Federal prosecutors have charged six Kansas City municipal employees and a Jackson County corrections worker with wire fraud, alleging that they used an insurance member benefit program to illegally rack up tens of thousands of dollars in gift cards.
Each defendant is charged with three counts of wire fraud in the 21-count indictment handed down Wednesday and unsealed Thursday after six of the seven defendants had been arrested.
Prosecutors allege that the group defrauded Blue Cross and Blue Shield of Kansas City out of more than $300,000 through a benefit program launched in April 2010 that allowed members to accumulate points for participating in healthy activities. They received $1 for every 1,000 points earned toward a gift card or preloaded debit card up to $250 annually per member.
"We are very saddened with the allegations brought upon a small group of city employees," City Manager Troy Schulte said in a statement released Thursday. "These alleged actions do not represent the majority of city employees who adhere to the city's ethical standards."
Each dependent in a member's household also could get points and gift cards for healthy activities, with a higher point totals assigned to more rigorous exercise, such as long-distance running. The maximum points awarded for a single activity was 10,000 for marathons and triathlons.
According to the indictment, one defendant reported that a 1-year-old child had run a triathlon, a marathon and a duathlon, which is an endurance race comprised of running and cycling. Prosecutors say defendants logged similar feats for a dozen children 7 years old or younger.
The indictment lists Crystal Burgin-Woods, 42, a Kansas City municipal court employee, as the biggest violator, tallying 383 gift cards worth $185,655. She is accused of reporting that two 3-year-olds and a 4-year-old completed five duathlons, nine marathons, four half-marathons and 11 triathlons combined.
Also named in the indictment are: Matt Stivers, 41, with the Kansas City information technology department; Kim Blair, 36, with the city Parks and Recreation Department; Matt Tholen, 29, of the city fire department; Michael Olukotun, 39, with Jackson County jail corrections; Michael King, 30, with the city water department; and Sylvia Sims, 47, with the Parks and Recreation Department.
Prosecutors said the defendants received a total of 1,253 fraudulent gift cards with a value of $310,960.
Fred Siems, Jackson County's chief administrative officer, said Olukotun has been placed on leave without pay, pending a final determination of his job status. The city manager's office referred further questions about the city employees charged to the U.S. attorney's office, so the status of those workers was unclear.
None of the defendants had obtained an attorney as of Thursday afternoon, according to the U.S. attorney's office. The AP left telephone messages for several of the defendants, while others either had full voice mailboxes or no listed number and were unable to get messages.