Va Employee, 13 Others Charged In Fraud Scheme

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Former Marine pilot Dean Toth had perfect hearing when tested over the past three years by Southwest Airlines, for which he now flies.

But when his disability claim landed at the Department of Veterans Affairs last year, it included a hearing exam showing he was nearly deaf. He collected about $93,000 in back benefits for that disability and began receiving $2,500 in monthly payments.Toth didn't suddenly lose his hearing: Instead, according to a 10-count indictment returned this week, he conspired with his next-door neighbor in Crestwood, Daniel Ryan Parker, a supervisor for Disabled American Veterans, to doctor his medical records and bribe a claims reviewer at the VA.

Toth, who served for a dozen years with the Marines, is one of 11 veterans from all four service branches charged this week in an elaborate plan to defraud the VA of nearly $1.9 million by submitting altered or counterfeit medical records showing they suffered from illnesses and conditions ranging from lung cancer to frostbite to depression. Three other people were charged in the case as well.

If not for a confidential source who contacted investigators last summer, the veterans would have received monthly benefits for life, U.S. Attorney Dave Huber said yesterday at a news conference.

The alleged scheme began in 2003 and continued until earlier this month, Huber said.

According to court records, Parker, who helped veterans apply for benefits at the DAV, and Jeffrey Allen McGill, who evaluated claims at the VA regional center in Louisville, recruited friends, relatives and acquaintances from several states to file claims.

Then Parker and McGill, both 37, either altered medical tests or fabricated new ones, and backdated the claims, Huber said.

Money allegedly split

The veterans -- none of whom were really sick or injured -- kicked back about two-thirds of their lump-sum payments to Parker and McGill, according to the indictment, and kept the monthly checks for themselves.

The indictment says that Toth, for example, collected back payments of $93,240, dating to when he left the Marine Corps in 2004, then forked over $62,160 to Parker, who shared it with McGill.

All but one of the defendants is a veteran. Each is charged with conspiracy to defraud, as well as paying or receiving bribes, and some with money laundering. They are scheduled to appear Dec. 16 for arraignment in U.S. District Court in Louisville.

If convicted on all charges, Parker could be sentenced to up to 90 years and fined $2.25 million; McGill, who lives in La Grange, could be imprisoned for 70 years and fined $1.75 million.

Toth was arrested and released on Wednesday night, and the others will be allowed to surrender. Huber would not say why Toth was the only one arrested.

Parker's lawyer, Brian Butler, said he has resigned from the DAV and cooperated with the investigation. "Mr. Parker has done all he can to assist in uncovering the losses to the VA," Butler said.

Toth does not have a listed number, and there was no answer at McGill's home. A spokeswoman for Southwest Airlines said Toth is on paid leave, pending the investigation. Lawyers for the other defendants are not identified in court records.

None of the 14 people charged Wednesday had criminal records, Huber said, adding, "They were all regular people."

In a statement, VA Inspector General George Opfer expressed "profound disappointment in the betrayal of trust by McGill and Parker, whose co-workers at VA and DAV, respectively, devote themselves to serving veterans, not enlisting them in a conspiracy to defraud taxpayers."

VA officials could not be reached for follow-up questions about how the case will affect future operations.

Huber said it was easy to understand how VA officials allegedly were taken -- "When you handle records in an office, you expect them to be authentic."

He said the VA nationally is on "red alert" to prevent similar fraud, although he declined to identify what preventive measures it has taken.

The other defendants include Parker's father-in-law, Randall Lee Adkins, 61, of Logan, W.Va.; his ex-girlfriend, Nicolette Marie Wages, 37, of Parkersburg, W.Va.; and his mother, Susan Diane Smith, 62, of Hurricane, W.Va. -- the only one who is not a veteran.

The indictment charges that Smith submitted a claim for her ex-husband, who served in the Air Force, saying he was suffering from lung cancer as a result of exposure to Agent Orange, the defoliant used in Vietnam.

100 percent disability

Parker and McGill allegedly counterfeited a medical exam to document his illness and put it in his file, and Smith's ex-husband was granted a 100 percent disability for "malignant growth of the lung."

The indictment says Smith's ex-husband, who served from 1965 to 1969, didn't know about the claim.

Smith arranged for the man's $53,052 in back payments to go into a bank account she controlled, then kicked back $40,000 to her son, who shared it with McGill, according to the indictment, which says Parker and his mother also shared the $2,900 monthly payments.

To bolster a claim for James Darrell Grimes, 61, of Scottsville, Ky., who served in the Army from 1965 to 1969, Parker and McGill allegedly fabricated a private physician's medical records to show that Grimes had received treatment for "non small cell lung cancer with brain metastases."

Grimes collected a lump sum of $66,277 and kicked back $44,000 to McGill, who shared it with Parker, according to the indictment.

Neither Grimes nor Smith could be reached for comment.

Huber wouldn't disclose who tipped off law enforcement about the scheme, but he praised the FBI and the VA's office of inspector general for a "meticulous investigation."

He said no one else at the DAV or VA was implicated.

The indictment says that Parker served in the Army from 1989 to 1992 and McGill in the Navy from 1989 to 2003.

McGill, whose duties included reviewing and rating VA disability claims, resigned Oct. 1.

Reporter Andrew Wolfson can be reached at (502) 582-7189.