Former Councilwoman Pleads Guilty

Cauthen Faces 2 Years in Insurance Scam

Katie Cauthen

Katie Cauthen

NASHVILLE, TENN. – Former Blythewood Town Councilwoman and attorney Kathleen (Katie) Devereaux Cauthen will face around two years in federal prison after pleading guilty in a Tennessee court last week.

Cauthen had been charged with two felony counts in a U.S. District Court in Nashville, Tenn. in a healthcare fraud and embezzlement scheme. The charges include conspiracy to commit “theft or embezzlement in connection with health care” and misprision, the failure to report the commission of a felony to judicial authorities. In an unannounced 35-minute hearing held last week, Cauthen officially changed her plea to guilty and admitted the criminal acts for which she is charged. Though Cauthen has pleaded guilty, her full plea agreement is still under seal by the court and she will not be sentenced for more than a year. She remains free on bond.

With the advice of her court-appointed attorneys, Cauthen acknowledged in plea hearing documents that she faces 21-27 months in prison. However, at her 11 a.m. Aug. 29, 2016 sentencing, if she has lived up to her agreement the conspiracy charge against her will be dismissed and Cauthen will plead only to misprision.

“Fully understanding my rights to plead ‘not guilty’ and fully understanding the consequences of my plea of guilty, I wish to plead ‘guilty’ and respectfully request the Court to accept my plea more fully set out in the plea agreement,” the document signed by Cauthen and one of her two attorneys states.

The term of imprisonment is set by the federal sentencing guidelines, taking into account the seriousness of the offense, criminal history and other factors. With her continued cooperation, Cauthen will be hoping to be granted a “downward departure” by her sentencing judge. If a defendant is honest and provides substantial aid and information to the U.S. Attorney’s Office, those prosecutors can recommend her offense level be lowered and sentence reduced by the guidelines.

Cauthen’s case has been delayed on multiple occasions as she has been helping the U.S. Attorney’s Office make a case against her alleged co-conspirators. Charged separately from other conspirators, Cauthen was never indicted, but rather agreed to a federal criminal information.

Four of Cauthen’s alleged co-conspirators – William Worthy of Isle of Palms; Bart and Angela Posey of Springfield, Tenn. and Richard H. Bachman of Austin, Texas – were indicted by a federal grand jury in Nashville in June 2013. That case was scheduled for trial in U. S. District Court in Nashville in January, but has been moved up and now is unlikely to see a jury until August 2016. Some of those charged in this case are also cooperating with the U.S. Attorney’s Office and so are likely to accept a guilty plea and not go to trial. According to U.S. Department of Justice statistics, more than 95 percent of federal criminal defendants plead guilty to charges.

In charges filed June 16, 2014, the former Councilwoman is alleged to have aided others in a scheme purported to provide health care benefit coverage to more than 17,000 individuals and multiple employer groups in various states. It claims that although holding themselves out as providing health care coverage, the defendant and her co-conspirators did not comply with either state or federal regulatory requirements. Cauthen and her co-conspirators are alleged to have collected more than $28 million in insurance premium payments.

 

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