Cauthen to be sentenced May 14

BLYTHEWOOD – A former Blythewood Town Councilwoman pleading guilty for her role in a multi-million dollar health care fraud scheme could soon learn her fate.

Kathleen Cauthen, 47, is scheduled for sentencing on May 14, according to federal court records. In 2015, Cauthen pleaded guilty to one count of misprision of a felony. A second count of conspiracy to commit theft or embezzlement in connection with health care was dropped as part of a plea deal.

Cauthen

Court documents state the misprision of a felony has a maximum sentence of three years in prison and a $250,000 fine. The embezzlement count carries the same penalty.  Documents list an “advisory” sentence of 21 to 27 months for the misprision count, though the judge could sentence Cauthen to probation or house arrest.

Cauthen has been a cooperating witness in the government’s investigation and prosecution of others in the health care fraud case. She has also been subject to subpoena from the prosecution.

Cauthen’s sentencing was set for March 16, but her attorney requested a continuation seeking more time to respond to a presentencing report. Complicating matters, the report that was emailed to Cauthen was delivered to her spam folder and wasn’t discovered until weeks later, the motion states.
“Ms. Cauthen would request the full period of time in which to respond to the lengthy presentence report, which is not possible due to the March 16 hearing date,” the motion says. “Based on the foregoing, Ms. Cauthen requests a continuance of this cause to fully respond and prepare for this critical hearing.”

Cauthen is one of several people indicted in a multi-state health care fraud scheme totaling at least $6.5 million and impacting approximately 17,000 people.

The scheme involved embezzling funds from premiums paid by individuals who had signed up for unauthorized health plans, diverting more than $5.4 million in premiums for the defendants’ own personal use, according to an FBI news release.

Shell companies were set up to facilitate money laundering, court documents state.

The ringleader was William Madison Worthy, a former client of Cauthen. Worthy was sentenced to 82 months – or just shy of seven years – in prison and three years of supervised release after pleading guilty in 2016.

Worthy was also ordered to pay $6.5 million in restitution, according to court records.

The sentence is concurrent with an 87-month sentence Worthy received in 2011 for similar, but unrelated fraud-related counts from when he lived in Spartanburg before moving to Isle of Palms.

Other codefendants have also pleaded guilty, including Angela Posey and Bart Posey. Angela Posey was sentenced March 26 to six months of probation. Bart Posey pleaded guilty in January and is scheduled for sentencing April 30.

In addition to criminal penalties, Cauthen and others pleading guilty have been slapped with cease and desist orders from departments of insurance in South Carolina, Delaware, Oklahoma and other states.

The S.C. Supreme Court suspended Cauthen’s law license in 2014. It later accepted a request from Cauthen to resign in lieu of discipline in January 2017, according to court documents. The resignation is permanent, court documents state.


Related: Former Councilwoman faces Federal charges, Former Councilwoman awaits day in court, Former Councilwoman pleads guilty, Cauthen sentencing delayed, $5 million civil penalty imposed on Katie Cauthen