Encino Man Fined $259,000 in Health Fraud

An Encino man was sentenced to five years probation and ordered to pay $259,000 in restitution Wednesday for mail fraud, embezzling and tax evasion in connection with a scheme that looted $1.5 million from a union health plan fund.

Matthew McCusker, 68, also was ordered to perform 3,000 hours of community service for his part in the theft from the Long Beach Teamsters Union fund. U. S. District Judge Mariana R. Pfaelzer said that if McCusker fails to repay the money he will have to serve a three-year prison sentence.

Assistant U. S. Atty. Leon Weidman said McCusker, along with Nicholas M. Nicholson and his wife, Dana, of San Clemente, operated two companies set up to administer trust funds that were supposed to provide medical benefits to members of Teamsters Local 911, which represents school employees, parking lot attendants and others.

During the five-week trial in Los Angeles last fall, Weidman told the jury that the defendants misrepresented the financial condition and size of the trust.

In 1979, they claimed the trust had $34.5 million in contributions, when in fact the total was only $1.1 million. Weidman said the defendants claimed a membership of 200,000 to 300,000, but the actual total was 3,692.

The trust collapsed in 1981, prompting a civil suit by the U. S. Department of Labor that named several defendants and accused many of them of leaving the trust unable to pay hundreds of thousands of dollars in medical bills. That suit is pending, Weidman said.

McCusker was found guilty of 16 counts of mail fraud, embezzlement and tax evasion. He was acquitted of 11 other charges.

Nicholas Nicholson was found guilty of 20 counts of mail fraud, one count of aiding and abetting an embezzlement, one count of filing a false tax return and one count of failing to file a tax return. He was ordered to serve three years in prison and five years’ probation, and to pay $149,560 in restitution.

Dana Nicholson was found guilty of 14 counts of mail fraud, one count of filing a false income tax return and one count of failing to file a tax return. She was sentenced to five years probation and ordered to perform 1,500 hours of community service and pay $83,623 in restitution.