PETER POSANG WONG, age 49, former head of PGMA (Pacific Group Medical Association), a medical benefit provider operating in Hawaii from 1993 until it was shut down by the State of Hawaii Insurance Commissioner in 1997, and a current resident of California, was sentenced today by United States District Court Judge David Alan Ezra to a prison term of 36 months and was ordered to pay $7,550,625 in restitution.

Wong plead to one count of making a false statement to an insurance regulatory agency and one money laundering count. The government, in arguing for a higher sentence, stated that PGMA's clients were primarily small businesses but that in 1994, PGMA picked up 2 big public employee unions, UPW and HGEA, resulting in a large infusion of cash. PGMA was required to file periodic repots including its balance sheet with the State of Hawaii Insurance Commissioner. Wong caused to be filed balance sheets containing false statements regarding PGMA's liabilities and assets. Had Wong not caused these filings containing false statements, the government argued that the Insurance Commissioner would have shut down PGMA one year earlier, thus resulting in fewer losses.

In sentencing Wong, Judge Ezra considered Wong's acceptance of responsibility for the crimes he committed, his cooperation with the government, the payments made to the victims by the Insurance Commissioner, based on PGMA assets, as well as the fact that the crimes occurred 10 years ago.

Edward H. Kubo, Jr., United States Attorney for the District of Hawaii, said that prior to its demise, PGMA was responsible for health coverage for approximately 27,000 members including members of the UPW and the HGEA. Kubo praised the State Insurance Commissioner who handled the liquidation of PGMA which included the filing of 10 lawsuits including two in California. The Insurance Commissioner determined that the total claims liability at the time PGMA was shut down was approximately $17,600,000. In December 2007, the Insurance Commissioner made a distribution to victims totaling $8,253,009. A second, smaller distribution is expected later this year. The restitution ordered by the Court is the deficit remaining after the second and final distribution.

The investigation was conducted by the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; the Internal Revenue Service; and the FBI. Assistant U.S. Attorney Florence Nakakuni handled the prosecution.

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