Former Los Angeles-Area Pastor Sentenced for Role in $11 Million Medicare Fraud Scheme

WASHINGTON—A pastor and owner of a Los Angeles-area medical supply company was sentenced today for his role in a power wheelchair fraud scheme that defrauded Medicare of more than $11 million.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney André Birotte, Jr. of the Central District of California; Special Agent in Charge Glenn R. Ferry of the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office; and Special Agent in Charge Joseph Fendrick of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.
Charles Agbu, 58, of Carson, California, was sentenced by U.S. District Judge George H. Wu to serve 87 months in prison and was ordered to pay $5,788,725 in restitution to Medicare. In December 2012, Agbu pleaded guilty to conspiracy and money laundering charges based on his role as owner and operator of Bonfee Inc., a fraudulent durable medical equipment (DME) supply company that Agbu operated with his daughter and co-defendant, Obiageli Agbu, and members of his family from a nondescript office building in Carson. Agbu admitted that he paid patient recruiters and doctors to provide him with fraudulent prescriptions for expensive, highly specialized power wheelchairs and other DME that he, Obiageli Agbu, and their co-conspirators used in submitting more than $11 million false claims to Medicare. Agbu billed the power wheelchairs to Medicare at a rate of approximately $6,000 per wheelchair even though he paid approximately $900 wholesale per wheelchair. In many cases, the Medicare beneficiaries to whom Agbu and his co-conspirators claimed they supplied the power wheelchairs and DME did not have any legitimate medical need for the medical equipment and, in some cases, never received the medical equipment from Agbu’s company. At the time Agbu engaged in this fraud, he was a pastor at Pilgrim Congregational Church in South Central Los Angeles.
On September 30, 2013 and October 2, 2013, Agbu’s co-defendants, Alejandro Maciel, 43, of Huntington Park, California, and Dr. Emmanuel Ayodele, 65, of Los Angeles, were sentenced to serve 41 and 37 months in prison and ordered to pay $5,388,755 and $6,355,949 in restitution to Medicare, respectively. Two other co-defendants, Dr. Juan Van Putten and Candelaria Estrada, have pleaded guilty to Medicare fraud charges and are scheduled for sentencing on December 12, 2013 and October 31, 2013, respectively. Obiageli Agbu was convicted by a jury on nine counts of conspiracy to commit health care fraud and health care fraud on July 19, 2013. Her sentencing date has not been set.
The case is being investigated by the FBI, HHS-OIG and the California Department of Justice and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The case is being prosecuted by Trial Attorneys Jonathan T. Baum and Alexander Porter of the Criminal Division’s Fraud Section.
The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

Oakland County Doctor and Owner of Michigan Hematology and Oncology Centers Charged in $35 Million Medicare Fraud Scheme

