U.S. Attorney’s Office
Northern District of Ohio
(216) 622-3600
August 11, 2014

Sheffield Lake Man Charged with Embezzling $2.9 Million

A Sheffield Lake man was charged with embezzling approximately $2.9 million from Medical Mutual, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.

Joseph F. Satava, III, age 69, was charged in a criminal information with one count of theft of embezzlement in connection with health case.

Satava embezzled approximately $2.9 million from his employer, Medical Mutual, between August 1997 and November 2013, according to the information.

Satava began working for Medical Mutual in 1971, and held the position of Manager of Credit and Collections for the past 20 years. In this capacity, he had the authority and managerial discretion to request and approve checks in amounts up to $5,000. During his tenure, Satava discovered a way to use this managerial authority to create reimbursement checks that he could then embezzle, steal, and convert, undetected, to his own personal use, according to the information.

To accomplish his embezzlement, Satava reviewed weekly printouts of the company’s accounts receivable trial balance statements to identify new companies that had signed contracts for insurance coverage. The weekly printouts included the amounts submitted by each company as the first payment for the insurance coverage. These payments were referred to as “binder payments.” Each binder payment was credited to the finance division’s “Binder Suspense Account.” At the end of each month, each company payment was then credited to the appropriate client-specific revenue account, according to information.

During most weeks, Satava selected between two and four companies from this printout that made binder payments under $5,000 and created a reimbursement check in the exact amount of each respective customer check submitted to the company. He caused the reimbursement check to be created by completing a company check reimbursement form. On the form, Satava listed an employee of the client company as payee, and requested payment in the amount of the company’s binder check. He stated on the form that insurance coverage had been denied as the reason for the requested reimbursement.

To conceal his embezzlement, Satava did not charge each reimbursement to the Binder Suspense Account. Instead, he charged the checks to an account that handled several billions of dollars of revenue each year. As such, the checks created by Satava were immaterial in amount relative to the volume of funds passing through this account, so the checks were not detected. Because the reimbursement checks were not charged against the account into which the binder payments were deposited, the coverage for each client company still went into effect, according to the information.

To negotiate the check, Satava forged the name of the payee appearing on the reimbursement check that he used without authorization. After he forged each check, he countersigned his own name beneath the forged name. Defendant used ATMs to deposit each check into his own personal bank account to avoid scrutiny from bank officials regarding the third party checks, according to the information.

Satava produced at least 1,382 reimbursement checks that he forged, countersigned, and deposited during his tenure as the manager of credit and collections, according to the information.

Satava used the embezzled funds to pay for living expenses that were otherwise beyond his means, such as furniture and other household items, his adult son’s personal expenses, a car loan, travel and personal vacations and a retirement home on Lake Erie, according to the information.

This case is being prosecuted by Assistant U.S. Attorneys Christos N. Georgalis and James Morford following an investigation by agents of the Federal Bureau of Investigation.

If convicted, the defendant’s sentence will be determined by the dourt after a review of factors unique to the 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.

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.

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