Michigan Man Charged in Fraud Scheme

An information was filed against Douglas L. Lepo, 68, of Sterling Heights, Michigan, charging him with one count of conspiracy to commit mail fraud, Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today.

The Information alleges that Lepo devised a scheme to defraud various consumers in Ohio and elsewhere, by fraudulently enticing them to purchase a business opportunity from the company he worked for, EDI Health Claims Network, of Michigan, which purportedly had the ability to provide a profitable work-at-home business involving providing electronic billing services to doctors and other health care providers.

On May 19, 2010, Chester J. Mazzoni, the president of EDI, entered a plea of guilty to a similar charge of conspiracy to commit mail fraud involving the EDI scheme.

“Thousands of innocent consumers have already paid the price for the alleged fraud described in today’s charges,” Dettelbach said. “Now, Chester Mazzoni and Douglas Lepo, who perpetrated the fraud, will pay a price at long last.”

It is alleged that the United States mails were used to further the scheme by sending mailings to entice interested persons to purchase a “license” and obtain training in health care billing for a price of over $5,000, join the EDI Health Claims Network as a licensee, and operate a billing business from home.

It is alleged that Lepo, or other co-conspirators, made false statements or failed to disclose material facts to persons interested in the EDI purported work-at-home business, such as the fact that few persons who became involved with EDI businesses successfully made any money from the purported business.

Lepo and Mazzoni were sued in 2006 by the Federal Trade Commission in connection with their operation of EDI. Eventually, the FTC liquidated the EDI company and, in 2008, obtained a judgment against Mazzoni and Lepo for over $17 million. Following the lawsuit, Lepo declared personal bankruptcy. The government recovered $50,000 from EDI and its related companies as a source of funds to distribute to over 3,000 persons alleged to have been victimized by the scheme.

If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and, in most cases it will be less than the maximum.

This case is being prosecuted by Assistant U.S. Attorneys James C. Lynch and Henry DeBaggis, following an investigation by the United States Postal Inspection Service and the Federal Bureau of Investigation, Cleveland, Ohio.

An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.