BOISE—Michael Wayne Davis, II, 45, of Raleigh, North Carolina, formerly of Eagle, Idaho, was indicted yesterday by a federal grand jury in Boise on eight counts of wire fraud and three counts of theft from a health care benefit plan, U.S. Attorney Wendy J. Olson announced.
According to the indictment, from 2002 until 2010, Davis owned and operated Xpress Flex, Inc. Xpress Flex was located in Boise, Idaho, and administered flexible benefits plans that allowed employees of Xpress Flex’s clients to pay for health care, dependent care, group insurance premiums, parking, and public transportation expenses with pre-tax withholdings from their paychecks. Through their employers, employees contributed funds to Xpress Flex and submitted claims to Xpress Flex for reimbursement after they incurred expenses. Xpress Flex was responsible for processing, adjudicating, and paying employees’ claims for reimbursement from these funds. In return for this service, the employers paid Xpress Flex an administrative fee.
According to the indictment, from 2009 to 2010, Davis devised a scheme to misappropriate the funds contributed by employers to Xpress Flex on behalf of their employees. Despite representations in Xpress Flex plan documents and agreements with employers that these funds belonged to the employers, and that Xpress Flex had no authority to dispose or invest them, Davis used these funds without authorization to pay for personal expenditures and the business expenses of another company he owned, Payroll America, Inc. The indictment alleges that these personal expenditures included concert tickets, meals at restaurants, gasoline, and merchandise from Amazon.com. The indictment also alleges that when Xpress Flex was late in paying reimbursement claims to Xpress Flex’s clients, or bounced reimbursement checks, employees of Xpress Flex made false statements to the clients, at Davis’ direction, about the causes of the delayed payments or bounced checks. The indictment alleges that after Xpress Flex’s operations ceased in March 2010, Davis continued to misappropriate client funds for his personal use and Payroll America’s purposes.
The indictment alleges thefts from the Independent School District of Boise City and Skagit County, Washington, flexible benefits plans and contains a forfeiture allegation seeking approximately $1,036,706, or substitute assets, including property, valued at this amount.
Each count of wire fraud is punishable by up to 20 years in prison, a maximum fine of $250,000 or twice the gain or loss from the offense, and up to three years of supervised release. Each count of theft from a health care benefit plan is punishable by up to 10 years in prison, a maximum fine of $250,000 or twice the gain or loss from the offense, and up to three years of supervised release.
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