Dr. Farid Fata, 48, of Oakland Township, Michigan, was arrested this morning and charged in a criminal complaint for his role in a health care fraud scheme which involved submitting false claims to Medicare for services that were medically unnecessary, including chemotherapy treatments, announced United States Attorney Barbara L. McQuade and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.
Joining in the announcement were Special Agent in Charge Robert D. Foley, III, Federal Bureau of Investigation, and Special Agent in Charge Lamont Pugh, Health and Human Services-Office of Inspector General (HHS-OIG).
United States Attorney Barbara L. McQuade stated, “Our first priority is patient care. The agents and attorneys acted with great attention to detail to stop these allegedly dangerous practices as quickly as possible, and we have set up a victim hotline so that patients can access their files and get questions answered.”
FBI Special Agent in Charge Robert D. Foley, III stated, “Violating patients’ trust and placing them at risk through fraudulent abuse of our nation’s health care system is deplorable and a crime which the FBI takes most seriously. The FBI remains committed to the arrest and prosecution of those who commit health care fraud.”
HHS-OIG Special Agent in Charge Lamont Pugh stated, “The conduct alleged in this complaint is serious, not only in terms of potential Medicare dollars improperly obtained, but patient safety as well. The OIG will aggressively investigate allegations of this nature in order to ensure the safety of Medicare patients and to protect vital taxpayer dollars.”
According to the complaint, Dr. Fata owns and operates Michigan Hematology Oncology Centers (MHO), which has offices in Clarkston, Bloomfield Hills, Lapeer, Sterling Heights, Troy, and Oak Park. It was through MHO that Dr. Fata allegedly submitted fraudulent claims to Medicare for medically unnecessary services, including chemotherapy treatments, positron emission tomograph (PET) scans, and a variety of cancer and hematology treatments for patients who did not need them. In the course of the scheme, Dr. Fata falsified and directed others to falsify documents. MHO billed Medicare for approximately $35 million dollars over a two-year period, approximately $25 million of which is attributable to Dr. Fata.
The complaint further alleges that Dr. Fata directed the administration of unnecessary chemotherapy to patients in remission; deliberate misdiagnosis of patients as having cancer to justify unnecessary cancer treatment; administration of chemotherapy to end-of-life patients who would not benefit from the treatment; deliberate misdiagnosis of patients without cancer to justify expensive testing; fabrication of other diagnoses such as anemia and fatigue to justify unnecessary hematology treatments; and distribution of controlled substances to patients without medical necessity or administered them at dangerous levels.
The complaint goes on to allege that Dr. Fata directed that chemotherapy be administered to patients who had other serious medical conditions that required immediate treatment before he would permit them to go to the hospital. In one instance, a male patient fell down and hit his head when he came to MHO. Dr. Fata insisted that the patient receive his chemotherapy before he could be taken to the emergency room. MHO administered the chemotherapy, after which the patient was taken to the emergency room. The patient later died from his head injury. In the second instance, a patient came to MHO with extremely low sodium levels, which can be fatal. Dr. Fata again directed that the patient first receive chemotherapy before being taken to the emergency room. MHO administered the chemotherapy and the patient was taken to the emergency room and hospitalized.
Dr. Fata will be making his initial appearance in federal court this afternoon at 1 p.m.
Patients who have questions concerning their medical records and/or information regarding this investigation and prosecution can call the United States Attorney’s Office Information Line at 888-702-0553.
The case is being prosecuted by Assistant Chief Catherine Dick, supervisor of the Detroit Medicare Fraud Strike Force, and Trial Attorney Matthew Thuesen of the Department of Justice as well as Sarah Resnick Cohen, Deputy Chief of the Health Care Fraud Unit at the U.S. Attorney’s Office, and Justin Bidwell, Special Assistant United States Attorney. The investigations were conducted jointly by the FBI and HHS- OIG, along with the assistance of the Michigan Attorney General’s Office.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team, go to: www.stopmedicarefraud.gov.

Abilene Dentist Pleads Guilty in Medicaid Fraud Scheme

ABILENE, TX—A dentist who practiced pediatric dentistry at Kool Smiles in Abilene, Texas, has admitted that he made false and fraudulent statements and entries on patient records, which caused Medicaid to be billed for, and pay, at least $120,000 for services falsely claimed to have been performed, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Dr. Tuan Truong, aka “Terry Truong,” of Abilene, pleaded guilty this afternoon before U.S. District Judge Jorge A. Solis to an information charging one count of making a false statement in connection with a health care matter. Truong, who will remain on bond, faces a maximum statutory penalty of five years in federal prison, a $250,000 fine, and restitution. A sentencing date was not set.
According to documents filed in the case, in summer 2008, Truong began working for Kool Smiles, which paid him a base salary and offered opportunities for bonuses based on additional procedures he performed in excess of daily targets set by Kool Smiles management. Dentists were required to use professional judgment in the treatment and management of patient care.
Beginning on June 30, 2008 and continuing to July 10, 2009, Truong made false entries on Kool Smiles patient records, purporting to have performed dental services for Medicaid beneficiaries that he well knew he had not performed. As a result of the false and fraudulent statements and entries Truong made, Kool Smiles billed Medicaid for procedures that were not performed. In fact, during this time period, Truong made false entries in the Kool Smiles electronic database that caused Kool Smiles to bill and receive payment from Medicaid (and Medicaid affiliates) of more than $120,000 but less than $200,000 for services he claimed to have performed but did not.
In addition, according to the factual resume filed, Truong personally benefitted from this scheme by receiving bonuses of $32,749 to which he would not have been otherwise entitled.
Kool Smiles has cooperated throughout the investigation, which was conducted by the Medicaid Fraud Control Unit of the Office of the Attorney General for the state of Texas and the FBI. Assistant U.S. Attorney Amy Burch, of the U.S. Attorney’s Office in Lubbock, Texas, is in charge of the prosecution.

