BOISE. Idaho (PRESS RELEASE) – Sara Curnow, 44, of Portland, Oregon, was sentenced today to 27 months in prison, followed by three years of supervised release, a condition of which is home confinement for 6 months, for the crime of wire fraud, U.S. Attorney Wendy J. Olson announced.  Chief U.S. District Judge B. Lynn Winmill also ordered Curnow to forfeit and pay restitution of $852,041 to St. Luke’s Health System.  Curnow pleaded guilty to one count of wire fraud on March 29, 2016.

According to the plea agreement, from approximately 2008 through 2015, Curnow was an employee of Pinnacle Pension Services (“Pinnacle”), headquartered in Boise, Idaho.  As part of its business, Pinnacle administered health care and dependent care Flexible Spending Accounts (“FSAs”) for employees of client firms.  Employees of client firms who elected to participate in an FSA program had pre-tax funds withheld from their paycheck and deposited into a bank account from which they can make claims for disbursement for health care and dependent care expenses throughout the year.  At the end of the year, if the employee had not exhausted his or her FSA deposits, they were forfeited to the employer.  In approximately 2009, Curnow assumed the job of FSA Administrator at Pinnacle.  In that role, Curnow had responsibility for reviewing and approving payment of FSA disbursement claims.

St. Luke’s Health System (“St. Luke’s”) was a client of Pinnacle.  St. Luke’s maintained bank accounts at Wells Fargo Bank into which withholdings of pre-tax FSA funds from participating employees were deposited and from which disbursements were made to these employees after they were approved by Pinnacle.

The plea agreement provided that beginning in April of 2009 and continuing until October of 2015, Curnow embezzled $852,041 from St. Luke’s FSA accounts at Wells Fargo Bank.  On the internal Pinnacle computer system, Curnow saw which St. Luke’s employees left forfeitures at plan year end and in what amounts.  These amounts were supposed to be forfeited to St. Luke’s at plan year end.  Instead, Curnow manipulated the Pinnacle claims system to create dummy elections and claims payments for St. Luke’s employees.  Rather than directing the claims payments to the bank accounts of the St. Luke’s employees, Curnow directed these claims payments to be sent by interstate wire transfer from St. Luke’s FSA account at Wells Fargo Bank to Pinnacle’s trust account at Wells Fargo Bank, and then, to Curnow’s bank accounts at Ally Bank, Mountain America Federal Credit Union, and Navy Federal Credit Union.  She did so on approximately 294 separate occasions in denominations ranging from approximately $600 to $9,100.  Because St. Luke’s had between 5,000 and 11,000 employees from 2009 through 2015, St. Luke’s did not discover the fraudulent transfers of forfeited funds that belonged to it.

The case was investigated by the U.S. Department of Labor, Employee Benefits Security Administration and the Boise Police Department.