A onetime executive with an Osseo home health care company is heading to prison for stealing hundreds of thousands of dollars in a scheme she contended was fueled by a “severe addiction” to shopping for lavish items and other psychological problems.

Lori Jo Mueller, 48, of Apple Valley, was sentenced Wednesday in federal court to four years and three months in prison for siphoning off money for more than six years from Edelweiss Home Health Care, which was forced to close in the wake of the thefts. The sentence is at the top end of the advisory guidelines.

From June 2006 through June 2012, Mueller stole about $842,000 from Edelweiss in nearly 350 acts of theft, and used the money to pay credit card bills and other personal expenses. She pleaded guilty in February to wire fraud and health care fraud. Meanwhile, Edelweiss closed in September and reopened as a new and smaller business in March with fewer clients and employees.

Also, from March 2010 until June 2012, she allegedly defrauded Medica by submitting false claims to various insurers seeking reimbursement for services provided by Edelweiss nursing staff.
In some instances, Mueller billed multiple insurance providers for the same services. The false billings recouped more than $631,000 for Edelweiss, unbeknownst to the owner, in fraudulent proceeds. Mueller was fired soon after the scheme was detected.

Mueller, who began working for Edelweiss in 2002 as a bookkeeper and was promoted to vice president of operations, was responsible for the review and payment of corporate invoices, bookkeeping and other financial matters. This access allowed her to issue company checks to herself.

Court records also show that Mueller, while known as Lori Jo Peterson, was convicted in 1997 of stealing more than $60,000 from a company in Burnsville. She also was convicted in 1992 of stealing tens of thousands of dollars in a swindling case in Hennepin County.
In Minnesota, the risk for abuse and fraud is something the home health care industry has been grappling with for years in the face of demands of an aging population that wants to stay in their homes.

Last year, state fraud investigators with the Department of Human Services handled 104 cases involving personal care provider organizations and four cases involving home health care agencies. The year before, the agency investigated 191 cases involving personal care provider organizations and six involving home health agencies.

In urging the court to spare Mueller prison and instead be put on probation with community-based confinement, defense attorney Frederic Bruno pointed out in a pre-sentencing filing that his client’s actions “were driven by her severe addiction to shopping, and that her failure to take prescribed medications and participate in therapy for a mental disorder contributed to this addiction.”

Among the many items purchased by Mueller during the scheme, according to court records, were: three cars, a speed boat, expensive jewelry, camera equipment, numerous electric guitars (one signed by Van Halen), televisions, and audio and video equipment.

She also bought many sports memorabilia items. They included: a signed baseball by Hall of Famer Cal Ripken Jr., a signed football by former Viking Randall McDaniel, a photo signed by golf great Tiger Woods. 

The defense added that Mueller has “problems with impulse control and a tendency to act out.”
The prosecution countered in its own filing that Mueller has a long criminal history involving fraud and was on probation because she stole from a previous employer, with this latest scheme putting Edelweiss “in a death spiral from which it could not recover.”

In short, prosecutors added, “Edelweiss no longer exists. Hundreds of employees lost their jobs. Client care was disrupted. And [owner Edel] Austin is devastated.”

Edelweiss closed in September, said Austin, who is now director of nursing for Abundance Home Health Care, which opened in the same building in March on a smaller scale.

“With all the embezzlement, we couldn’t continue to go” as Edelweiss, Austin said.

When Austin learned that Mueller was attributing her crime, in part, to being a shopping addict, Austin responded, “Oh, gosh, that didn’t work out too much, did it?”

Bruno said he views Mueller’s sentence as fair, but he doubts that his client’s thefts were what brought about Edelweiss’ closure, noting that the business lost a little more than $200,000 in total.

“Why they went out of business is their own fault,” he said. “She was a convenient scapegoat for the collapse of a company that was probably going down anyway.”