Somerset Co. Man Sentenced For Defrauding NJ Health Care Program Out Of $4M

BRIDGEWATER, NJ — A Manville man was sentenced to 7.25 years in prison on Thursday for defrauding a publicly funded health care benefit program of more than $4 million, Attorney Philip R. Sellinger announced.

C.R. Kraus, 58, of Manville, was convicted in April of all 10 counts of an indictment following a trial before U.S. District Judge Zahid N. Quraishi.

In addition to the prison term, Kraus was sentenced to three years of supervised release and ordered restitution of $4.19 million.

In January 2023, Kraus’s conspirators, Harry Pizutelli and Maritza Flores, pleaded guilty to conspiracy to commit healthcare fraud and tax evasion relating to defrauding the New Jersey Traumatic Brain Injury Fund (TBI Fund) of millions of dollars for their own personal benefit. Both are awaiting sentencing.

"This defendant stole millions of dollars earmarked for victims of traumatic brain injuries,” Sellinger said. "Stealing resources intended to help New Jersey residents who are already coping with serious challenges is especially egregious. This office will never relent in holding such criminals accountable. Today, this defendant learned the price of his criminal acts."

"C.R. Kraus was intent on defrauding the Traumatic Brain Injury Fund by making false claims that he treated patients who suffer from such maladies," FBI – Newark Acting Special Agent in Charge Nelson I. Delgado said. "This not only took away valuable resources from other deserving patients but enabled Kraus and his co-conspirators to benefit substantial monetary gain, to the tune of more than $4 million. The FBI investigative team worked to put a stop to their fraudulent behavior, and bring to justice criminals who use the healthcare system as a personal piggy bank."

According to documents filed in this case and statements made in court, Pizutelli was the manager of the TBI Fund and was responsible for its day-to-day operation. He supervised, managed, and oversaw the process by which third-party vendors were paid for services to TBI Fund patients.

From 2009 through June 2019, Pizutelli, Kraus, Flores, and others conspired to defraud the TBI Fund by misappropriating more than $4.5 million in fraudulent vendor payments for services that were never actually provided, according to court documents.

Pizutelli distributed fraudulent vendor payments to Flores, Kraus, and others by generating and processing false invoices and internal payment vouchers. He generated these invoices and vouchers to give the appearance that Flores, Kraus, and other conspirators had provided services to eligible patients when, in fact, they had not provided any services.

More than $940,000 in fraudulent distributions went to Flores and more than $3.245 million in fraudulent distributions was given to Kraus, which they used for their own personal benefit and enrichment, Sellinger said.

Flores and Kraus also evaded income taxes by making material misstatements and omissions on their tax returns and significantly underreporting the income they had derived from the scheme.

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