Couple Arrested for Scheme to Steal Hundreds of Thousands from CU

On Wednesday, the United States Attorney’s office announced the arrest of a couple who had attempted to defraud the University of over $200,000 by submitting false invoices for expenses allegedly relating to neuroscience research.

John Bzdil III, a former manager of the Pediatric Neurosciences Department at Columbia’s Neurological Institute, and his wife, Heather Brooke Rinehart, were arrested Wednesday morning at their home in Allentown, Pennsylvania. Both Bzdil and Rinehart were charged with one count of wire fraud and one count of conspiracy to commit mail and wire fraud, and Bzdil was charged with additional counts of wire and mail fraud. The US Attorney’s Office for New York's Southern District released a statement explaining that each charge could result in a maximum sentence of twenty years in prison and a fine upwards of $250,000.

In 2007, the University paid for a series of invoices authorized by Bzdil that amounted to $112,500, according to a press release from the Attorney’s Office and a formal complaint filed by the Federal Bureau of Investigation. In his request, Bzdil asked for funds to reimburse spinal muscular atrophy studies conducted by a Columbia-affiliated medical professional. However, according to the Attorney’s office, this research never occurred.

Bzdil and Rinehart were also reimbursed for purported work-related expenses. These invoices covered over $84,000 worth of personal goods—largely cosmetic products—purchased from Amazon.com, and over $25,000 to pay for the Skytop Lodge luxury resort in Pennsylvania, for a “Rinehart/Bzdil wedding” that occurred in September 2007.

The complaint filed by the Attorney’s office stated that the bulk of the couple’s fraudulent activity occurred from around June 2005 to June of this year, with two checks filed in February 2007—one for the amount of $7,500 seeking reimbursement for spinal muscular atrophy research.

In one instance, Columbia sought to reimburse Bzdil for alleged research expenses by requesting funds from the National Institute of Health, which were transferred to the University and then used to pay Bzdil. The wiring of funds, and the transmission of these receipts and payments via private and commercial couriers, resulted in the couple's mail and wire charges.

Bzdil, 34, was the Pediatric Neuroscience Department’s manager from June 2005 to about January of this year, according to the complaint. Provided with two University credit cards, was responsible for the purchase of office supplies as well as overseeing the staff payroll and allocation of research grants to members of the Neuroscience Department. Rinehart, 28, was formerly employed in the fashion marketing industry before working with Bzdil.

The Columbia Medical Center said in a statement, "We cooperated fully with the US Attorney's investigation, but have no information on the arrest nor do we as a rule comment on active criminal investigations."

Investigative work in the case was conducted by the FBI, and the Major Crimes Unit of the US Attorney’s Office will be handling prosecution in the case of US vs. Bzdil. The couple is expected to appear before US Magistrate Judge Douglas F. Eaton on Friday.

For more information, stay tuned for updates.