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The Honolulu Advertiser
Posted on: Friday, July 25, 2003

Former insurance executive indicted

By David Waite
Advertiser Courts Writer

The head of a defunct company that provided medical insurance to more than 26,000 people in Hawai'i, half of whom were government workers, was indicted by a federal grand jury yesterday on 16 counts of providing false information about the company's solvency.

U.S. Attorney Ed Kubo said the indictment accuses Peter Posang Wong, 46, of deliberately filing false information about the nonprofit Pacific Group Medical Association with the state Department of Commerce and Consumer Affairs between March 1996 and January 1997.

"By withholding material information about the horrendous financial state of PGMA, and by lying about its financial condition," Wong "deceived and misled others into believing that the company was sound and successful, when the company was virtually bankrupt," Kubo said.

Kubo attributed PGMA's insolvency to "Wong's manipulation of the company's payment of claims." Wong, who has moved to California, could not be reached yesterday for comment.

Kubo said that by the time state insurance regulators moved to seize control of the company in March 1997, its debts were estimated at "well over $15 million."

"The hurt from this was spread throughout the community," Kubo said. Some policyholders submitted claims to PGMA but wound up paying their own bills, he said, and doctors who provided services to PGMA members were never paid by the company.

Almost half of the people whose medical insurance was provided by PGMA were members of the United Public Workers union and the Hawai'i Government Employees Association.

In federal court last November, former UPW leader Gary Rodrigues was found guilty of mail fraud, money laundering and embezzling union funds.

One of the charges against him noted that the contract he negotiated with PGMA to provide coverage for union members allowed the company to set aside a portion of premium payments to be transferred back to the union to hire a consultant to periodically analyze the medical plan.

But Rodrigues never told the union's 12,000 members or other union officials that he had selected his daughter, Robin Rodrigues Sabatini, a Kaua'i bookkeeper, to be the consultant and that Sabatini did little or no work in exchange for hundreds of thousands of dollars she was paid, federal prosecutors maintained during the trial.

Rodrigues and Sabatini are scheduled to be sentenced Sept. 29. During their trial, their attorneys claimed it was Sabatini who "tipped off" her father that PGMA was on shaky financial ground and, as a result, Rodrigues ordered union office workers to stop making payments to the company and began negotiating with other healthcare insurance providers.

Kubo declined to say yesterday what role the relationship between Rodrigues and PGMA played in the decision by the U.S. attorney's office to bring charges against Wong. He said an investigation into PGMA's operations is continuing.

Assistant U.S. Attorney Florence Nakakuni, who prosecuted the case against Rodrigues, is also the lead prosecutor in the PGMA case.

Ed Fischer, a special agent of the federal Labor Department inspector general's office, was instrumental in the Rodrigues prosecution and also involved in the investigation that led to Wong's indictment. Fischer said the indictment pertains only to the information Wong provided to state regulators and is not related to the consultant agreement Rodrigues had with PGMA.

If convicted, Wong would face a sentence of up to 10 years and a $250,000 fine on each of the counts.