Texas Man Sentenced to 72 Months for Conspiring with Michael Mann to Defraud Lenders

ALBANY, NEW YORK - Derek R. Schwartz, age 55, of Coppell, Texas, was sentenced today to 72 months in prison for conspiring with former ValueWise CEO Michael T. Mann to defraud companies that loaned millions of dollars to ValueWise subsidiaries.

United States Attorney Carla B. Freedman and Craig L. Tremaroli, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI), made the announcement.

Schwartz pled guilty in September 2023 to one count of conspiring to commit wire fraud and four counts of wire fraud. He admitted to helping Mann fraudulently obtain millions of dollars in loans from financing companies.

Mann obtained millions of dollars in loans from two financing companies, located in New York and Colorado, by falsifying his companies' receivables. Mann falsely told the financing companies that Minnesota-based UnitedHealth Group Incorporated ("UHG") and its subsidiary OptumInsight Inc. ("Optum"), owed millions of dollars to his Clifton Park-based companies. Mann routinely created fake invoices reflecting the fictitious debt and assigned them to the financing companies as collateral for loans.

Schwartz was a high-level executive at Optum, and then began working for ValueWise in October 2013. Until about August 2016, he operated TrueHR, LLC, a ValueWise subsidiary based in Dallas, Texas.

Schwartz admitted that in October 2013, he and Mann asked Luke Steiner, a UHG/Optum employee whom Schwartz used to supervise, to represent to the financing companies that the fake invoices created by Mann were valid and payable by Optum. With Schwartz's encouragement, Steiner regularly made these false verifications for six years, ending in August 2019.

Schwartz also admitted he took these other actions in furtherance of the fraudulent scheme:

• In 2014 and 2015, he asked two other UHG/Optum employees to verify false invoices that Mann submitted to one of the financing companies, identified in court papers as "Financing Company-1." He instructed these employees to respond to Financing Company-1's inquiries in the same manner as Steiner.

• From 2014 through 2018, Schwartz lied directly to one of Mann's lenders, "Financing Company-2." Mann falsely represented to Financing Company-2 that one of his companies, Weitz & Associates, needed loans in order to pay its vendors. As part of its due diligence process, Financing Company-2 verified, with Weitz' purported vendors, that they were receiving payments from Weitz. One such purported vendor was TrueHR, a ValueWise company operated by Schwartz. In fact, TrueHR was not a Weitz vendor, and Schwartz regularly lied to Financing Company-2 about TrueHR receiving payments from Weitz - and continued to do so even after TrueHR ceased to exist as a company.

Senior United States District Judge Lawrence E. Kahn also ordered Schwartz to serve 3 years of post-imprisonment supervised release and to pay a total of $12,968,505.20 in restitution to Financing Company-1 and Financing Company-2; Judge Kahn ordered Schwartz to pay $2,000 in restitution per month, including while incarcerated. In addition, Schwartz has already made a $1 million restitution payment to the Court for distribution to his victims.

Mann, formerly of Saratoga County, New York, pled guilty to various crimes in connection with his fraudulent scheme, and was sentenced in August 2021 to 144 months in prison. Steiner pled guilty in February 2020 to conspiring with Mann and was sentenced to probation.

The FBI investigated this case, and Assistant U.S. Attorneys Michael Barnett and Cyrus P.W. Rieck prosecuted this case.