Written by The Business Journal Staff
According to court documents, businessman Reynolds was the president and sole shareholder of Ben-E-Lect, a health care claims processor that operated in Fresno and Visalia.
As part of its services, Ben-E-Lect held clients’ funds in accounts meant to be used for paying health insurance expenses. Its clients were primarily small to medium sized businesses — a total of 3,200 across 22 states.
Over a five year period, Reynolds is accused of embezzling funds from these client accounts, using the money for such things as business operating expenses, personal mortgage payments, personal auto loan payments, personal credit card payments, the purchase of a 30-percent interest in a payroll company and cash withdrawals.
During this period, businessman Reynolds allegedly embezzled about $6.08 million from those accounts, but reimbursed them about $1.6 million, meaning a net loss of about $4.4 million.
Fresno attorney Roger Nuttall sent out a statement defending Reynolds, chalking up the charges to “book keeping irregularities, which would have been better handled administratively via the State of California vs a costly Federal proceeding.”
In a statement, Reynolds responds to the charges, “While I can understand the possible concerns that our clients may have after hearing of the allegation, they should know that this issue only impacts a small portion of the business. Most importantly, we take seriously the commitment we made to our employers and our obligation to make sure no employer is ever harmed.”
Businessman Reynolds was expected to self-surrender to the U.S. Marshals in Fresno today, and to be arraigned at 2 p.m. before U.S. Magistrate Judge Erica P. Grosjean.
If convicted of embezzlement, Reynolds faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. If convicted of mail fraud, Reynolds faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. If convicted of money laundering, Reynolds faces a maximum stator penalty of 20 years in prison and a fine of $500,000 or twice the value of the property involved in the transaction, whichever is greater.