Today’s Washington Post ran two stories on Peanut Corporation of America President Stewart Parnell’s invocation of his Fifth Amendment Privilege Against Self-Incrimination at yesterday’s House Commerce Committee hearing. Lyndsey Layton’s piece here reports on the day’s hearing, which included gut-wrenching testimony from family members of salmonella victims. Those victims contracted salmonella from eating peanut butter produced at Peanut Corporation of America plants. Meanwhile, Dana Milbank’s Washington Sketch here details the theatrics of Parnell’s public shaming. Given the deaths that occurred during the salmonella outbreak, Parnell’s invocation of the Fifth Amendment, and Parnell’s apparent obsession with profits over safety, Milbank sees Parnell’s in-person shaming–he was Waxmanned by Waxman himself-as a good thing. I disagree. The hearing itself was necessary and proper. The in-person shaming of Parnell in tandem with his Fifth Amendment invocation reeks of McCarthyism. It teaches disrespect for the Constitution and prejudices the potential jury pool. Don’t get me wrong. Parnell looks like a total slimeball. If he is guilty of a crime he should be prosecuted, convicted, and sent to prison. For a long time.
You are currently browsing the archive for the Health Fraud category.
To give you an idea of how professional AUSA Tanya Treadway is, take a look at the first paragraph of the original speaking indictment in U.S. v. Schneider, a health care fraud and controlled substances case being brought in the District of Kansas: “Defendant Stephen J. Schneider is a doctor of osteopathic medicine, licensed in Kansas, and board certified in family medicine. Prior to becoming a doctor, he was a butcher.” No, I’m not making this up. The Superseding Indictment, a kitchen-sink affair, is also full of gratuitous, prejudicial verbiage, including community nicknames for Dr. Schneider. U.S. District Judge Monti Belot, not particularly known as a champion of defendants’ rights, has apparently had enough of Treadway’s tactics. He restricted the Government’s use of certain words and phrases contained in the Superseding Indictment and threw out a good deal of the Government’s proposed evidence, in pre-trial rulings on Monday. Yesterday, Treadway and her boss filed a notice of interlocutory appeal on the evidentiary ruling. Belot’s granting of the defense motion in limine is almost certainly not appealable, but the Government’s actions will cause the re-cheduling of the trial, which is currently set for Monday, Febraury 2. When Treadway fist told Judge Belot that she would appeal his evidentiary ruling he angrily accused her of threatening the Court. The defense. rightfully, is howling about the interlocutory appeal and resulting delay. Defendant Linda Schneider has been detained for 13 months and Stephen Schneider is under house arrest. Read all about the latest developments here, here, and here.
After only about four hours of deliberation, a jury in US District Court in Columbus has convicted former National Century Financial Enterprises CEO and co-founder Lance Poulsen on one count of conspiracy, one count of wire fraud and money laundering conspiracy, four counts of concealment of money laundering and six counts of securities fraud in connection with the company’s 2002 collapse which cost investors about $1.9 billion. The testimony of the government’s star witness, former executive VP for compliance Sherry Gibson, was central to the prosecution’s case. Gibson’s testimony was critical in the trial which resulted in the March convictions of five other former National Century executives. In addition, jurors heard Gibson testify about the attempt of Poulsen and his associate Karl Demmler to bribe her to change her story; Poulsen was convicted in that case and sentenced to 10 years in prison in August. US District Judge Algenon Marbley did not immediately set a sentencing date in this case (Columbus Dispatch, Columbus Bizjournal).
The fraud trial of former National Century CEO and co-founder Lance Poulsen is recessed until October 20 due to prior commitments by US District Judge Algenon Marbley. The government’s key witness, former Executive VP for Compliance Sherry Gibson, testified on Thursday and Friday that she had falsified records at Poulsen’s specific request “report by report, and sometimes line by line” dating all the way back to 1992. Among other things, she said she was told to show falsify the balances shown in the company’s reserve accounts, and she explained how the company would deceive auditors by creating false backup reports and by varying audit dates for different entities in order to shuffle funds between accounts.
Gibson pleaded guilty in 2003 to one count of conspiracy to commit securities fraud and agreed to cooperate with prosecutors; she was sentenced to 48 months in prison in June 2004. She was the government’s star witness in the trial of five other executives who were convicted in March, and also in the March trial of Poulsen and his associate Karl Demmler for witness tampering. They were convicted of trying to bribe her to change her testimony; Poulsen was sentenced to 10 years in prison in August in that case.
Earlier in the week, FBI Special Agent Jeffrey Williams testified that investigators discovered $1.3 billion in unsecured loans to companies owned or controlled by Poulsen and other National Century principals.