Former Office Manager for Health Care Solutions Network Sentenced in $63 Million Medicare Fraud

WASHINGTON—A former office manager at the defunct health care provider Health Care Solutions Network Inc. (HCSN) was sentenced today in Miami to serve 68 months in prison for her role in a fraud scheme that resulted in more than $63 million in fraudulent claims to Medicare and Florida Medicaid.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations, Miami office, made the announcement.
Lisset Palmero, 45, of Miami, was sentenced by U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida. In addition to her prison term, Palmero was sentenced to three years of supervised release and ordered to pay restitution in the amount of $17.4 million.
During the course of the conspiracy, Palmero was employed as a receptionist and office manager at HCSN, a mental health facility that purported to provide Partial Hospitalization Program (PHP) services. A PHP is a form of intensive treatment for severe mental illness.
HCSN of Florida (HCSN-FL) operated community mental health centers at two locations. According to court documents, Palmero was aware that HCSN-FL paid illegal kickbacks to owners and operators of Miami-Dade County Assisted Living Facilities (ALF) in exchange for patient referral information to be used to submit false and fraudulent claims to Medicare and Medicaid. Palmero also knew that many of the ALF referral patients were ineligible for PHP services because they suffered from mental retardation, dementia, or Alzheimer’s disease.
Court documents reveal that Palmero was aware that HCSN-FL personnel were fabricating patient medical records. Many of these medical records were created weeks or months after the patients were admitted to HCSN-FL for purported PHP treatment. Palmero was also aware that medical records were fabricated for “ghost patients” who were never admitted to the HCSN-FL PHP. During her employment at HCSN-FL, Palmero actively concealed the fabrication of medical records by preparing, and causing others to prepare, documentation that was later utilized to support false and fraudulent billing to government-sponsored health care benefit programs, including Medicare and Florida Medicaid.
According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported HCSN-FL mental health services.
This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case was prosecuted by Trial Attorney Allan J. Medina and former Special Trial Attorney William J. Parente.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.

Florida Physician to Pay $26.1 Million to Resolve False Claims Allegations

WASHINGTON—Steven J. Wasserman, M.D., a dermatologist practicing in Venice, Florida, has agreed to pay $26.1 million to resolve allegations that he violated the False Claims Act by accepting illegal kickbacks from a pathology laboratory and by billing the Medicare program for medically unnecessary services, the Justice Department announced today. The settlement is the largest ever with an individual under the False Claims Act in the Middle District of Florida and one of the largest with an individual under the False Claims Act in U.S. history.
The government alleged that, in or around 1997, Dr. Wasserman entered into an illegal kickback arrangement with Tampa Pathology Laboratory (TPL), a clinical laboratory in Tampa, Florida, and Dr. José SuarezHoyos, a pathologist and the owner of TPL, in an effort to increase the lab’s referral business. Under that agreement, Dr. Wasserman allegedly sent biopsy specimens for Medicare beneficiaries to TPL for testing and diagnosis. In return, TPL allegedly provided Dr. Wasserman a diagnosis on a pathology report that included a signature line for Dr. Wasserman to make it appear to Medicare that he had performed the diagnostic work that TPL had performed. The government alleged that Dr. Wasserman then billed the Medicare program for TPL’s work, passing it off as his own, for which he received more than $6 million in Medicare payments. In addition, the government asserted that, in furtherance of his agreement with TPL, Dr. Wasserman substantially increased the number of skin biopsies he performed on Medicare patients, thus increasing the referral business for TPL.
The government further alleged that, in addition to his involvement in the alleged kickback scheme, Dr. Wasserman also performed thousands of unnecessary skin surgeries known as adjacent tissue transfers on Medicare beneficiaries. Adjacent tissue transfers are complicated and often time-consuming procedures physicians sometimes use to close a defect resulting from the removal of a growth on a patient’s skin. The government alleged that Dr. Wasserman performed many of these procedures in order to obtain the reimbursement for them and not because they were medically necessary.
“Doctors who take illegal kickbacks and perform unnecessary procedures not only put their own financial self-interest over their duty to their patients, they raise the cost of health care for all of us as patients and as taxpayers,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. “The Department of Justice will not tolerate those who abuse the public health care programs to which we all contribute and on which we all depend.”
“This settlement represents a watershed achievement in our district’s civil healthcare fraud enforcement program,” said Robert O’Neill, U.S. Attorney for the Middle District of Florida. “Schemes of this magnitude require extraordinary remedies, and we are proud to have reached such an outstanding resolution for the taxpayers and their health programs.”
The allegations resolved by today’s settlement were initiated by a lawsuit originally filed in the District Court for the Middle District of Florida by Alan Freedman, M.D., a pathologist who formerly worked at TPL. Dr. Freedman filed the lawsuit under the qui tam, or whistleblower, provisions of the False Claims Act. Under the False Claims Act, a private party may file suit on behalf of the United States for false claims and share in any recovery. The United States has the right to intervene in the action, which it did in this case, filing its own complaint in October 2010. Dr. Freedman will receive $4,046,000 of today’s settlement.
The United States previously settled with TPL and Dr. SuarezHoyos for $950,000 to resolve the allegations asserted against them in the same lawsuit.
“Anyone cheating patients and taxpayers should expect to pay a high price,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “Besides paying more than $26 million, Dr. Wasserman is excluded from treating patients and being paid under Medicare, Medicaid, and all other federal health care programs.”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14 billion.
Principal Deputy Assistant Attorney General Delery and U.S. Attorney O’Neill thanked the joint investigation team, which includes special agents with the Department of Health and Human Services-OIG and the FBI, for their efforts in the investigation of this matter.
The claims settled by this agreement are allegations only; there has been no determination of liability.
The lawsuit is captioned U.S. ex rel. Freedman v. SuarezHoyos et al., No. 04-933 (M.D. Fla.).

