A former Holmes Beach resident and her company are on the hook in two cases.
The U.S. Department of Labor seeks to recover $1.57 million in diverted employee benefit funds in the U.S. District Court, Middle District of Florida.
And, in a 12th Circuit contract case, Sunz Insurance Co. alleges $7.9 million in damages.
U.S. Secretary of Labor Thomas E. Perez filed suit Aug. 11 against Suzanne G. Burrow, now of Bradenton, and her company, Direct HR Services Inc., under the Employee Retirement Income Security Act of 1974, alleging breaches of fiduciary duty.
Filed in federal court in Tampa, the Department of Labor complaint also names a former Holmes Beach man, Jason Syrek, 43, now serving a six-year prison term for health care and tax fraud.
Other defendants are companies allegedly controlled by Burrow and Syrek: Commerce Benefits Group Agency Inc. of Ohio; Healthsmart Benefit Solutions Inc. of Illinois and Texas; and Direct HR Services Employee Health and Welfare Plan.
From prison, Syrek answered the complaint in a handwritten response filed Sept. 9.
By press time, no other defendant filed a response.
Also, a Sept. 27 email request from The Islander to Burrow for comment on the federal and state case went unanswered.
Direct HR and Burrow, as its owner, offered human resource services — including health care plans — to employers.
Syrek allegedly assisted and directed Burrow in setting up Direct HR, which by August 2014 served 79 employer-clients and 323 participants.
A 38-page document filed in the federal case Sept. 2 lists some 1,500 people who may be entitled to restitution.
DOL suit specifics
The suit alleges Burrow, Syrek and the companies ran afoul of ERISA by failing to provide the health care benefits for plan participants and beneficiaries.
The Direct HR plan had preferred-provider health care options, including MultiPlan, American Healthcare Alliance and Cigna.
The DOL complaint seeks reimbursement for unpaid medical claims and premiums the defendants collected but failed to pay, and to prohibit them from operating in the employee benefit industry.
Direct HR and Burrow violated federal law by using the plan assets “in their own interests or accounts,” according to the complaint.
The complaint also alleges:
• Between August 2011 and September 2014, Commerce Benefits and successor company, Healthsmart, provided administrative services to the plan.
• When the plan terminated in September 2014, $3.65 million in employee health benefit claims were left unpaid — never processed, unfunded or improperly denied.
• Burrow, Syrek and DHR improperly diverted more than $1.2 million into non-plan accounts between August 2011 and September 2013.
• More than $40,000 was used to pay DHR’s tax liability.
• Commerce Benefits/Healthsmart diverted $25,000 to pay its own debt.
• Syrek directed Commerce Benefits/Healthsmart to move $555,000 from a bank account to pay plan claims, but as of Aug. 11, $277,538.35 had not been repaid.
• Defendants violated ERISA in setting up a self-insured multiple-employer welfare arrangement and failing to monitor the plan or use an actuary or underwriter for claims reserves.
• All defendants are liable for the breaches of the other under ERISA.
Sunz v. Burrow
Also pending against Burrow and Direct HR, as well as Burrow’s personal trust, is a 12th Circuit Court case filed in September 2014 by Sunz Insurance Co. of Bradenton and Sarasota. It alleges Burrow and the company failed to pay Sunz for workers’ compensation insurance between 2012 and 2014.
In the five-count complaint, Sunz alleges a personal guaranty claim against Burrow, a fraudulent transfer involving Burrow and her trust and an action to repossess 2012 and 2013 Porsches against all three defendants.
Sunz seeks $2.6 million in contract damages in connection with the insurance it provided to Direct HR, and with treble damages, $7.9 million, for failing to allow an audit, plus attorney’s fees.
In a March 2016 deposition, Burrow said she was paid $200,000 a year 2012-14 while at Direct HR through SGB Consulting and her trust.
She also acknowledged purchasing property at 7800 18th Ave. W., Bradenton, for $1.1 million with Syrek, and said it was property of her trust.
Property records show she holds a possessory interest and Suncoast Estate and Trust LLC, trustee of the Suncoast Estate and Trust, acquired the property in January 2014.
In August, the attorney for Burrow, her company and trust, withdrew from the case and Judge Gilbert A. Smith Jr. set a Jan. 17, 2017, non-jury trial.
Common denominator
Though Syrek is not a named defendant in the Sunz case, he is a common denominator in both suits.
Records show the former Holmes Beach man, also from Michigan, and Burrow, from Ohio, came to Holmes Beach in 2010.
While in Holmes Beach, Syrek set up Direct HR at 6000 Marina Drive with Burrow, while he continued to operate CAS Resources Inc., another human resource company in Adrian, Michigan.
At CAS, he failed to properly administer premiums collected for Blue Cross Blue Shield of Michigan and, instead, purchased luxury items for his own use.
According to Burrow’s deposition in the Sunz case, she was an employee at CAS, earning $35,000-$40,000.
The DOL suit alleges CAS ceased operations in 2011 and its participants and unprocessed claims then merged into Direct HR.
Syrek’s fraud goes back at least a decade.
Syrek was convicted and sentenced in 2007 to 13 months for bank fraud by an Ohio federal judge for a scheme to defraud Fifth Third Bank of $817,380 with ACH credits to One Source Management of Maumee, Ohio.
Syrek’s 2013 sentence for the CAS fraud orders restitution of $13.2 million to the Internal Revenue Service and $4.5 million to BCBS-Michigan.