Accused health insurance fraudster Steven J. Dorfman lied when he told a federal court that he did not control any overseas bank accounts, the FTC said in a filing outlining fresh evidence in its case against Dorfman and his companies.
As it pursues permanent shutdown of the operation it accuses of duping consumers into thinking they were buying comprehensive health insurance covering preexisting conditions, the FTC is asking what happened to millions of dollars in those overseas accounts.
In an April 8 filing in U.S. District Court in Fort Lauderdale, the agency presented what it said was evidence showing that Dorfman, founder and CEO of Hollywood-based Simple Health Plans LLC, established the bank account for a Panamanian call center that received nearly $10 million from Dorfman’s companies.
He also controlled the bank account for another offshore operation used by Dorfman’s companies — a call center in the Dominican Republic that Dorfman referred to as a “branch” of one of his own companies, the new filing states. A previous filing showed that $10.7 million was transferred to that account.
In a March 25 filing opposing the agency’s shutdown of his company, Dorfman criticized an earlier FTC reference to “suspicious” transfers to offshore accounts. He said, “The transfers were contractual payments to companies that provided [Simple Health Plans] with call center support from Panama and the Dominican Republic — not shells to which Mr. Dorfman sought to secrete assets.”
The FTC disputed that statement in its filing this week, saying, “Dorfman’s denial that he controlled any overseas bank account is directly contradicted by this evidence. What happened to funds transferred into these accounts remains an open question.”
Asked whether Dorfman is facing criminal charges in addition to the FTC litigation, a spokeswoman for the U.S. District Attorney’s Office in the Southern District of Florida said by email, “We are unable to confirm or deny the existence of an investigation.”
Dorfman did not respond to a request sent to his attorney to discuss the latest accusations.
In a December filing, Dorfman called the FTC’s accusations full of “hyperbole, misstatements of fact, and overgeneralizations that are untethered to reality and beneath the dignity of an agency of the United States of America.”
The FTC’s newest filing outlines what the agency calls additional evidence of fraud discovered after the court seized Dorfman’s companies in October and closed them with a temporary restraining order.
Since then, the FTC said, Dorfman has tried numerous procedural stunts to delay a hearing to determine whether the FTC can remain in possession of Dorfman’s company until a final ruling is issued in the case.
That hearing is currently scheduled for April 16 in U.S. District Court in Fort Lauderdale.
The FTC says Dorfman “siphoned millions of dollars from the corporate bank accounts,” including more than $1.4 million “related to his lavish wedding” in Bal Harbour, and $2.5 million for a property in Nevada. Previously, the FTC said Dorfman spent nearly $300,000 on the wedding and more than $1 million on jewelry, a Rolls Royce Wraith and Lamborghini Aventador that were photographed as part of the ceremony.
New evidence presented by the FTC included an accusation Dorfman bought 20 “burner” phones “to submit fake positive [Better Business Bureau] reviews.”
He also oversaw development of sales scripts that directed boiler room workers to put what he called “fear of God” into prospects, the FTC said.
That meant “telemarketers should create a sense of ‘urgency and fear’ in the uninsured consumers as to whether they are eligible for any type of plan,” the FTC said. Stoking such fears increased the likelihood the prospects would agree to buy the company’s products, which were not comprehensive health insurance but a package of discounts, wellness plans and limited indemnity plans worth a maximum annual reimbursement potential of $3,200.
In December, the FTC said 37,000 victims are still paying millions of dollars each month for the sham plans they purchased before the shutdown. But unless the court rules in the FTC’s favor and keeps the operation closed, the receiver overseeing the assets would not be authorized to reach out to those customers and give them the opportunity to cancel, the FTC said.
Despite the operation taking in nearly $150 million in commissions since 2013, the FTC found just $3.9 million when it seized Dorfman’s corporate and personal accounts, records state.