Testimony to date in the fraud trial of former National Century CEO Lance Poulsen has centered on how investors were allegedly deceived by the company’s accounting practices. National Century represented to investors that it was buying valid and collectible receivables from health care providers in exchange for cash to pay their bills. The receivables were packaged as bonds which were sold to investors. However, both former director of securitization Jon Beacham and former associate vice president of funding Jessica Bily both testified that National Century never actually purchased the receivables from six providers and instead deliberately overfunded them as part of a scheme to enrich Poulsen and two other principals, who controlled the six providers. Bily said that Poulsen ordered her to make false entries in the official books to make it appear that these were legitimate. Bily also testified that the scheme was going on as long ago as 1994. National Century collapsed in 2002 (Columbus Bizjournal, Columbus Dispatch).
Twelve jurors and four alternates were selected on Wednesday in the fraud trial of former National Century CEO Lance Poulsen, with opening arguments scheduled for Thursday morning. (Columbus Bizjournal). Poulsen’s defense team will have one tactical advantage not available to his co-defendants who were convicted in March: since then, the SEC has put some of the blame on other parties. As the Columbus Dispatch pointed out:
The Securities Exchange Commission found Bank One and JPMorgan Chase, which now owns Bank One, culpable for negligent conduct while serving as National Century’s bank trustees.
The SEC has made similar findings with accounting firms PricewaterhouseCoopers and Deloitte & Touche while auditing National Century.
Still, Poulson faces long odds, and he has the additional problem of the tape recordings that sunk him in his witness tampering trial.
Jury selection begins today in Columbus before US District Judge Algenon Marbley in the fraud trial of Lance Poulsen, former CEO and co-founder of National Century Financial Enterprises. Poulsen faces one count of conspiracy, one count of wire fraud and money laundering conspiracy, four counts of concealment of money laundering and six counts of securities fraud in connection with the company’s 2002 collapse; the loss to investors has been estimated at anywhere from $1.9 billion to as much as $3 billion.
Five of Poulsen’s co-defendants have already been convicted, and four have been sentenced to prison (here and here) with the fifth, Rebecca Parrett, still at large. Poulsen’s trial was separated after he and an associate were charged with witness tampering for trying to bribe the prosecution’s star witness. Both were convicted; Poulsen has been sentenced to 10 years in prison in that case.
Yet another example of the blatant Medicare fraud that’s been going on in public for years: a federal jury in Los Angeles on Monday convicted the owner of durable medical equipment supplier Pacific City Group in connection with a scheme to get Medicare to pay for motorized wheelchairs that weren’t needed. Leonard Nwafor was convicted on 11 counts including health care fraud and conspiracy. Between January 2006 and May 2008 his company billed Medicare over $1.1 million and was paid $526,000 for the wheelchairs, which sell for as much as $7,000 each. Evidence at the trial allegedly showed that prescriptions for the motorized wheelchairs purporting to be from several LA-area doctors were forged. A “beneficiary” testified that a company representative posing as a Medicare official threatened her with loss of benefits if she and her husband didn’t accept two wheelchairs they didn’t need.
Nwafor faces a statutory maximum of 110 years in prison. His sentencing is scheduled for December 1 before US District Judge John Walter. He also faces federal mail fraud charges in a separate case (DOJ).
Minh Huynh and Thien Tuan Vo, two Fort Worth area chiropractors, were indicted last week on charges that they defrauded insurance companies by seeking payments for bogus treatments of “victims” of staged accidents. Huynh was charged with three counts of health care fraud, one count of conspiracy to commit mail fraud and one count of mail fraud. Vo faces one count of health care fraud. The indictment alleges that they received “patients” from a law firm which had contracted to represent participants in staged accidents. They allegedly then supplied the law firm with falsified treatment and billing records which were submitted to insurance companies. Hyunh also allegedly paid kickbacks to an employee of the law firm in exchange for referrals. The Star-Telegram describes the scheme as a fraud that took in more than $1 million; more indictments are likely (DOJ).
One of the two men indicted in connection with an alleged scheme to defraud Medicare by recruiting patients from Skid Row in Los Angeles (earlier) has pleaded guilty. Estill Mitts, who operated an “assessment center” in the heart of Skid Row, on Thursday agreed to plead guilty to conspiracy to commit healthcare fraud, money laundering and tax evasion. In the plea agreement, Mitts admits recruiting homeless Medicare and Medi-Cal beneficiaries for three hospitals, where they received unnecessary medical treatments or no treatment at all. One hospital, City of Angels Medical Center, was owned by Dr. Rudra Sabaratnam, who was indicted along with Mitts and has pleaded not guilty (earlier). Mitts will enter his plea on September 10. Sabaratnam’s trial is scheduled to begin on September 30 (LA Times).
Dr. Rudra Sabaratnam, the CEO of City of Angels Medical Center who was indicted on August 6 in connection with a scheme in which patients were allegedly recruited from Los Angeles’ Skid Row and given unnecessary medical treatment (earlier), pleaded not guilty on Monday in US District Court in Los Angeles. A trial date was scheduled for September 30. Sabaratnam faces eight counts of paying kickbacks for patient referrals (AP).
