Toms River Pair Charged In $4.5M Health Care Fraud Scheme

TRENTON, NJ — Two people from Toms River are among three people arrested Thursday in connection with a 10-year scheme to defraud a public health care benefit program of more than $4.5 million, authorities announced.

C.R. Kraus, 55, and Maritza Flores, 43, both of Toms River, along with Harry Pizutelli, 62, of Edison, were arrested by special agents of the FBI and IRS and have been charged with conspiracy to commit health care fraud, Acting U.S. Attorney Rachael A. Honig said.

They were scheduled for a videoconference before U.S. Magistrate Judge Tonianne J. Bongiovanni later Thursday, Honig's office said.

Authorities allege Kraus and Flores received payments as vendors from the New Jersey Traumatic Brain Injury Fund for services that were not provided to patients who were supposed to be receiving the services.

Pizutelli was the manager of the TBI Fund and was responsible for its day-to-day operation. He supervised, managed, and oversaw the process by which third-party vendors were paid for services rendered to eligible TBI Fund patients, and is accused of submitting the false vouchers that paid them.

The fund exists to provide New Jersey residents who have suffered a traumatic brain injury with services and support in order to maximize their quality of life, such as physical, occupational, and speech therapy; service coordination; assistive technology; cognitive therapy; neuropsychological services; pharmaceuticals; wheelchair ramp installation and other home modifications; and general home management and maintenance. It supports those who don't have insurance or other means to pay for the services.

After a prospective patient applies for services, TBI Fund personnel review the application and, if approved, the patient is authorized to secure designated services from a third-party vendor. Once a patient receives services approved by the TBI Fund, the vendor or service provider submits an invoice to the TBI Fund for payment. When an invoice is received, TBI Fund personnel review the invoice to ensure that the patient had been approved to receive the services. If the invoice is approved, an internal payment voucher is generated, authorized by TBI Fund personnel, and then submitted to the New Jersey Department of the Treasury for payment, which issues a check directly to the vendor.

From 2009 through June 2019, Pizutelli, Kraus, Flores, and others conspired to defraud the TBI Fund by misappropriating more than $4.5 million in fraudulent vendor payments for purported services that were never actually provided, authorities allege.

Authorities allege Pizutelli orchestrated the distribution of fraudulent vendor payments to Kraus, Flores, and others by generating and processing false invoices and internal payment vouchers. Pizutelli generated the invoices and vouchers to give the appearance that Kraus, Flores, and other conspirators had provided approved services to eligible patients when, in fact, they had not provided any services. Pizutelli then approved and transmitted the internal payment vouchers so that his conspirators received the payments, according to court documents.

Kraus is accused of receiving $3.25 million for home modifications that were never done. Flores, who lived with Kraus, received $940,000 for therapeutic services, including occupational and physical therapy and acupuncture, that no one at her Serenity's Gate business was licensed to perform.

Authorities said Pizutelli orchestrated the fraudulent payments to maintain and further romantic and/or sexual relationships with Flores and other conspirators.

In addition, authorities allege Kraus and Flores "made material misstatements on their federal income tax returns, by significantly underreporting the income" to hide the scheme, authorities said.

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