A well-to-do North Oaks couple are admitting they left Louisiana in the wake of Hurricane Katrina, settled in Minnesota with their triplet children -- two of them severely disabled -- and defrauded Medicaid and Social Security out of hundreds of thousands of dollars.
James N. Hood, 69, and Cynthia M. Hood, 55, pleaded guilty Wednesday in federal court in Minneapolis to mail fraud, health care fraud and theft of public money. Cynthia Hood also pleaded guilty to making a false statement while seeking Social Security benefits for the children, who are now 14 years old.
The Hoods decided on Minnesota for the "high quality of life and the best health care and educational resources for their children," the U.S. attorney's office said in a statement Wednesday. "At no time was [James Hood] truthful in reporting his income for any benefits received."
In court Wednesday, the Hoods agreed to repay to the state and federal governments all of the money they illegally claimed, about $483,000 in total, defense attorney Jean Brandl said Thursday.
While saying her clients are "deeply apologetic and take full responsibility for their actions," Brandl also noted that the Hoods were "not people living high on the hog" and didn't take exotic trips or buy fancy cars.
"They have a big house, but there's not much in it," Brandl said. The Hoods were able to pay back the money "because they saved almost everything" and spent the rest on care for their disabled children.
Brandl said the Hoods lost perspective "worrying about their kids," and James Hood in particular "worries about money and was willing to push the limits out of his fear about scarcity of money."
For their offenses, each could end up serving decades in prison. They remain free pending sentencing, which has yet to be scheduled.
Brandl said she hopes to spare her clients prison time, in particular given the responsibilities they have for their disabled children.
She described one of the children as "severely autistic" and another as a quadriplegic from cerebral palsy. "Cindy spends every waking moment caring for those children," Brandl said.
According to their plea agreements and court records:
Following Katrina in 2005, the family scouted more than 20 states for government assistance for their children that was difficult to find in New Orleans.
Soon after arriving in Minnesota, they applied for benefits through the state's Medicaid program. James Hood prepared incomplete and false tax forms that Cynthia Hood signed, and the Hoods kept submitting false information in their applications and during interviews for benefits.
Prosecutors note that James Hood had at least 33 bank accounts in 2007 that earned at least $117,000 in interest income. However, he only disclosed about $85,000 of that income to the Minnesota Department of Human Services.
He also didn't disclose interest income to Ramsey County Community Human Services and also concealed stock holdings and dividend income totaling at least $156,000, as well as failing to reveal farm subsidies, farm income from property in Iowa and significant gifts from family trusts. The Hoods also told the agency that James Hood's pay as a history professor at Tulane University was their only income.
In all, from January 2006 to April 2011, James Hood stole nearly $370,000 in state and federal Medicaid benefits for his children.
In late 2010, Cynthia Hood falsely told the Social Security Administration that her household consisted of herself and her children and that her husband lived in Iowa. In truth, James Hood was living with and financially supporting them.
She also has told the government that she did not own any homes, vehicles, stocks, bonds or property, and reported that she had one bank account with a balance of $1,400. In fact, Cynthia Hood held at least 16 bank accounts jointly with James Hood.
In total, the Hoods defrauded the Social Security Administration out of more than $80,000.
According to an affidavit filed in the case by the Social Security Administration, the Hoods had a combined retirement portfolio of more than $1 million, more than a dozen bank accounts with a total of nearly $1 million in cash and two homes worth more than $1 million combined. Their North Oaks home was bought with cash for $865,000 in August 2006.
When the Hoods brought their triplets to Minnesota from Louisiana in 2005, officials said, they also claimed they were displaced from their home by the hurricane. However, their Louisiana house was deemed habitable by federal officials and listed for sale at one point for $278,000.
Star Tribune staff writer James Walsh contributed to this report.
Paul Walsh • 612-673-4482