Enrico Rubano, the former co-head of information technology at AFTRA’s Health and Retirement Fund, has been arrested and charged with stealing $3.4 million from the benefits plan in a false invoicing scheme for IT work that was never performed over a six-year period. Rubano and co-conspirator Shivanand Maharaj were both arrested in New York on Thursday and charged with two counts of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.
Beginning in 2009, and continuing through 2015, Rubano and Maharaj and other unnamed co-conspirators “devised a scheme in which companies they owned or controlled submitted to the Funds invoices for millions of dollars in information technology services that were never performed or that had, in fact, been performed by employees of the Funds or other vendors,” according to the U.S. Attorney’s office.
“Rubano, in his position as co-head of information technology, approved these fraudulent invoices, and received kickbacks from Maharaj and other co-conspirators. Between 2009 and 2015, Rubano and Maharaj and their co-conspirators falsely billed and fraudulently received from the Funds at least approximately $3.4 million.”
Rubano’s attorney said that he is innocent and will be exonerated.
The case is almost identical to that of Nader Karimi, the former chief technology officer at the SAG Pension and Health Plans, who was involved in a similar fake invoice kick-back scheme that defrauded the SAG Plans out of more than $2.5 million. Last April, in a plea agreement, Karimi was sentenced to five years’ probation for filing a false income tax return in which he failed to report more than $700,000 in kickbacks he received from contractors he hired to upgrade the Plans’ computer system.
Officials at AFTRA’s Retirement Fund say they uncovered Rubano’s scheme as part of their internal review process and alerted the authorities.
“During one of these periodic internal reviews of operations, AFTRA Retirement found evidence that there may have been unauthorized expenditures in connection with a vendor relationship,” the Fund says on its website. “AFTRA Retirement immediately undertook a careful review of the evidence and promptly notified federal law enforcement authorities. AFTRA Retirement has actively cooperated in this investigation and we have been informed that former AFTRA Retirement employee Rick Rubano and an outside vendor have been arrested in connection with the government’s investigation. AFTRA Retirement also promptly notified its insurance carrier of this situation and is pursuing recovery of any losses ultimately determined to have been incurred.”
“Enrico Rubano used his position as the co-head of IT for a health and retirement benefit fund to perpetrate a scheme to falsely invoice millions of dollars from the fund for consulting work never actually performed,” said Manhattan U.S. Attorney Preet Bharara. “Rubano allegedly had the fund make payments based on hundreds of fake invoices to Shivanand Maharaj’s company, not for IT work actually done by that company, but really in exchange for alleged kickback payments to Rubano. Money that should have gone to help pay retirement and health care benefits were instead allegedly diverted to Rubano and Maharaj.”
“These defendants devised a scheme to falsely bill their client for work that was never performed by allegedly using an ‘inside’ employee to approve bogus invoices,” said Phillip R. Bartlett, inspector-in-charge of the U.S. Postal Inspection Service. “They went one step too far when they decided to use the U.S. Mail to facilitate their criminal misdeeds.”
On its website, the AFTRA pension fund said it “wishes to assure its participants and other concerned parties that the losses will not have a material financial impact on AFTRA Retirement and participants’ benefits are not at risk.”
The SAG Health Plan and the AFTRA Health Fund merged on January 1, but the union’s pension plans remain separate entities.