Co-founder of Medical Charity in St. Joseph Sentenced to 17 Years in Prison for $8 Million Fraud Scheme

KANSAS CITY, Mo. – The co-founder of a so-called Christian health care sharing ministry in St. Joseph, Mo., was sentenced in federal court today for his role in an $8 million wire fraud conspiracy that cheated hundreds of members, and to making false statements on a personal tax return.

Craig Anthony Reynolds, 62, of St. Joseph, was sentenced by U.S. District Judge Greg Kays to 17 years and six months in federal prison without parole. Reynolds was taken into custody at the conclusion of today’s hearing to immediately begin serving his sentence. The court also ordered Reynolds to pay $7,758,908 in restitution to the victims, $253,474 in restitution to the Internal Revenue Service, and $46,550 in restitution to the Missouri Department of Revenue.

The court also ordered Reynolds to forfeit to the government $462,771, which includes proceeds from the sale of a St. Joseph residence, cash representing his interest in another St. Joseph residence, the values of a Lincoln Navigator, and a Harley-Davidson motorcycle which will all be sold, and the contents of several bank accounts.

Reynolds incorporated and ran Medical Cost Sharing, a tax-exempt organization, as its president and chief executive officer from 2014 through December 2022. On Nov. 14, 2023, Reynolds pleaded guilty to one count of conspiracy to commit wire fraud and one count of making false statements on a tax return.

In a separate but related case, co-defendant James L. McGinnis, 77, of St. Joseph, pleaded guilty on April 2, 2024, to the same charges and awaits sentencing. McGinnis co-founded Medical Cost Sharing and served as its chief operating officer from 2014 through December 2022.

Reynolds and McGinnis each admitted that he and his co-conspirators used false and fraudulent promises to market Medical Cost Sharing as a “Health Care Sharing Ministry” to defraud hundreds of “ministry members.” They collected more than $8 million in member “contributions,” yet paid only 3.1 percent in health care claims so that they could personally profit and take most of the members’ contributions for themselves.

Reynolds and McGinnis pocketed at least $5,168,268 from the member contributions from December 2015 through December 2022. Thus, Reynolds and McGinnis took at least 64 percent of total member contributions for their personal profit.

Reynolds and McGinnis marketed Medical Cost Sharing as a “Christian Health Care Sharing Ministry” through insurance brokers, radio stations, social media, and its website. Medical Cost Sharing sales materials promoted its 501(c)(3) tax-exempt designation, advertising that it was different from for profit health insurance. The Medical Cost Sharing website claimed, “while we are not an insurance company, many think of us as a Christian Health Insurance, or Christian Medical Insurance because, like conventional insurance plans, we help you pay your healthcare costs. We help you protect your family. But unlike these corporate, profit based plans, we are a healthcare sharing ministry … your healthcare costs are shared with other Christians enrolled in our medical sharing plans.”

Medical Cost Sharing promised its member that if they paid monthly “contributions,” Medical Cost Sharing would pay claims after the members’ “personal responsibility” (deductible) was met.

In reality, Reynolds and McGinnis admitted, Medical Cost Sharing rarely paid members’ health care claims. Sometimes Medical Cost Sharing would pay a part of a claim if the member filed a complaint with their state attorney general and/or hired an attorney to represent them against Medical Cost Sharing.

Medical Cost Sharing paid no claims at all for almost two years, from Feb. 22, 2021, through December 2022, although it collected a total of nearly $1.2 million in dues in 2021 and 2022.

On Dec. 13, 2022, federal agents served search warrants on the Medical Cost Sharing business location and the residences of Reynolds and McGinnis and seized property generated from Medical Cost Sharing proceeds. Medical Cost Sharing continued to try to collect membership dues after the search and seizure warrants. On Dec. 27, 2022, the court entered a temporary restraining order that prohibited Medical Cost Sharing, Reynolds, and McGinnis from continuing to perpetrate a fraudulent scheme and from processing Medical Cost Sharing member payments, among other actions.

Reynolds also admitted that he filed a return that claimed he had no taxable income in 2019. Reynolds actually received at least $354,292 in taxable income in 2019. According to court documents, Reynolds filed false federal and state tax returns in 2018, 2019, 2020, and 2021.

According to court documents, Reynolds also defrauded the U.S. Treasury by applying for Covid tax credits using false information. Reynolds received a total of $42,586 in fraudulently obtained Employee Retention Credits for tax year 2021.

This case was prosecuted by Assistant U.S. Attorneys Kathleen D. Mahoney, Patrick Daly, and John Constance. It was investigated by the FBI and IRS-Criminal Investigation.

FBI Website for Victims of Medical Cost Sharing Fraud

Those who believe they are victims of this fraud and wish to receive restitution for any losses suffered as a result may provide their information through the MCS Victim Information Page that has been established by the FBI.

https://www.fbi.gov/how-we-can-help-you/victim-services/seeking-victim-information/mcs-victim-information-page