From the U.S. Attorney's Office, Middle District of Pennsylvania:
HARRISBURG - The United States Attorney’s Office for the Middle District of Pennsylvania announced that Laurie Ehrhart, age 48, of New Bloomfield, Pennsylvania was sentenced yesterday by Chief United States District Court Judge Christopher C. Conner to 6 months home confinement and 2 years probation for helping her former husband defraud a disabled veteran out of $316,360.
According to United States Attorney David J. Freed, Laurie Ehrhart pleaded guilty on December 7, 2018, to one count of Health Care Fraud. Ehrhart’s former husband, Jason Ehrhart, also pleaded guilty to Health Care Fraud and was sentenced on April 15, 2019, by Judge Conner to 19 months’ incarceration. The charges against the couple related to their misappropriation of Michael Ehrhart’s veteran’s disability benefits.
While serving in the U.S. Army in 1985, Michael Ehrhart, a former resident of Perry County, Pennsylvania, was diagnosed with multiple sclerosis. In 1998 Michael Ehrhart began receiving disability benefits from the Department of Veterans Affairs (VA). Michael was eventually hospitalized on a permanent basis at the VA hospital in Lebanon, Pennsylvania in November of 2004 and began receiving disability benefits from the Social Security Administration (SSA) in 2006.
In August of 2006 Michael was deemed by the VA to be incompetent to handle his own financial affairs. As a result, on October 2, 2006, Michael’s brother, Jason Ehrhart, applied to serve as Michael’s VA Fiduciary and Legal Custodian. Under the terms of a Fiduciary Agreement, Jason Ehrhart agreed to use all of Michael’s VA disability benefits exclusively for Michael’s benefit. The agreement warned Jason that the funds were not for his personal use. The Fiduciary Agreement also required Jason Ehrhart to submit an annual accounting to the VA with respect to the amount of money received and spent on Michael’s behalf.
While Jason Ehrhart served as Michael’s VA Fiduciary and Legal Custodian, all of Michael’s VA benefits, plus most of his Social Security disability checks, were deposited into a checking account Jason opened at The Orrstown Bank. Altogether, $476,260 in federal benefits ($422,828 in VA disability, $48,187 in Social Security disability, and $5,244 in VA clothing allowance) were deposited into the account between January 2009 and August 2016.
However, during that same time period $316,360 of the $476,260 was misappropriated by Jason and Laurie Ehrhart and converted to their own use Checks totaling $218,832 ($96,202 payable to Jason and $122,630 payable to Laurie), were drawn against the account. Of the $218,832, $157,742 was deposited into Jason and Laurie Ehrhart’s joint checking account at the Juniata Valley Bank (JVB) and at least $23,496 was converted to cash. Thereafter, the funds in the joint JVB account were employed by Jason and Laurie Ehrhart to pay personal expenses.
Checks totaling $7,174 were also made payable to Jason and Laurie Ehrhart’s two minor children. Jason Ehrhart would instruct the children to take the checks to the bank, cash them, and surrender the cash to him.
Checks totaling $19,890 were also made payable to another couple who were Jason and Laurie Ehrhart’s best friends. Jason Ehrhart regularly treated the couple and their children to dinners out and at least two, all-expense paid vacations to Disney World in Florida. Jason also purchased two automobiles for the family and paid for the wife’s dental work.
To conceal his embezzlements, Jason Ehrhart submitted eight false annual accountings to the VA in which he falsely claimed he spent $402,408 on Michael’s behalf. The itemized expenditures in the annual accountings were grossly inflated. For example, Jason Ehrhart claimed he paid the mortgage on the veteran’s residence ($1,631 per month) plus Michael’s share of the mortgage on his mother’s residence ($881) after she died in May 2011. However, the lenders for both properties obtained default judgments and both properties were eventually foreclosed and sold.
Jason Ehrhart also falsely claimed in the annual accountings that he spent thousands on miscellaneous expenditures for the veteran, including storage unit rentals, vehicle maintenance bills, state and local taxes, life and auto insurance, and credit card bills. However, in 2016 the veteran’s specially equipped wheelchair van, for which Jason Ehrhart claimed he spent approximately $32,395 on maintenance, was found broken down and abandoned along a Perry County roadside. Laurie Ehrhart admitted she helped Jason complete the 8 false annual accountings in her handwriting.
Michael Ehrhart died at the Lebanon VA Hospital on July 30, 2018. As part of their sentences Judge Conner ordered Laurie and Jason Ehrhart to pay $316,360 restitution to Michael’s son, his only known heir.
The Department of Veteran Affairs Office of Inspector General, the Pennsylvania State Police, and the Social Security Administration’s Office of Inspector General investigated the case. Assistant United States Attorney Kim Douglas Daniel prosecuted the case.