of deceptive pretenses, representations, and promises, employee-participants and employer-clients were duped into enrolling in and paying fees for the Classic 105 program. Furthermore, participants and employers faced significant financial consequences such as not just unpaid taxes, fees, and penalties, but also ineligibility from various government programs such as unemployment benefits and lower Social Security payments.

Despite having knowledge of these events, which constituted wire fraud, Borino failed to disclose and attempted to hide the information on many occasions. For example, in September 2014, Borino was told that “TTFG has not made any deals with any banks in any state” and also had “not solicited nor [sic] received any pooling of funds from a group of individuals.” In the subsequent months, when subordinates asked Borino specific questions about the loan component and passed along concerns that Classic 105 was “a scam and likely an illegal tax dodge,” Borino failed to disclose what he had been told: that there were no entities providing loans. Borino proceeded to convey to subordinates and prospective clients that the loan component was funded by loans from “Wall Street banks,” community banks, and various “investing vehicles” in succeeding years. During Borino’s punishment, Judge Vitter mentioned his seniority in TTFG, an organization that “was based on nothing but fraud.”

U.S. Attorney Evans commended the United States Department of Labor’s Office of Inspector General and Employment Benefits Security Administration, the Federal Bureau of Investigation, and IRS-Criminal Investigations for their work in investigating this problem. The prosecution was led by Assistant United States Attorneys Jordan Ginsberg, Andre Lagarde, and Maria Carboni.