A Charleston businessman who co-founded a company that administered health care insurance has been indicted on federal embezzlement charges in a a case that reportedly left more than $7 million in unpaid medical expenses, according to the federal Department of Labor.
Charles Kenneth Johnson is named in a 24-count indictment returned Feb. 8.
He is accused of theft or embezzlement in connection with heath care for allegedly misappropriating funds that businesses and employees paid for medical insurance.
Some of those funds, according to the indictment, were taken to build new office space for the company for which he served as chief executive officer — Advance Benefit Management Systems.
The construction company hired to build the office space was owned by Johnson’s son, according to the indictment.
Johnson co-founded Advance Benefit Management Systems in Charleston in September 2013. The company operated as a third-party plan administrator for at least 118 self-funded employee health care plans. Advance Benefit Management Systems was under contract to adjudicate medical claims and pay those claims with the money each business and its employees paid into their individual plans.
The premiums from each business and its employees were supposed to be kept separate from others who contracted with Advance Benefit Management Systems. In exchange, each business paid Johnson’s company administrative fees.
According to the indictment, around the year 2016 Advance Benefit Management Systems began commingling the funds from an estimated 2,860 participants across 13 states.
In May 2020, the Department of Labor filed suit against Johnson, his company and company president Randy Wright alleging more than $7 million in claims Advance Benefit Management Systems was paid to manage had gone unpaid. U.S.
District Judge Richard Story from the Northern District of Georgia granted the Labor Department’s request to put the company’s work in the hands of independent fiduciaries, and issued an order prohibiting Johnson and Wright from running Advance Benefit Management Systems or any similar business.
Johnson and Wright agreed to pay a $90,263 penalty and $644,737 in restitution, according to court documents in the civil case filed in December 2021.
Only Johnson is named in the federal indictment returned this week in South Carolina. He is scheduled for arraignment in U.S. District Court in Charleston on Feb. 22.
Federal prosecutors have also filed for forfeiture of $975,500, which they contend is the minimum amount Johnson illegally obtained.
