A former attorney in Lake Lotawana was sentenced Friday in Kansas City federal court for his role in a fraud conspiracy that cost St. Luke's Health System more than $1.2 million in patient account collections.
Mark Schultz, 57, was sentenced to one year and one day in federal prison without parole and was ordered to pay $400,500 in restitution to St. Luke's. He had pleaded guilty in February to wire fraud and mail fraud conspiracy, and his former law partner, Alan Gallas of Kansas City, pleaded guilty in a separate but related case. Gallas received the same sentence and was ordered to pay more than $1.2 million in restitution. Both men have surrendered their law licenses.
The Gallas & Schultz law firm had specialized in collection work for corporations, and St. Luke's had been a client. According to court documents, Gallas was the attorney responsible for the St. Luke's account, collecting on outstanding patient accounts after the hospital had attempted to collect. As the firm received payments, they were logged into the case management system for the appropriate patient account and then deposited into the firm's trust account. On a periodic basis, often monthly, the firm then remitted payments collected to St. Luke's.
Gallas admitted that he caused law firm personnel to withhold money from payments by placing thousands of payments on “hold” status, then directing those funds be transferred from the trust account to the firm's operating account. Gallas said he was part of the scheme from 2009 through July 2015, and Schultz admitted his participation from January 2014 through July 2015. The pattern of not remitting some payments increased greatly from 2012 to 2015.
According to court documents, Schultz's office manager told him in January 2014 that she would quit because she could no longer agree to transfer the money. Schultz nevertheless continued to profit until the scheme was uncovered in July 2015. The FBI investigated the case.