2003-07-24 -- Napolitano, Frank and Edward Maze -- Sentencing -- News Release

Two Sentenced to Prison for their Roles in a $1.1 Million, 13-Year Healthcare Debt Collection Fraud

NEWARK - Two men were sentenced to prison today for their roles in a debt collection scheme that bilked more than $1.1 million from Cathedral Healthcare System of Newark over a 13-year period, U.S. Attorney Christopher J. Christie announced.

U.S. District Judge William J. Martini sentenced Frank Napolitano, 54, of Nutley, to 12 months and one day imprisonment. Judge Martini also sentenced Edward Maze, 65, of Boca Raton, Fla. to 21 months imprisonment and ordered him to pay a $25,000 fine to the U.S. government.

In addition to their prison sentences, both were ordered by Judge Martini to pay joint restitution in the amount of $632,795. Chubb Insurance Company will receive $547,159 and Cathedral Healthcare will be paid $85,636 in restitution. Maze already paid Cathedral pursuant to a civil settlement last year in the amount of $480,944.

Judge Martini also ordered the defendants to serve three years of supervised release upon completion of their prison sentences.

Both Napolitano and Maze pleaded guilty on March 10, 2003 to separate one-count Informations charging conspiracy to commit mail fraud before Judge Martini

Napolitano was an employee of Prime Mark Corporation, the billing and debt collection arm of Cathedral Healthcare System. At his plea hearing in March, he admitted that he fraudulently diverted checks he collected for medical bills owed to Cathedral Healthcare facilities. Specifically, Napolitano admitted that he improperly endorsed the checks (using endorsement stamps that Maze admitted he had provided) and deposited them into a bank account controlled by Maze, in the name of Maze's business, Selective Claims Services.

At his plea hearing, Maze admitted that, in turn, he mailed Napolitano a percentage of the proceeds of each check (initially, 40 percent, and later, 30 percent), as a "commission payment." For each fraudulently diverted check, to avoid detection of the scheme, Napolitano admitted that he falsely recorded in Prime Mark Corporation's records that Prime Mark Corporation had received and properly deposited the funds into the appropriate Cathedral Healthcare account.

The scheme began in 1988 and continued until approximately June 2001, when an audit revealed discrepancies in Prime Mark Corporation's debt collection records. During this period, Prime Mark Corporation, a wholly-owned affiliate of Cathedral Healthcare System, provided billing and debt collection services to hospitals and healthcare providers affiliated with Cathedral Healthcare System, including St. Michael's Medical Center and St. James Hospital, both in Newark, and St. Mary's Hospital Center in Orange.

Christie credited Special Agents of the FBI Newark Division, under the direction of Special Agent in Charge Louie F. Allen, and Postal Inspectors in Newark, under the direction of Postal Inspector in Charge Martin D. Phanco, for developing the case against Napolitano and Maze.

The Government is represented by Assistant U.S. Attorney Judith H. Germano of the U.S. Attorney's Office in Newark.

Defense Attorneys:

Raymond F. Flood, Esq., Hackensack, for Napolitano

Thomas J. Cammarata, Esq., Jersey City, for Maze