Co-founder of Medical Charity in St. Joseph Sentenced for $8 Million Fraud Scheme

Press Release

'Christian Health Care Sharing Ministry' Defrauded Hundreds of Members

KANSAS CITY, Mo. - A co-founder of a so-called Christian health care sharing ministry in St. Joseph, Mo., has been sentenced in federal court for his role in an $8 million wire fraud conspiracy that cheated hundreds of members, and for making false statements on a personal tax return.

James L. McGinnis, 78, of St. Joseph, was sentenced by U.S. District Judge Greg Kays on Thursday, Nov. 21, to 12 years in federal prison without parole. The court also ordered McGinnis to pay restitution of $7,758,908 to the victims, $143,141 to the Internal Revenue Service, and $10,787 to the Missouri Department of Revenue. The Court also ordered McGinnis to forfeit to the government a 2021 Ford F-250 truck.

On April 2, 2024, McGinnis pleaded guilty to one count of conspiracy to commit wire fraud and one count of making false statements on a tax return.

McGinnis co-founded Medical Cost Sharing, a tax-exempt organization, and served as its chief operating officer from 2014 through December 2022.

Another co-founder, Craig Anthony Reynolds, 62, of St. Joseph, has pleaded guilty and been sentenced on the same charges. Reynolds incorporated and ran Medical Cost Sharing as its president and chief executive officer from 2014 through December 2022.

McGinnis and Reynolds each admitted that he and his co-conspirators used false and fraudulent promises to market Medical Cost Sharing as a "Health Care Sharing Ministry" to defraud hundreds of "ministry members." They collected more than $8 million in member "contributions," yet paid only 3.1 percent in health care claims so that they could personally profit and take most of the members' contributions for themselves.

McGinnis and Reynolds pocketed at least $5,168,268 from the member contributions from December 2015 through December 2022. Thus, McGinnis and Reynolds took at least 64 percent of total member contributions for their personal profit.

McGinnis and Reynolds marketed Medical Cost Sharing as a "Christian Health Care Sharing Ministry" through insurance brokers, radio stations, social media, and its website. Medical Cost Sharing sales materials promoted its 501(c)(3) tax-exempt designation, advertising that it was different from for profit health insurance. The Medical Cost Sharing website claimed, "while we are not an insurance company, many think of us as a Christian Health Insurance, or Christian Medical Insurance because, like conventional insurance plans, we help you pay your healthcare costs. We help you protect your family. But unlike these corporate, profit based plans, we are a healthcare sharing ministry … your healthcare costs are shared with other Christians enrolled in our medical sharing plans."

Medical Cost Sharing promised its member that if they paid monthly "contributions," Medical Cost Sharing would pay claims after the members' "personal responsibility" (deductible) was met.

In reality, McGinnis and Reynolds admitted, Medical Cost Sharing rarely paid members' health care claims. Sometimes Medical Cost Sharing would pay a part of a claim if the member filed a complaint with their state attorney general and/or hired an attorney to represent them against Medical Cost Sharing.

Medical Cost Sharing paid no claims at all for nearly two years from Feb. 22, 2021, through December 2022, although it collected a total of nearly $1.2 million in dues in 2021 and 2022.

On Dec. 13, 2022, federal agents served search warrants on the Medical Cost Sharing business location and the residences of McGinnis and Reynolds and seized property generated from Medical Cost Sharing proceeds. Medical Cost Sharing continued to try to collect membership dues after the search and seizure warrants. On Dec. 27, 2022, the court entered a temporary restraining order that prohibited Medical Cost Sharing, McGinnis, and Reynolds, from continuing to perpetrate a fraudulent scheme and from processing Medical Cost Sharing member payments, among other actions.

In addition to the wire fraud conspiracy, McGinnis also admitted that he filed a federal income tax return that claimed he had no taxable income in 2019. McGinnis actually received at least $140,881 in taxable income in 2019.

Reynolds was sentenced, in a separate but related case, on June 26, 2024, to 17 years and six months in federal prison without parole. The court also ordered Reynolds to pay $7,758,908 in restitution to the victims, $253,474 in restitution to the Internal Revenue Service, and $46,550 in restitution to the Missouri Department of Revenue. The court also ordered Reynolds to forfeit to the government $462,771, which includes proceeds from the sale of a St. Joseph residence, cash representing his interest in another St. Joseph residence, the values of a Lincoln Navigator, and a Harley-Davidson motorcycle which will all be sold, and the contents of several bank accounts.

This case was prosecuted by Assistant U.S. Attorneys Kathleen D. Mahoney, Patrick Daly, and John Constance. It was investigated by the FBI and IRS-Criminal Investigation.

FBI Website for Victims of Medical Cost Sharing Fraud

Those who believe they are victims of this fraud and wish to receive restitution for any losses suffered as a result may provide their information through the MCS Victim Information Page that has been established by the FBI.

https://www.fbi.gov/how-we-can-help-you/victim-services/seeking-victim-information/mcs-victim-information-page

Updated November 22, 2024