Federal Jury Convicts Two in ACA Subsidy Fraud Involving Homeless Enrollees

A federal jury has convicted Cory Lloyd, a former licensed broker from Stuart, Florida, and Steven Strong, a marketing executive from Texas, for orchestrating a $233 million fraud scheme involving the Affordable Care Act (ACA). Over four years, the duo and their collaborators manipulated income data and fabricated eligibility to enroll thousands of ineligible individuals—many of them homeless—in subsidized health plans via HealthCare.gov. This led to $180 million in misallocated federal tax credits and over $6.5 million in commissions to Strong alone.

The scheme revealed serious vulnerabilities in both income verification protocols and special enrollment period (SEP) safeguards. Adjusters and fraud investigators should note the strategic use of Medicaid application denials to trigger SEP eligibility and the use of mismatched personal data (e.g., addresses, Social Security numbers) to obfuscate identities.

Cory Lloyd previously held property-casualty appointments with dozens of insurers, raising questions about licensing oversight and the vetting of brokerage partners. Fraud tactics included coaching enrollees to falsify income claims, submitting knowingly false data to CMS systems, and using deceptive sales scripts. Prosecutors also tied fraud proceeds to personal luxury purchases, including a $140,000 yacht.

This case underscores the need for insurers and regulators to scrutinize ACA broker relationships, bolster SEP and income verification checks, and closely monitor commission-driven enrollment spikes. It also highlights how fraudulent enrollment can disrupt legitimate care access, especially among vulnerable populations, including those struggling with mental health and substance use disorders.