Risk Management

Ex-HR Exec Charged with Health-care Embezzlement

U.S. Attorney accuses former Hitachi America manager with using $8m of payments to the plan for personal expenses such as a Florida house and Lexus.
Stephen TaubNovember 13, 2008

A former head of human resources for electronics firm Hitachi America Ltd. was charged with defrauding the company’s health care plan of about $8 million.

Dennis Dowd, formerly the HR senior manager of the subsidiary of Japan-based Hitachi Ltd., was charged with one count of embezzlement in connection with health care, one count of health care fraud, and one count of money laundering, according to government officials, including Michael Garcia, U.S. Attorney for the Southern District of New York.

Dowd, who faces a maximum sentence of 30 years if convicted, was hired by Hitachi America in 1979, and served as senior manager of corporate benefits for Hitachi America until March of this year. He was responsible for managing various aspects of Hitachi America’s employee benefits programs, including the health plan.

According to the complaint, in January 1997 Dowd opened a bank account in the name of “Hitachi Group Insurance Health and Welfare Trust,” although its creation was not authorized by Hitachi America. Between 2000 and early 2008, he deposited about $8 million into that account, including about $4.9 million from payments intended for insurance claims belonging to the plan.

Checks totaling an additional $2.9 million from insurance companies and health care providers, among other entities, were made payable to the plan or Hitachi America, and were also deposited into the account, the complaint said.

The government alleged that Dowd diverted funds in the bank account that he created, using them to pay for personal and family expenses, including at least $1 million in personal credit-card payments for consumer goods. At least $2 million in checks were made payable to Dowd using various spellings of Dowd’s name, the complaint said. About $625,000 was paid to purchase a house in Vero Beach, Fla., while another about $42,000 paid for a Lexus automobile registered to him, it was alleged.

An attorney representing Dowd did not immediately return a call from CFO.com seeking comment.

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