Fraud victims testify at sentencing of Miralink president!

By Paul Pinkham, The Times-Union

There was the grandmother who lost her Middleburg horse farm to foreclosure after her Workers' Compensation checks stopped coming. She ended up sleeping in her truck outside a convenience store.

There was the businessman who faces a $27,000 Internal Revenue Service lien on his Beaches surf shop for taxes he thought were paid.

There was the mechanic who fears he could lose his Arlington garage any day now as the IRS threatens to seize his bank account, despite paperwork showing he paid a Jacksonville employee leasing firm to handle his payroll and taxes.

All three showed up Wednesday to tell a federal judge how Thomas D. King's $5 million in mail and wire fraud affected their health, their finances and their lives.

U.S. District Judge Virginia M. Hernandez Covington responded by sentencing King, former president of now-defunct Miralink Group, to 14 years in prison. A jury convicted King in September on 23 counts of fraud and money laundering.

Though King continued Wednesday to deny wrongdoing, he and prosecutors had settled on $253,000 in restitution, which has been collected. The government agreed to the amount to ensure some compensation for King's victims, Assistant U.S. Attorney Mark Devereaux said.

Jacksonville-based Miralink handled payroll, taxes and Workers' Compensation insurance for 2,200 small businesses with 33,000 employees in eight states. Jurors found King knowingly purchased Workers' Compensation insurance from a sham carrier - leaving workers uninsured when they were injured on the job - then laundered the proceeds through a third-party administrator.

The company's collapse in 2002 sparked a nationwide FBI probe of the employee leasing industry that resulted in five more indictments in Jacksonville last month.

"It was a very significant fraud that occurred, and a lot of people suffered as a result," Covington told King, 43. "There are numerous victims out there."

Victims like Cherie Miller. She told Covington she worked for a company that cared for elderly hospice patients when she hurt her back on the job in 2002.

She said she received Workers' Compensation benefits for about six weeks, then they stopped abruptly, leaving her with no income and unable to get the medical attention she needed to return to work.

Three months later, her five-bedroom brick home and three-horse farm in Middleburg were foreclosed upon.

"I lost it all because I couldn't make my payments," Miller testified. She said she spent about a month living in her truck in the Hess Express parking lot at Beach and Hodges boulevards. Her grandchildren still ask about the horses, she said.

While Miller was sleeping in her truck, King was driving a Mercedes, said Assistant U.S. Attorney Susan Raab. Prosecutors said he also used Miralink funds to buy a $50,000 Hummer and a $37,000, 3.01-carat diamond ring for his wife.

Dan Safra and Gabriel Lankry testified King failed to pay payroll taxes for their small businesses.

"The IRS is going to shut me down any day now," said Lankry, owner of Autobahn Motors on St. Johns Bluff Road. Safra, owner of Waves Surf Shop in Jacksonville Beach, said the IRS has placed a lien on the business.

King told Covington those victims weren't his obligation. Confusion about taxes is common in the employee leasing industry, he said, and he described himself as just as much a victim.

"There was nothing criminal about it," King said. He said Miralink's clients got a $2.2 million windfall by cashing payroll checks after investigators shut down the company in 2002.

King's attorney, Landon Miller, asked Covington for a five-year sentence, well below the guidelines.

He said King ran Miralink successfully for about seven years before receiving the fraudulent insurance certificates that led to his downfall.

"These companies didn't actually lose anything," Miller said. "If they didn't get hurt and they didn't have any claims, I'm not sure they're victims."

But federal prosecutors asked Covington for a stiff sentence to punish King and send a message to others in the industry. They said the government hasn't determined the number of King's victims.

"This is a man who has absolutely no remorse," Raab said. "He is utterly selfish. He has utter disregard and disrespect for the effect of his actions on anyone else."

Covington said King deserves credit for making partial restitution, and she cited nearly two dozen letters of support that described him as a good father and hard worker. But she said she was concerned he still won't admit the fraud.

She ordered that his sentence be followed by three years' probation, during which he cannot open lines of credit or work in any job related to insurance.

At Miller's request, Covington said she would recommend that King be sent to federal prisons in Jesup, Ga., or Ocala.

King plans to appeal.