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Trial set for insurance exec that provided health insurance to VT students

Published On: Apr 30 2013 09:16:55 PM CDT
ABINGDON, Va. -

The former owner of a Texas company that provided health insurance to Virginia Tech students has pleaded not guilty to racketeering, conspiracy, money laundering and fraud charges.

Records show 73-year-old John Paul Gutschlag Sr. entered his plea Tuesday in federal court in Abingdon. A jury trial was set to start Sept. 23. Gutschlag was released on $10,000 unsecured bond.

A 57-count federal indictment accuses Gutschlag and GM-Southwest Inc. of overstating claims by more than $9 million to boost profits.

The Frisco, Texas-based company is a third-party administrator of student health insurance. Major insurance carriers provide coverage but pay GMS a fee for collecting premiums and paying claims. The indictment says that by overstating claims, GM was able to charge higher premiums and discourage competitors from bidding to provide the service.