Brain untrust: new jersey man defrauded brain injury fund out of $4 million

TRENTON, NJ — A Somerset County man was sentenced to 87 months in federal prison on Tuesday for defrauding the New Jersey Traumatic Brain Injury (TBI) Fund of millions of dollars and committing tax evasion. C.R. Kraus, 58, of Manville, was convicted in April on charges including conspiracy to commit healthcare fraud, multiple counts of healthcare fraud, and tax evasion, according to U.S. Attorney Philip R. Sellinger.

Kraus’s sentence follows a lengthy investigation that revealed he and his co-conspirators, including former TBI Fund manager Harry Pizutelli and another accomplice, Maritza Flores, orchestrated a scheme to siphon more than $4 million from the state-funded program. The TBI Fund, managed by the New Jersey Division of Disability Services, provides essential support and services to state residents suffering from traumatic brain injuries, particularly when other financial resources are unavailable.

U.S. Attorney Sellinger condemned Kraus’s actions, stating, “This defendant stole millions of dollars earmarked for victims of traumatic brain injuries. Stealing resources intended to help New Jersey residents who are already coping with serious challenges is especially egregious. This office will never relent in holding such criminals accountable.”

According to evidence presented at trial, Pizutelli, who managed the day-to-day operations of the TBI Fund, facilitated fraudulent payments to Kraus and Flores by generating and approving false invoices. These invoices made it appear that Kraus and Flores had provided authorized services to TBI Fund beneficiaries when, in reality, no services were rendered. Authorities said that Pizutelli approved these payments to Kraus and Flores as part of a scheme that maintained personal relationships, including a romantic relationship with Flores. From 2009 to 2019, the scheme resulted in more than $940,000 in fraudulent payments to Flores and over $3.2 million to Kraus.

FBI Acting Special Agent in Charge Nelson I. Delgado criticized the scheme, stating, “C.R. Kraus was intent on defrauding the Traumatic Brain Injury Fund by making false claims that he treated patients who suffer from such maladies. This not only took away valuable resources from other deserving patients but enabled Kraus and his co-conspirators to benefit substantial monetary gain.”

In addition to the prison term, U.S. District Judge Zahid N. Quraishi ordered Kraus to pay $4.19 million in restitution and sentenced him to three years of supervised release following his prison term. Flores and Pizutelli, who both pleaded guilty to conspiracy to commit healthcare fraud and tax evasion, are awaiting sentencing.

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