Former Registered Nurse Sentenced in Miami to 111 Months in Prison in Connection with $63 Million Mental Health Care Fraud Scheme

WASHINGTON—A former registered nurse was sentenced today to serve 111 months in prison for his role in a health care fraud scheme involving defunct health provider Health Care Solutions Network Inc. (HCSN), announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations, Miami Office.
John Thoen, 53, of Miami, was sentenced by U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida. In addition to his prison term, Thoen was sentenced to serve three years of supervised release.
On November 20, 2012, Thoen pleaded guilty in the Southern District of Florida to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.
According to court documents, HCSN operated community mental health centers (CMHC) at three locations in Miami-Dade County, Florida, and one location in Hendersonville, North Carolina. HCSN purported to provide partial hospitalization program (PHP) services to individuals suffering from mental illness. A PHP is a form of intensive treatment for severe mental illness. According to court documents, HCSN obtained Medicare beneficiaries to attend HCSN for purported PHP treatment that was unnecessary and, in many instances, not even provided. HCSN obtained those beneficiaries in Miami by paying kickbacks to owners and operators of assisted living facilities.
According to court documents, Thoen was a licensed registered nurse in both Florida and North Carolina. In Florida, Thoen participated in the admission to HCSN of patients who were ineligible for PHP services. Thoen participated in the routine fabrication of patient medical records that were utilized to support false and fraudulent billing to government sponsored health care benefit programs, including Medicare and Medicaid.
In North Carolina, Thoen, according to court documents, routinely submitted fraudulent PHP claims for Medicare patients who were not even present at the CMHC on days PHP services were purportedly rendered. Thoen also caused the submission of fraudulent Medicare claims on days the CMHC was closed due to snow.
Thoen also admitted to his role in a money laundering scheme involving Psychiatric Consulting Network Inc. (PCN), a Florida corporation that was utilized by HCSN as a shell corporation to launder health care fraud proceeds. According to court documents, Thoen was president of PCN.
According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services.
Fifteen defendants have been charged for their alleged roles in the HCSN health care fraud scheme, and nine defendants have pleaded guilty. Alleged co-conspirators Wondera Eason and Paul Layman are scheduled for trial on March 11, 2013, before Judge Altonaga in Miami. Alleged co-conspirators Alina Feas, Dana Gonzalez, Gema Pampin and Lisset Palmero are scheduled for trial on June 3, 2013. Defendants are presumed innocent until proven guilty at trial.
The cases are being prosecuted by Special Trial Attorney William Parente and Trial Attorney Allan J. Medina of the Criminal Division’s Fraud Section. This case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. In support of the Medicare Fraud Strike Force, the FBI Criminal Investigative Division’s Financial Crimes Section has funded the Special Trial Attorney position.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.

