Investigations Newsletter: Pharmacist Pleads Guilty to $180 Million Health Care Fraud Scheme

Arent Fox
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Arent Fox

According to court documents, the defendant admitted to, among other things, distributing unnecessary compound prescriptions by adjusting prescriptions and paying recruiters commissions for procuring prescriptions for high-margin medications.

Friday Enforcement Wrap

Pharmacist Pleads Guilty to $180 Million Health Care Fraud Scheme

A Mississippi pharmacist and co-owner of compounding pharmacies pleaded guilty for his role in a scheme to defraud TRICARE and private insurance companies by paying kickbacks to distributors for referral of medications that were ultimately dispensed by his pharmacies.

According to court documents, the defendant admitted to, among other things, distributing unnecessary compound prescriptions by adjusting prescriptions and paying recruiters commissions for procuring prescriptions for high-margin medications. Defendant also admitted to using a purported copayment assistance program to make it appear as though his pharmacy and its affiliates had been collecting copayments. In total, the defendant allegedly caused more than $180 million in fraudulent billings.

The defendant pleaded guilty to conspiracy to defraud the United States and solicit, receive, offer and pay illegal kickbacks, which carries a penalty of up to five years imprisonment. Sentencing has been set for November 30.

Read the DOJ press release here.

Chinese Nationals Charged with Computer Hacking Conspiracy

On July 19, an indictment was unsealed that charges four nationals and residents of China with engaging in a campaign to hack into computer systems of various companies, universities, and government entities in the United States and abroad. According to the indictment, Ding Xiaoyang, Cheng Qingmin, and Zhu Yunmin, officers with the Hainan State Security Department (HSSD), which is an arm of the Ministry of State Security, were responsible for coordinating and managing computer hackers and linguists at front companies to conduct the hacking for the benefit of China and its state-owned entities. The indictment also alleges that Wu Shurong was employed at a front company and created malware to hack into computer systems owned by foreign companies, universities and governments. The HSSD officers allegedly worked with professors at various universities to identify and recruit hackers, and to manage front companies.

The hacking conspiracy allegedly took place between 2011 and 2018 and targeted victims in various industries such as defense, health care, and aviation in countries including the United States, Cambodia, Germany, Malaysia, Norway, Saudi Arabia, and the United Kingdom. According to the indictment, the conspiracy sent spear-phishing emails using accounts designed to resemble legitimate companies in order to gain unauthorized access to victims’ computers and networks. Hackers allegedly obtained trade secrets and other confidential information regarding sensitive technologies regarding autonomous vehicles, chemical formulas, foreign information, and even infectious disease research related to Ebola, HIV/AIDS, and other diseases.

Each defendant is charged with one count of conspiracy to commit computer fraud punishable by up to five years imprisonment, and one count of economic espionage punishable by up to 15 years imprisonment.

Read the DOJ’s Press Release Here.

President of Construction Company Charged with Fraudulently Obtaining Government Contract

Raymond White, president and CEO of a construction management and general contractor company, was arrested and charged with submitting false information in order to obtain a $4.8 million contract to build a facility at Joint Base Andrews in Maryland. White also allegedly submitted false information to the US Small Business Administration in order to induce it to guarantee 80% of the performance and payment of bonds issued for the contract. White is charged with one count of major fraud against the United States, which carries a maximum sentence of 10 years in prison, and two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison.

According to charging documents, White submitted a bid to the DC Army National Guard to build a munitions load crew training facility at Joint Base Andrews that contained false financial reports regarding White’s company’s financials, prior performance, and the identities of members of the management team. White was also required to obtain performance and payment bonds for the contract. In order to obtain the bonds, White submitted documents to the SBA that contained fictitious financial reports and claims that he had never been convicted for a criminal offense when in reality he was convicted in 2011 of mail fraud, making false statements, and tampering with a witness. White ultimately obtained the contract in September 2019, but it was terminated in September 2020 prior to any construction work being performed at the site.

Read the DOJ press release here.

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