Psychologist, 2 postal workers charged in million dollar fraud scheme

A Whittier psychologist was arrested this morning following his indictment for allegedly orchestrating a scheme to bill the federal government nearly $1 million for medical treatments for fabricated psychological conditions.

The indictment handed down June 8 charges clinical psychologist Arnold P. Nerenberg, 69, co-founder of the Whittier-based World Legion of Power bodybuilding organization, with seven counts of mail fraud.

Also charged in the case are two ex-postal workers, Lois L. Washington, 47, of Inglewood, and Cetric T. Fletcher, 51, of Long Beach. Washington and Fletcher are each charged with two counts of mail fraud, and are also each accused of two counts of making false statements to obtain federal employee’s compensation.

Like Nerenberg, Fletcher was taken into custody this morning by federal agents and both men are expected to be arraigned on the indictment in federal court in Los Angeles this afternoon. Washington will be summoned to appear in federal court at a later date.

The indictment alleges that from June 2000 through April 2008, the defendants submitted fraudulent paperwork to obtain compensation for psychological conditions that were never diagnosed and were reimbursed for medical expenses that were never incurred. According to court documents, Nerenberg billed the U.S. Postal Service for nearly $1 million in bogus medical fees and received about half of that. Former postal worker Fletcher allegedly pocketed more than $200,000 as a result of the scheme, while Washington allegedly made more than $145,000.

“This indictment marks a significant effort in the on-going battle against fraudulent workers’ compensation claims,” said U.S. Postal Service Inspector General David C. Williams. “The workers’ compensation program benefits thousands of postal employees who have received legitimate on-the-job injuries. But false claims by postal employees like these two, and by health care providers like Mr. Nerenberg, undermine the system.”

Office of Personnel Management Inspector General Patrick E. McFarland said: “Per the indictment, Mr. Nerenberg fraudulently billed not only workers’ compensation, but also other insurers, including the Federal Employees Health Benefits Program. This case is an excellent example of how cooperation among federal law enforcement agencies can bring perpetrators of fraud to justice.”

In some instances, Nerenberg allegedly billed the government for treatment sessions with Washington and Fletcher when records indicate the psychologist was out of the area or out of the country. According to court documents, one of his “patients” was actually an HSI undercover agent posing as a postal worker for whom Nerenberg secured disability pay from the Department of Labor based upon his claimed acute fear of dogs.

“Fraud schemes like this contribute to escalating healthcare and workers’ compensation costs and, in the end, it’s the American public that pays the price,” said Claude Arnold, Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Los Angeles. “As this indictment makes clear, those suspected of exploiting the system to enrich themselves face serious consequences, including significant prison time if the charges are upheld.”

According to the indictment, Washington submitted fraudulent paperwork to the Department of Labor’s worker compensation program claiming she was unemployed and had no income, when, in fact, she held various jobs, including loan officer, notary and real estate agent. The two ex-postal employees are also accused of seeking reimbursement for travel to medical appointments that never took place.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

Each count of mail fraud carries a maximum statutory penalty of 20 years in prison. If convicted of the mail fraud charges in the indictment, Nerenberg faces up to 140 years in federal prison, while Washington and Fletcher could be sentenced to as much as 40 years. Additionally, both Washington and Fletcher face two counts of making false statements to obtain federal employee’s compensation, charges that would add an additional six years to the maximum penalty for each defendant.

The indictment is the result of a joint federal investigation involving U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the U.S. Postal Service’s Office of Inspector General; the Office of Personnel Management’s Office of the Inspector General; and the Department of Labor’s Office of the Inspector General.