Leader of Armenian Organized Crime Ring Sentenced in Manhattan Federal Court to 37 Months in Prison for His Role in $100 Million Medicare Fraud Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, announced that Armen Kazarian was sentenced today in Manhattan federal court to 37 months in prison for his involvement with the Mirzoyan-Terdjanian Organization, an Armenian-American organized crime enterprise engaged in a wide range of criminal activity. Kazarian pled guilty to racketeering conspiracy in July 2011 and was sentenced today by U.S. District Judge Paul G. Gardephe.
Manhattan U.S. Attorney Preet Bharara said, “Armen Kazarian sat at the top of a criminal organization and now he will sit in a jail cell for a long time. International mobsters who think they can export their criminal enterprises to the United States and target our government programs and our citizens are in for a rude awakening—they will face U.S. justice and be made to answer for their crimes.”
According to the indictment, other documents filed in this case, and statements made during the guilty plea proceeding:

Kazarian was a “Vor,” a term translated as “Thief-in-Law.” The term refers to a member of a select group of high-level criminals from Russia and the countries that had been part of the former Soviet Union, including Armenia. Vors offer prestige and protection to criminal organizations in return for a share of criminal earnings and use their position of authority to resolve disputes among criminals. Kazarian used his status as a Vor within the criminal community to assist the Mirzoyan-Terdjanian Organization, an Armenian-American organized crime ring that engaged in an extensive range of criminal offenses including the operation of a $100 million Medicare fraud billing ring. As part of his involvement with the group, Kazarian engaged in extortion on the organization’s and his own behalf.

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In addition to the prison term, Judge Gardephe sentenced Kazarian, 47, of Glendale, California, to three years of supervised release. He was also ordered to pay a $60,000 fine.
Mr. Bharara thanked the New York Field Office of the Federal Bureau of Investigation; the New York City Police Department; the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the New York Office of the Inspector General, Department of Health and Human Services for their work in the investigation.
The prosecution is being handled by the Office’s Organized Crime Unit. Assistant U.S. Attorneys Jennifer Burns, Arlo Devlin-Brown, and Harris Fischman are in charge of the prosecution.

Health Care Fraud Fugitive Extradited from Colombia to Serve 2006 Sentence

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael B. Steinbach, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced the return to South Florida of fugitive Magda Luz Lavin, 55, after her arrest and extradition from Colombia. Lavin fled South Florida during a 2006 health care fraud trial and was subsequently charged with bond jumping. She made her initial appearance in federal court earlier today on the bond jumping charge.
Lavin was the former owner of at least two HIV clinics in the Southern District of Florida. She was charged in a 25-count federal indictment with conspiracy to commit health care fraud, health care fraud, and money laundering. On September 18, 2006, after three weeks of trial before U.S. District Judge Joan A. Lenard, defendant Lavin failed to appear in court, and the court issued a bench warrant for her arrest. Thereafter, the court found that Lavin had fled the jurisdiction and had voluntarily waived her appearance during the remainder of the trial and permitted the government to proceed with the trial. On September 25, 2006, the jury convicted Lavin on all counts.
On December 19, 2006, Judge Lenard sentenced Lavin in absentia to 180 months in prison and ordered her to pay restitution in the amount of $5,037,356. Upon her return, Lavin will begin to serve her sentence and face the bond jumping charges.
U.S. Attorney Wifredo A. Ferrer stated, “This case should serve as a wakeup call to health care fraud defendants who seek to avoid justice by fleeing to other countries: the arm of the law is long, and we in law enforcement are patient. Sooner or later, we will catch you, and you will be brought back to face justice.”
“In 2006, Magda Luz Lavin, a convicted health care fraudster, attempted to cheat justice by fleeing the country during her trial,” said Michael B. Steinbach, Special Agent in Charge of FBI Miami. “Thanks to the support and close cooperation of our partners including Interpol and the Colombian National Police, she is again in the United States in federal custody. Justice is served.”
According to the evidence, the defendant used two medical clinics, Alternative Day Spa Corp., formerly in Kendall, and Alternative Treatment Programs, formerly in Key West, to defraud Medicare of more than $5 million between May 2000 and December 2002. The two clinics claimed to specialize in the treatment of HIV patients with “infusion therapy treatments.” The patients who attended the clinics were, in fact, HIV positive.
The evidence at trial showed that under Lavin’s direction, the clinics fraudulently billed Medicare for dosages of two expensive medications, Neupogen and Procrit. In fact, however, the patients received either no medication at all or minimal dosages of the medications diluted with vitamins and saline solution or dextrose solution. Lavin also paid kickbacks to patients to induce them to continue to attend the clinics.
During the trial, the evidence revealed that the defendants had caused the falsification of progress notes on “infusion therapy sheets” in the patients’ files to make it appear that the patients were receiving medications as billed to Medicare. In truth, however, patients were not receiving the medications as noted on the sheets and billed to Medicare. In addition, the government presented expert testimony that it was actually impossible for patients to receive the dosages of medications as billed to Medicare. The expert also testified that these medications were normally provided by injection, not by infusion, and that—contrary to the practice at the two clinics—Neupogen and Procrit should not be mixed together or with saline solution.
Mr. Ferrer commended the investigative efforts of the FBI. Mr. Ferrer also thanked the U.S. Marshals Service for its assistance in returning this fugitive to the Southern District of Florida. The health care fraud case was prosecuted by Assistant U.S. Attorney Barbara Martinez.

