In an insurance fraud case in which the insurance company actually made money, the former director of the Housing Authority of Salt Lake City received one day of probation and a whole lot of bad publicity.
During a sentencing hearing Wednesday, federal prosecutors admitted the case wasn't the "crime of the century" when 62-year-old Rosemary Kappes kept her former husband on her health care benefits, eight years after the two divorced.
In fact, Kappes' attorney pointed out that the health insurance company actually made money off of Kappes. Having paid some $28,000 in insurance premiums over those eight years, Kappes' husband only received about $14,000 in medical services in the same time period.
Assistant U.S. Attorney Mark Hirata said the crime was that Kappes knew she was doing something wrong over those years and had failed to disclose that she divorced and kept her former husband on her insurance to the housing authority board and the insurance company. Her defense attorney acknowledged that Kappes only disclosed what she was doing when a debate over offering health benefits to domestic partners threatened to disclose her situation at work.
Hirata also pointed out that Kappes admitted to an FBI agent that she divorced her husband for tax purposes. The two continue to live together as "life partners," her attorney said.
Kappes says she went to the authorities and disclosed the situation. She also has never had a run-in with the law. Yet all of a sudden Kappes found herself indicted on 13 counts of mail fraud, 22 counts of health care fraud and one count of theft from a federally-funded program.
As part of a plea bargain, Kappes on Wednesday pleaded guilty to one count of health care fraud and faced up to one year probation.
U.S. District Judge Dee Benson however questioned why Kappes was prosecuted.
"It's been the most humiliating thing in my life," Kappes told the court. After serving as the authority's director since 1987, she suddenly found herself placed on administrative leave last May and resigned from her post in July, all after she decided she was going to retire at the end of this year.
Benson noted that Kappes had endured publicity over this case and the early termination of a distinguished career.
"You've lost your job over this," Benson said, adding she would also have a record as a convicted felon.
In finding a punishment in line with the crime, Benson sentenced Kappes to one day of probation, ordering her to keep her nose clean by the end of Wednesday. He also ordered her to serve 10 hours community service but no fine was imposed.
Kappes vowed she would pay the housing authority back for the money it paid into her benefits in support of her former husband.
E-mail: gfattah@desnews.com