EAST ST. LOUIS, ILL. — This is an official press release from the U.S. Department of Justice (USAO - Illinois, Southern), published as received.
EAST ST. LOUIS, Ill. – A district court judge in southern Illinois sentenced the owner of a south Florida-based telemarketing company to 25 years in federal prison for causing his employees to sell limited indemnity health insurance plans to unsuspecting consumers by means of false and deceptive practices.
Steven Dorfman, 40, of Fort Lauderdale, Florida, owned, operated, and functioned as the CEO of a south Florida telemarketing company known as Simple Health. In February, a jury convicted Dorfman of one count of conspiracy to commit mail and wire fraud, four counts of mail fraud and eight counts of wire fraud in connection with his operation of Simple Health.
“Steven Dorfman orchestrated a scam to enrich himself by deceiving thousands of victims. He directed sales agents at his telemarketing company to lie to consumers and trick them into believing the limited indemnity insurance plans they were peddling would function like major medical insurance,” said U.S. Attorney Rachelle Aud Crowe. “This brazen fraud had lasting, and financially disastrous, effects on many victims. Although the Simple Health salespersons had promised that the policies would cover most of their medical expenses, when the victims attempted to use the policies, they found out that they provided little, if any, coverage. As a result, these victims were left owing thousands of dollars’ worth of medical bills that were not covered by the limited indemnity plans sold by Simple Health.”
According to court documents and evidence presented during the trial, Dorfman’s company trained employees to use deceptive sales tactics to scam consumers into purchasing the limited indemnity insurance plans. These plans cover relatively low amounts of medical expenses. Once the low caps were reached, the consumers were then responsible for paying 100% of their medical expenses.
“This sentencing is a statement that mail fraud will not be tolerated, and the perpetrators will be brought to justice,” said Acting Inspector in Charge, John Jackman, who leads the St. Louis Field Office of the U.S. Postal Inspection Service. “The Postal Inspection Service will continue to partner with other law enforcement agencies to collectively pursue criminals who victimize postal customers and U.S. consumers.”
At Dorfman’s direction, Simple Health salespeople utilized false and misleading scripts to mislead consumers about the amount of coverage provided by the policies. Following these scripts, salespeople would make statements such as “the whole idea of this plan is to make your out-of-pocket expenses as low as possible” and “when all is said and done, you’ll end up owing pennies on the dollar.” Evidence at trial also established that Simple Health’s commissioned salespersons frequently told additional, off-script lies to the consumers to get them to buy them to buy the policies, with little to no effort by Dorfman to stop this practice.
Using the deceptive scripts and the blatant lies of their salespersons, Simple Health sold these limited indemnity policies to more than 400,000 unsuspecting victims across the country from May 2012 through November 2018. This fraudulent conduct generated more than $190 million in revenue for Simple Health. The company sold more than 1,400 of these limited indemnity policies to individuals from all 38 counties in the Southern District of Illinois.
Two co-conspirators were also charged in the conspiracy. Candida Girouard, 47, of Valrico, Florida, was sentenced to 6 months’ imprisonment in May. Simple Health’s vice president of sales, John A. Sand, 50, of Fort Lauderdale, Florida, was tried at the same time as Dorfman and was convicted by the jury on all counts contained in the indictment. As a post-trial hearing, however, the federal judge assigned to this case granted Sand’s motion for judgment of acquittal notwithstanding the verdict. The Government is currently considering whether to appeal that decision.
Following imprisonment, Dorfman will serve five years of supervised release.
The St. Louis Office of the U.S. Postal Inspection Service led the investigation, and Assistant U.S. Attorneys Scott Verseman and Peter Reed are handling the prosecution.
The investigation began with a referral from the Federal Trade Commission’s Midwest Regional Office in Chicago. The FTC filed a complaint for civil injunctive relief in October 2018. The FTC’s action put an end to the fraud and a court-appointed receiver was appointed to take over Simple Health’s business operations.