Eleven People Arrested in New Jersey in Large-Scale Medicaid Fraud Scheme

NEWARK—Federal and state agents this morning arrested 11 people who are charged by complaint, along with two corporations, in connection with a large-scale scheme to defraud the Medicaid program of millions of dollars, U.S. Attorney Paul J. Fishman announced today.
The complaint also charges the owner of a home health aide business headquartered in Linden, New Jersey, with attempting on two occasions to hinder a state investigation by bribing a state regulator—who was working with the FBI—and with conspiring with the owner of another home health aide business in Elizabeth, New Jersey, to launder money.
The defendants arrested this morning are scheduled to appear this afternoon before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court.
“The defendants in this case allegedly enriched themselves by gaming the Medicaid system,” U.S. Attorney Fishman said. “The actions described in this complaint are especially egregious, because the taxpayer dollars that were stolen were intended to provide necessary health care for our most vulnerable citizens. I’m especially proud that federal and state law enforcement agencies worked together effectively to uncover this alleged fraud.”
David Velazquez, Acting Special Agent in Charge of the FBI, Newark, said, “The FBI views health care fraud as a severe crime problem that poses a potential risk to patients and increases health care costs for all. Today’s arrests are the result of a four-year investigation into a sophisticated scheme involving multiple layers of fraud, money laundering, and bribery, in order to defraud the New Jersey Medicaid program of millions of dollars. This case is indicative of how the FBI, along with its federal partners and the state of New Jersey, will continue to work together to pursue those that steal from our health care system.”
“Falsely billing Medicaid for millions of dollars as alleged in today’s complaint is a serious crime,” Internal Revenue Service (IRS) Criminal Investigation Acting Special Agent in Charge Shantelle P. Kitchen, Newark Field Office, said. “Financial fraud schemes such as this are often described as a house of cards. The underlying structure can fall apart at any time and expose the individuals responsible. IRS-Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their money.”
New Jersey Attorney General Jeffrey Chiesa said, “The New Jersey Division of Consumer Affairs regulates nurses, home health aides, and home health agencies in our state and the Division’s Enforcement Bureau aggressively investigates any allegations of fraud or wrongdoing by those regulated professionals and businesses. We are proud to have worked with the FBI on this investigation. Alleged billing fraud by health professionals affects the entire economy and will not be tolerated.”
According to the complaint filed in this case:
Irina Krutoyarsky, 58, of Springfield, New Jersey, was the owner and operator of HHCH Health Care Inc., a for-profit home health aide business located in Linden. HHCH billed Medicaid for services purportedly provided by home health aides to Medicaid-eligible patients. Medicaid is a jointly funded federal-state health insurance program that provides certain health benefits to the disabled and individuals and families with low incomes and resources. Paul Mil, 68, of Springfield, was the owner and operator of People Choice Home Care Inc., another for-profit home health business located in Linden and Elizabeth, which also billed Medicaid for services purportedly provided by home health aides.
Krutoyarsky, Mil, and their conspirators allegedly defrauded Medicaid of millions of dollars through a variety of schemes, including:

• Billing Medicaid for treatment and services not actually rendered;
• Obtaining fraudulent home health aide certifications for employees and others;
• Using illegal aliens and/or non-certified individuals to provide home health aide services and billing Medicaid, claiming the services had been provided by certified home health aides.

According to the complaint:
During the investigation, an individual working with the FBI—“Cooperating Witness Three” (CW3)—met Krutoyarsky, Mil, and others at HHCH and consensually recorded a number of conversations. For example, on January 31, 2012, CW3 met with Krutoyarsky and Mil to discuss obtaining a home health aide license. During this consensually recorded conversation (audio and video), they discussed fraudulently billing Medicaid by providing false information about the patients, known as a “bait and switch”:
Krutoyarsky: You know, it’s just the free money...coming in.
CW3: That’s true.
Mil described how they billed Medicaid for services not actually rendered:
Mil: It’s a lot of people, a lot of people who...Medicaid. Government pay for the service. We can get, you know, between 10 and 18 hours [of Medicaid billing per week per patient]. Look, people can work in a week and get paid hundred bucks a week doing nothing. Why not?

