Fresno, California - Mark Merrill Reynolds, 62, of Fresno, pleaded guilty today to unlawfully converting to his own use client funds held by his company, Ben-E-Lect, U.S. Attorney McGregor W. Scott announced.
According to court documents, Reynolds was the president and sole shareholder of Ben‑E-Lect and Ben-E-Lect of Visalia. These companies operated in Fresno and Tulare Counties. Ben-E-Lect’s clients were small to medium sized businesses that purchased high‑deductible, fully insured group medical plans from independent insurance carriers, and then self‑insured beneficiaries for amounts up to the amount of the high deductible. Ben-E-Lect processed the claims using funds that its clients paid into an account known as the Ben-E-Lect Employer Elect account. Ben-E-Lect was required to hold these funds in a fiduciary capacity and to withdraw clients’ funds only for specific purposes, none of which included Ben-E-Lect’s own operational expenses or Reynold’s personal gain.
According to the plea agreement, Reynolds converted funds from the Employer Elect account to his own use by withdrawing funds from the account and then using these funds for business operational expenses of Ben-E-Lect, and to pay his own personal expenses.
This case is the product of an investigation by the Federal Bureau of Investigation and the California Department of Insurance. Assistant U.S. Attorneys Mark J. McKeon and Henry Z. Carbajal III are prosecuting the case. Reynolds is scheduled to be sentenced by U.S. District Judge Lawrence J. O’Neill on August 20, 2018, at 10:45 a.m.
Reynolds faces a maximum statutory penalty of 5 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.