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Massive Healthcare Fraud Takedown: 91 Defendants, $295 Million Scheme
Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced that a nationwide takedown by Medicare Fraud Strike Force operations in eight cities has resulted in charges against 91 defendants, including doctors, nurses, and other medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $295 million in false billing.
In recent years the government has ramped up enforcement to bring an end to Medicare fraud. The joint DOJ-HHS Fraud Strike Force is comprised of a multi-agency team of federal, state and local investigators. Accordingly, this massive takedown involved the work of approximately 400 law enforcement agents from the FBI, HHS-Office of Insepctor General, and other federal, state and local agencies. In addition to the 91 arrests, the Strike Force also executed 18 search warrants in connection with ongoing investigations. As if this massive takedown wasn’t already enough, the Strike Force arrested an additional 45 defendants the same day in Miami and in the past couple of months has charged 10 defendants in Baton Rouge, 6 defendants in Los Angeles, 18 defendants in Detroit, and 2 defendants in Houston.
This level of coordination is unmatched in other white collar/fraud related crimes. Thus, the government’s stubborn focus on preventing fraud should not be taken lightly by anyone in the healthcare industry. As Assistant Attorney General Breuer said at the press release, “as charged in these indictments, the defendants cover nearly the entire spectrum of healthcare providers, and perpetrated a variety of fraudulent schemes.” Since its inception in 2007, the Strike Force has operations in nine major cities across the nation and has charged more than 1,140 defendants who account for nearly $2.9 billion in false billings.
The best way to avoid being ensnared by a federal investigation is for healthcare providers to maintain aggressive Medicare fraud and abuse compliance programs. These internal corporate policies should, at the very least, be written and cover a wide range of corporate functions susceptible to fraud and abuse. Other critical elements to a successful compliance program include the designation of a compliance officer, conducting effective training and education, developing effective lines of communication, establishing internal enforcement procedures, auditing and monitoring, and maintaining a whistleblower/non-retaliation policy. Preventing all violations may be impossible, but that shouldn’t stop healthcare providers from establishing and faithfully administering an anti-fraud compliance program. With such a program in place, the government will tend to look the other way when technical violations of the law occur. This is a much better, and cheaper, outcome than being charged in a federal indictment.
Since Medicare is a federally funded program most defendants are charged with federal crimes and required to make appearances before a U.S. District Court judge. Indictments in these cases usually include “white collar” charges such as health care fraud, conspiracy to commit health care fraud, receipt of health care kickbacks, and money laundering. In addition, practically all of the defendants are subject to criminal forfeiture proceedings and required to pay restitution if convicted. These charges are very complex, time consuming, and expensive to defend against. Therefore for both compliance and defense purposes, healthcare providers should employ the services of an attorney that has an intimate understanding of the intersection between federal regulatory compliance and federal criminal defense.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Individuals Could Face Decades in Prison for Stock Manipulation Scheme – Attorney also Charged
Three stock promoters have been indicted for their roles in a stock manipulation scheme that defrauded investors. Timothy Barham Jr., 43, of Henderson, Tenn.; Nathan Montgomery, 30, of Henderson, Nev.; and Ryan Reynolds, 39, of Dallas, were each charged in a superseding indictment filed on April 28, 2011, in U.S. District Court for the Southern District of Florida. The superseding indictment charges Barham, Montgomery and Reynolds each with one count of conspiracy to commit securities fraud, wire fraud and mail fraud. The superseding indictment also charges six individuals who were originally indicted in February 2010 for their roles in the fraud scheme: Jonathan Randall Curshen, 46, of Sarasota, Fla.; Michael Simon Krome, 49, Long Island, N.Y.; Ronald Salazar Morales, aka “Ronny Salazar,” 39, of Costa Rica; Robert Lloyd Weidenbaum, 44, of Miami; and Eric Ariav Weinbaum, 37, and Izhack Zigdon, 47, both of Israel.
The defendants are all charged with one count of conspiracy to commit securities, mail and wire fraud. Additionally, as in the original indictment, the superseding indictment charges Krome, the attorney, with one count of securities registration violation, one count of obstruction of justice and one count of wire fraud. Weinbaum and Zigdon also continue to be charged with three counts of wire fraud. In addition, Curshen and Salazar each are charged with two counts of mail fraud, and Weidenbaum and Weinbaum each are charged with one count of mail fraud. The superseding indictment also charges Curshen and Salazar with one count of conspiracy to commit money laundering. The superseding indictment seeks forfeiture in the amount of $7 million.
Weinbaum and Zigdon took control of a company called CO2 Tech, which traded in the OTC market. Weinbaum and Zigdon obtained the shares by retaining Krome, a securities attorney. Krome allegedly evaded federal securities regulation requirements in order to provide co-conspirators with millions of unregistered shares of CO2 Tech that could not have otherwise been legally obtained.
In the indictment, the defendants fraudulently pumped up the market price and demand for CO2 Tech’s stock by making coordinated trades between themselves and making it appear that there were genuine investors in the market that were buying the shares. The defendants are also alleged to have made false and misleading press releases about CO2 Tech’s business relationships. After all the coordinated trades and false press releases artifically pumped the price of CO2 Tech, the defendants “dumped” their shares by selling them for huge profits at the expense of the general investing public.
Each count of wire fraud and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. The fraud conspiracy charges carry identical penalties as the substantive fraud offenses, up to 20 years imprisonment. The securities registration violation carries a maximum penalty of five years in prison and a $10,000 fine and the obstruction count carries a maximum penalty of 20 years in prison and a $250,000 fine. The money laundering conspiracy charge carries a maximum penalty of 20 years in prison. Each participant is facing decades of prison time for their participation in this scheme.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