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Krutoyarsky: ...But as long as these people doesn’t live in the same address, so Medicaid is not gonna trace.
CW3: Oh, so, otherwise they will trace. Okay.
Krutoyarsky: Because they do the tracings, you know. They gonna see who’s working, who’s not working, this and that....So this way, they gonna have a free money....Government, free money.
After meeting with Krutoyarsky and Mil, CW3 met with defendant Nekadam S. Galibova, an HHCH office employee who assisted CW3 in obtaining a home health aide license without taking the required course or test. CW3 underwent neither the required training nor testing, but in March 2012, CW3 received a home health aide license from the New Jersey. Krutoyarsky, Mil, and others billed Medicaid under CW3’s license, knowing that CW3 provided no treatment to any patients.
Galibova was also a purported HHCH home health aide. The investigation revealed that she conspired with Krutoyarsky and others to bill Medicaid for services not rendered. Galibova and HHCH billed Medicaid for a patient (referred to as Patient M.N.) from July 27 to 31, 2009 and August 3 to 4, 2009, periods when that patient was, in fact, out of the country.
Krutoyarsky and Mil also dispatched undocumented aliens and other unlicensed individuals to patients’ homes. Defendant Sonia Mesa was observed by the FBI visiting a patient’s home; however, Medicaid was billed using the names of others, including Alla Neymet and Leonora Popesku.
Krutoyarsky also bribed a New Jersey Department of Labor employee on two occasions to stop wage and hour investigations into HHCH and People Choice. This state employee, however, was cooperating with the FBI and is referred to in the Complaint as “Cooperating Witness Two” (CW2). On June 14, 2010, Krutoyarsky met CW2 about the state investigation into HHCH. Krutoyarsky did not want to provide CW2 with records related the HHCH and handed CW2 an envelope containing approximately $1,000 in cash.
Krutoyarsky and CW2 passed notes back and forth, negotiating the bribe. Eventually, Krutoyarsky agreed to pay CW2 $10,000, which she later paid. On April 14, 2011, Krutoyarsky paid another $15,000 to CW2 to subvert a state investigation into People Choice.
Krutoyarsky and Mil then allegedly laundered the proceeds of the Medicaid fraud to conceal their scheme and allow it to continue. Krutoyarsky and defendant Gulmira Shayakhmetova are alleged to have conspired to structure money by making numerous cash withdrawals in amounts under $10,000 to evade the banks requirement to file a report with the U.S. Treasury.
Count one charges conspiracy to commit health care fraud and carries a maximum penalty of 20 years in prison and a $250,000 fine. Counts two and three each charge bribery and each charge carries a maximum penalty of 10 years in prison and a $250,000 fine. Count four charges conspiracy to commit money laundering and carries a maximum penalty of 20 years in prison and a $500,000 fine. Count five charges conspiracy to unlawfully structure financial transactions and carries a maximum penalty of five years in prison and a $250,000 fine.
In addition, HHCH and People Choice were charged in count one of the criminal complaint with conspiracy to commit health care fraud.
The criminal complaint also alleges forfeiture and provides notice of the federal government’s intent to forfeit at least $3.45 million in proceeds from the alleged offense and numerous properties in Krutoyarsky’s name in New Jersey, Florida, and New York.
U.S. Attorney Fishman praised agents of the FBI, under the direction of Acting Special Agent in Charge David Velazquez in Newark; IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen; U.S. Citizenship and Immigration Services; New Jersey Attorney General Jeffrey Chiesa; New Jersey State Comptroller Matthew Boxer; Division Director Mark Anderson, Office of the State Comptroller, Medicaid Fraud Division; New Jersey Division of Consumer Affairs, under the direction of Director Eric T. Kanefsky, Board of Nursing; Hal Wirth, Commissioner, New Jersey Department of Labor; U.S. Department of State-Diplomatic Security; and the Marlboro Police Department, under the direction of Chief Bruce Hall, for the investigation leading to today’s charges.
The government is represented by Assistant U.S. Attorneys Anthony Moscato and Jonathan W. Romankow of the Organized Crime/Gangs Unit, Lakshmi Srinivasan Herman of the Economic Crimes Unit and Peter W. Gaeta of the Asset Forfeiture and Money Laundering Unit.
The charges and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

