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Ex-workers comp director must pay more than $1M in fraud restitution

Ex-workers comp director must pay more than $1M in fraud restitution

The former workers compensation director for a Texas risk management fund has been ordered by a federal judge to pay more than $1 million in restitution after he defrauded the pool of more than $514,000.

Herman G. Wilks of Pflugerville, Texas, was the director of comp claims administration for the Austin, Texas-based Texas Association of School Boards Inc., according to records filed in U.S. District Court in Austin. He pleaded guilty in January to 10 counts of mail fraud, and was sentenced Friday to 63 months in prison.

Court records show that Mr. Wilks was ordered to pay $447,367 in restitution to the association and $558,992 to Travelers Cos. Inc. Travelers insured the school board association's losses related to Mr. Wilks' fraud, said Assistant U.S. Attorney Ashley Hoff in Austin.

The association in January said it was working with its crime coverage insurer to recover the stolen funds.

The school board association operates a risk management pool that provides workers comp, unemployment compensation, auto, liability and property coverage for more than 1,100 Texas school districts, court records show.

While working as the association's comp administrator, Mr. Wilks established a business called Medco Implantable Supply Inc. in 2008 that did not provide any products or services, records show.

He identified workers comp claims billed to the Texas school board fund for legitimate surgical and medical procedures, then included fraudulent billings on behalf of Medco for fictitious medical implant devices, records show.

The plan ensured that the school board fund would process the fraudulent payments along with the legitimate comp claims, prosecutors said in filings. Mr. Wilks netted $514,400.17 in fraudulent payments from April 2008 to March 2013.