Roundy's Accused of Insurance Fraud

MILWAUKEE - Roundy's, Inc., which runs the Pick 'n Save supermarket chain, and a former Roundy's executive have been accused of involvement in a possible disability insurance fraud, according to court documents, the Milwaukee Journal Sentinel reports.

Ralph Beketic, who left Roundy's in 2002, collected disability benefits from UnumProvident Corp. That payment allegedly served as a type of early retirement benefits that Roundy's didn't have to pay Beketic, according to a claim made in Waukesha County Circuit Court.

A Roundy's official denied the allegation, saying that Beketic was disabled and had been examined by doctors hired by UnumProvident before the insurance claim was paid.

The accuser is Roger Alswager, another former Roundy's executive, who was fired by the company in 2001 after a series of drunk-driving arrests. Alswager, who was Roundy's v.p. of real estate and development, later filed suit against the company for defamation after then-president Gerald Lestina told a Pick 'n Save operator about the circumstances behind Alswager's termination.

Last year a jury found for Roundy's in that case, but Alswager has since appealed that verdict. His latest accusation, which he says is supported by a recorded conversation with a friend of Beketic's, was put forth in a letter filed with the case's court record.

The letter is from Mark Walsh, an investigator with UnumProvident in Portland, Maine. Walsh wrote to Waukesha County Circuit Judge Mark Gempler on April 6, asking for permission to talk to Alswager about his accusation.

Alswager needs Gempler's approval because of a gag order on his pending lawsuit against Roundy's.

Walsh's letter called Alswager's claim a "possible fraud matter concerning Mr. Beketic and Roundy's." Walsh also included in his letter to the judge a copy of a letter from Alswager that describes the accusation.

Alswager's letter maintains that Beketic left Roundy's after the company sold its corporate jet, requiring him to drive to various locations. Beketic sought excuses from doctors to permit him to claim a disability, according to the letter.

The letter claims Roundy's, one of Wisconsin's largest companies with $4.38 billion in annual revenue, and Beketic agreed to use the disability benefits "as a form of early retirement."

Alswager's letter further said a deferred compensation agreement would have required Roundy's to pay Beketic $476,000 if Beketic's employment was terminated after Roundy's was sold in June 2002 to investment funds controlled by Chicago-based Willis Stein & Partners.

The letter identified Alswager's source as Frank Serio, a Pick 'n Save operator and a friend of Beketic's. Alswager said Serio made those comments in a recorded conversation.

Ed Kitz, Roundy's treasurer, said Friday that Beketic left the company because of his disability. He said medical reports, including some conducted by doctors hired by UnumProvident, back up that claim. Kitz said Roundy's only role in the matter was to buy the disability insurance policy that covered Beketic, who filed the claim with UnumProvident.

According to information filed by Roundy's with the SEC, Beketic was v.p. of wholesaling operations from 1996 until 2002. A SEC filing by Roundy's in November 2002 said that Beketic left Roundy's after the June 2002 sale to Willis Stein.

In 2001 Beketic was the third-highest paid executive at Roundy's, earning total compensation of $390,995, including his base salary of $225,000, according to SEC filings. The two highest-paid Roundy's executives, Lestina and c.e.o. Robert Ranus, both resigned in relation to the company's sale to Willis Stein.

Alswager's latest accusation is the latest in a series of charges against Roundy's. In 2002 he said Roundy's engaged in mismanagement, including preferential treatment for a large customer. Alswager's accusations went public after Roundy's asked a judge to order him to not contact the privately held company's shareholders about his claims.

Roundy's lawyers denied Alswager's claims, saying he was embittered over his termination and was conducting a "smear campaign" aimed at Lestina and another company executive.

A judge later ruled that Alswager could contact Roundy's shareholders with his claims.
This ad will auto-close in 10 seconds