Boca Raton Chiropractor Sentenced for Conspiracy to Commit Mail Fraud in Connection with Staged Accident Scheme

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge; Federal Bureau of Investigation (FBI), Miami Field Office; Jose A. Gonzalez, Special Agent in Charge-Internal Revenue Service, Criminal Investigation (IRS-CI); and Jeff Atwater, Florida Chief Financial Officer, announced that defendant Jennifer Adams, 39, of Boca Raton, a chiropractic doctor, was sentenced yesterday to 54 months in prison, to be followed by three years of supervised release. She was also ordered to pay restitution of $1,920,424.83. Adams previously pled guilty to a one-count information charging her with conspiring with others to commit mail fraud for her role in a staged accident fraud scheme.
According to court documents, to execute the fraud scheme, the recruiters sought out drivers and their friends/family members to participate in staged accidents. Under Florida’s “No Fault” insurance law, insurers are required to provide Personal Injury Protection (PIP) coverage of $10,000 per person. The recruiters referred to the individuals whom they recruited as the “Perro” and the “Perra.” The “Perro” was the person who “caused” the staged accident. The “Perra” was the person who was the “victim” of the staged accident and whose car was struck by the “Perro’s” car. Thus, if the recruiter found a Perro with a wife and two children and a Perra with two friends, for a total of seven participants, the maximum PIP benefit was $70,000.
Once the recruiters found the participants, they coached the participants on how to perform the staged accident, what to say to the police officer who responded to the scene, and on how to claim that they had been injured. Thereafter, the accident was staged. After impact, a police officer was called, and a police report was filed. After the staged accident, the Perro and Perra filed false claims with their insurance companies, alleging that they and their family members were injured.
Court documents state that the accident participants were then directed by the recruiters to chiropractic clinics that were controlled by co-defendants. The staged accident participants completed paperwork falsely asserting that they suffered injuries during the staged accident. The co-conspirators advised the participants on how to fill out the paperwork and what to say if an insurance investigator interviewed them about their injuries or treatment. The staged accident participants were instructed to sign numerous blank treatment forms that would later be submitted indicating that they had visited the clinic on a number of separate occasions for treatment, although they may have visited the clinic only once or twice. During their visits, some staged accident participants received no treatment at all or may have received only a short exam or treatment from the chiropractor or LMT but the paperwork completed by the LMTs and chiropractors, including Dr. Adams, indicated that a full and lengthy exam and treatment was given.
According to court documents, Adams agreed to place her name on the corporate paperwork for two clinics, thus utilizing her status as a licensed chiropractic physician, to allow the clinics to bill insurance companies directly for PIP claims without obtaining additional licensure from the state of Florida. Those clinics were Ovy Rehabilitation Medical Center Inc. (OVY) in West Palm Beach, Florida, and Chiropractic Office of South Florida LLC (COSF) in Palm Springs, Florida. Although Adams was named as the owner of the clinic on the corporate paperwork, the co-conspirators maintained control of the bank account and running the operations of the clinics.
Court documents state that Adams initially believed the clinics to be operating legitimately. Sometime thereafter, Adams became aware that her license and status as a chiropractor was being used to fraudulently submit claims by U.S. mail to insurance companies. Adams realized these patients did not require the medical treatment they sought. Adams continued to work at both clinics signing prescriptions for plans of treatment that she knew were not medically necessary and that she knew were being submitted for reimbursement to numerous insurance companies. According to court documents, from the time that Adams was told about the fraud until the clinics were closed by law enforcement, the clinics submitted fraudulent claims that resulted in more than 10 insurance companies making total payments of $1,920,424.83. Defendant Adams received a salary for her work as a chiropractic physician paid from the COSF and OVY checking accounts. The bulk of the proceeds of the fraud were taken by co-conspirators.
Mr. Ferrer commended the investigative efforts of the FBI, IRS-CI, and the Florida Department of Insurance Fraud and issued a special thanks to the National Insurance Crime Bureau (NICB) for its assistance in this investigation. Mr. Ferrer also thanked the members of the Greater Palm Beach Health Care Fraud Task Force. The case is being prosecuted by Assistant U.S. Attorney A. Marie Villafaña.