On July 20, 2022, the Justice Department announced that it brought criminal charges against 36 defendants in 13 federal districts across the country, charging more than $1.2 billion in alleged telemedicine, cardiovascular and cancer genetic testing, and durable medical equipment (DME) fraud schemes. The Centers for Medicare & Medicaid Services and the Center for Program Integrity also took adverse administrative actions against 52 providers involved in similar schemes, as a result of which the Department has seized over $8 million in cash, luxury vehicles, and other goods.
The defendants charged included a telemedicine company executive, owners, and executives of clinical laboratories, durable medical equipment companies, marketing organizations, and medical professionals. The charges, which were the result of a nationwide coordinated law enforcement effort, involved illegal kickbacks and bribes paid by laboratory owners and operators to other medical professionals in exchange for patient referrals. According to court documents, medical professionals referred Medicare patients for expensive and medically unnecessary DME and for cardiovascular genetic testing that (i) does not diagnose a present cardiac condition, and (ii) was not approved by Medicare to screen for an increased risk of developing cardiovascular conditions in the future.
One defendant that operated several clinical laboratories was charged with submitting over $174 million in false claims to Medicare arising from the illegal payment of kickbacks to marketers who then paid kickbacks to telemedicine companies in exchange for referrals for these genetic tests. The government alleged that the defendant laundered the illicit funds across various bank accounts and entities to purchase at least $7 million in luxury goods and real estate that the indictment seeks to forfeit.
Other defendants were charged with using deceptive means to induce Medicare beneficiaries to agree to cardiovascular genetic testing and other genetic testing and equipment. The telemedicine companies arranged for medical professionals to order these expensive tests and DME regardless of whether they were medically necessary and with little or no patient interaction. The DME and results of the genetic testing often were not provided to the patients.
Read the press release here.
California Man Sentenced in $27 Million PPP Fraud Scheme
On July 20, 2022, a Southern California man was sentenced to 11 years and three months in prison after a federal jury convicted him of bank fraud, making false statements to a financial institution, and money laundering, for submitting fraudulent applications for Paycheck Protection Program (PPP) loans backed by the Small Business Administration under the Coronavirus Aid, Relief, and Economic Security Act.
The evidence presented at trial demonstrated that between April and June 2020, the defendant submitted 27 PPP applications, seeking a total of $27 million in PPP loans, to four banks on behalf of eight companies that the defendant solely owned. The defendant’s fraudulent applications represented that each of his companies had 100 employees and an average monthly payroll of $400,000, when in fact the companies did not have any employees or payroll expenses. The defendant also allegedly fabricated documents submitted to the US Internal Revenue Service representing that his companies each had an annual payroll of $4.8 million. Three of the defendant’s companies received $3 million in PPP loans as a result of his fraudulent applications. The evidence at trial demonstrated that the defendant used the fraudulently-obtained PPP loans for personal expenses instead of the payroll and business expenses for which the funds are intended.
Read the press release here.
US Citizen Pleads Guilty in International Bank Fraud Scheme
A US citizen who previously resided in Ukraine pleaded guilty to conspiracy to commit bank fraud in connection with an international scheme to unlawfully debit money from American consumers’ bank accounts. The members of the conspiracy created fake websites purporting to offer cloud storage, among other goods and services, and created shell companies to receive the victims’ funds. They then debited the victims’ bank accounts, falsely representing to the banks that the victims had authorized the charges as payment for the products advertised on the websites (that the victims would never receive). To avoid scrutiny from the banks, members of the conspiracy made misrepresentations to the banks concerning the legitimacy of the transactions, and they also caused the accounts to make “micro debits” against other bank accounts controlled and funded by the conspiracy to reduce the return rates on the transactions and thereby lessen the likelihood that the banks would close the accounts. The members of the criminal enterprise also operated a call center to handle victim complaints to dissuade them from reporting the unauthorized transactions to the banks and to government agencies.
This defendant, in particular, opened four US business deposit accounts at a bank branch in Las Vegas, at the direction of a co-conspirator operating outside the United States. The accounts were created for a shell company called “Silver Safe Box,” of which the defendant was identified as the sole member and authorized signer. Between approximately December 2019 and January 2021, the members of the conspiracy funded over 800,000 “micro debits,” ranging from $0.99 to $1.85, through the Silver Safe Box accounts. The defendant’s support of the criminal enterprise also included recruiting new members and assisting the call center in Ukraine by creating a script for responses to victim complaints. The defendant admitted that there were likely more than $1.5 million in victim debits from his role in the conspiracy. The defendant will be sentenced on October 12 and faces a maximum of 30 years in prison.
Read the press release here.