A former Virginia CEO pleaded guilty June 15 to embezzling nearly $8 million intended to settle claims for injured children, according to the U.S. Justice Department.
Joseph Gargan, 59, was CEO of the Pension Co. in Arlington, Va., which executed settlement agreements between civil defendants and alleged child victims of medical malpractice.
Mr. Gargan pleaded guilty to embezzlement of government funds and wire fraud.
Prosecutors said the former CEO embezzled $6.9 million of the $15.9 million that the federal government transferred to the Pension Co. from December 2015 to August 2019. The money was supposed to be used to buy annuities and execute six settlement agreements on behalf of children who claimed to be injured due to medical malpractice or who lost a parent through alleged medical negligence at a federally operated or insured hospital or clinic.
Mr. Gargan also embezzled $1 million that a New York hospital paid to the Pension Co. from October 2018 to March 2020 as part of a civil settlement with a child, according to the Justice Department.
"In some cases, Mr. Gargan attempted to conceal his criminal activity by creating false documents purporting to show that he had purchased the annuities when, in fact, he had embezzled and converted that money to his own use," prosecutors said. "Mr. Gargan also made payments to the plaintiffs, falsely claiming the payments were proceeds from an annuity, when, in fact, the payments were made only to conceal his criminal conduct."
Mr. Gargan faces a maximum penalty of 30 years in prison. His sentencing is scheduled for Sept. 23.
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