Former OSI Exec Indicted by NJ Attorney General in Long-Running Overbilling Case

The attorney general in New Jersey announced last week that a former sales director at Outsourcing Solutions, Inc. had been charged with various crimes stemming from her role in overbilling the state for collection services and subsequently covering up the actions and undermining a government investigation.

New Jersey Attorney General Anne Milgram and Criminal Justice Director Deborah L. Gramiccion said in a press release that Sandra Bielanski was being charged with theft by deception, misconduct by a corporate official, and five counts of making false contract payment claims. The office noted that all charges represented second-degree crimes.

The indictments are the latest in a series of actions resulting from a lengthy investigation of OSI billing practices between January 1999 and May 2005. The state claims that OSI overbilled for collection services by more than $1 million in the period. In addition, OSI employees provided gifts to New Jersey officials to ensure the contract would continue.

In February 2007, OSI agreed to pay the state nearly $2 million to resolve issues of overbilling and provision of illegal gifts to state employees (“OSI to Pay Nearly $2 million to Settle New Jersey Collection Contract Dispute,” Feb. 7, 2007). But legal action against individual OSI employees and state officials has been ongoing.

OSI noted at the time that all employees involved in the indiscretions were dismissed.

Bielanski was charged last week primarily for her role in covering up the overbilling. The indictment alleges that, as sales director, she became aware of the overbilling and conspired to conceal the false billing from the state.

“We now have indicted three employees of this vendor for deliberately overbilling the state by more than $1 million,” said Attorney General Milgram. “In today’s indictment, we charge that Ms. Bielanski learned of the unlawful billing and was complicit in efforts to cover it up.”

The state had already charged two other former OSI employees as “ring leaders” in the case: Enos Blake, an OSI vice president responsible for managing state projects, and Carol Labbe, his de facto second in command, according to state prosecutors. The AG’s office said that the two deliberately overcharged the state for debt collection work for more than six years, resulting in overpayments of $1,184,662 over that time.

In addition to the former company employee, three officials at New Jersey’s State Division of Taxation were charged with crimes in connection with the case. The former division director, Robert K. Thompson and two deputy directors, David M. Gavin and Harold E. Fox, were charged with making discretionary decisions while under undisclosed conflicts of interest caused by their receipt of meals, entertainment, golf outings and other gifts from OSI. Thompson and Gavin are charged with official misconduct and engaging in a pattern of official misconduct, and Fox is charged with official misconduct, all second-degree offenses.

The press release noted that Bielanski will be ordered to appear at a later date to answer the charges and that second degree crimes in New Jersey carry a maximum sentence of 10 years in state prison and a $150,000 fine.