Court papers outline insurance scheme that feds, auditors say fl - WSLS 10 NBC in Roanoke/Lynchburg Va

Court papers outline insurance scheme that feds, auditors say fleeced Tech out of millions

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Virginia Tech is involved in a legal battle on two fronts against GM Southwest Inc. (GMS), a Texas based company that used to run the school's health insurance program geared toward students who had no coverage.

Tech is the victim in a 57 count federal indictment against GMS and its president, John Gutschlag Sr.

Investigators accuse Gutschlag of stealing approximately $9,000,000 from the university between 2003 and 2011.

Tech sued GMS in January in Richmond Circuit Court, claiming the company fleeced the university out of more than $10,000,000 during that same time frame.

Tech broke down what it claimed was its losses in court papers like this (all amounts are approximate):

2004-2005 --- $43,000

2005-2006 --- $524,000

2006-2007 ---- $1.118 MILLION

2007-2008 --- $1.9 MILLION

2008-2009 -- $2.186 MILLION

2009-2010 --- $2.013 MILLION

2010-2011 --- $1.695 MILLION

The feds filed papers earlier this week in U.S. District Court in Roanoke to seize 12 million dollars in assets belonging to Gutschlag.

The U.S. Attorney's office said Gutschlag will be allowed to turn himself in.

GMS provided health insurance for mostly international and graduate students, including thousands of graduate assistants employed by the university between 1996 and 2010.

Investigators believe GMS lied in financial reports it submitted to the university, beginning in 2003, understating the amount of premiums it collected and overstating the amount of claims it paid.

Court records show in January 2011, a new Tech auditor blew the whistle on what investigators said was the scheme.

The auditor took over for a long time Tech employee that had recently retired.

No trial dates have been set in either case.

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