A principal and CEO of a privately-owned Los Angeles hospital and a man who allegedly recruited homeless patients from L.A.’s Skid Row were arrested last Wednesday following the unsealing of a 21 count federal indictment charging them with operating a sophisticated health care fraud scheme. Dr. Rudra Sabaratnam, CEO of City of Angels Medical Center, was indicted on eight counts of paying kickbacks for patient referrals. Estill Mitts, who operated a storefront “Assessment Center” in skid row, was indicted on four counts of receiving kickbacks for patient referrals, six counts of money laundering and two counts of tax evasion. Mitts and stringers who worked for him allegedly brought the patients to the hospital in exchange for sham consulting fees arranged by Sabaratnam; the hospital allegedly submitted bills to Medicare and Medi-Cal for unnecessary medical treatments or in some cases for treatments never performed. A related civil case has been filed by the City of Los Angeles naming two more hospitals and more defendants, indicating that more federal criminal charges may be forthcoming (LA Times, DOJ).
Ending this week’s sentencings of former executives of National Century Financial Enterprises, US District Judge Algenon Marbley today sentenced former CEO and co-founder Lance Poulsen to 10 years in prison for witness tampering. Poulsen and his associate Karl Demmler were convicted on March 26 on one count each of conspiracy to obstruct justice, witness tampering, witness tampering by influencing testimony and corruptly persuading a federal witness. They allegedly attempted to pay former executive VP for compliance Sherry Gibson $500,000 to $1 million to plead unfamiliarity with the fraud charges against Poulsen and other executives. Gibson, who had pleaded guilty in 2003 to one count of conspiracy to commit securities fraud and agreed to cooperate, went to authorities instead. She was a key witness in the fraud trial of the five executives who were convicted in March, testified against Poulsen and Demmler in this case and is expected to testify against Poulsen in his fraud trial which begins October 1. Demmler’s sentencing was postponed pending completion of a psychological evaluation (Columbus Dispatch).
Following Wednesday’s sentencings, the third and fourth former National Century Financial Enterprises defendants were sentenced on Thursday by US District Judge Algenon Marbley in Columbus. In the morning, former executive vice president of securitizations Roger Faulkenberry was sentenced to 10 years in prison. He was convicted in March on one count of conspiracy, four counts of securities fraud, one count of wire fraud and two counts of money laundering. On Thursday afternoon, former associate director of marketing and vice president of client development James Dierker received a five year prison sentence. He was convicted on one count of conspiracy and three counts of money laundering. Marbley had previously indicated that he held Dierker less culpable than the other defendants. After fifth defendant Rebecca Parrett flew the coop, Dierker was the only other defendant allowed bond with electronic monitoring (Columbus Bizjournal, Columbus Dispatch, DOJ via Yahoo News).
Co-founder and former CEO Lance Poulsen and his co-defendant Karl Demmler will be sentenced today in connection with their witness tampering convictions. Poulsen’s trial on the fraud charges begins October 1.
In the first of three days of sentencing hearings relating to the collapse of National Century Financial Enterprises, US District Judge Algenon Marbley sentenced co-founder and former COO Donald Ayers to 15 years in prison and former CFO Randolph Speer to 12 years in prison for their roles in the 2002 collapse of the health care provider financing company in what prosecutors called a massive and complex fraud scheme. In their March trial, Ayers was convicted on one count of conspiracy, six counts of securities fraud and one count of money laundering, while Speer was convicted on one count of conspiracy, three counts of securities fraud, one count of wire fraud and six counts of money laundering. Marbley also ordered restitution of nearly $2.4 billion (Columbus Dispatch, Columbus Bizjournal).
Co-defendants Roger Faulkenberry and James Dierker will be sentenced today. Co-founder and former CEO Lance Poulsen has yet to stand trial on fraud charges but he will be sentenced tomorrow in connection with his witness tampering conviction. Convicted co-founder Rebecca Parrett remains at large.
Angela Isley of Atlanta, former COO of medical supplier Orthoscript, Inc., was sentenced on Monday to 70 months in prison by US District Judge Charles Pannell in Atlanta. A jury convicted Isley in April on 52 counts including health care fraud, mail fraud and money laundering in connection with two schemes (earlier). In one, she submitted $600,000 in fraudulently coded claims to Medicare, causing a loss to Medicare of $219,000. In a separate scheme, she embezzled $360,000 from Orthoscript to pay her and her partner’s credit card bills by falsely coding payments as legitimate business expenses. Arch Nelson, a partner in Orthoscript who testified against Isley, was also sentenced on Monday. He received 5 years probation for misprision of a felony (Forbes/AP, DOJ).
Sentencing dates for five former executives of National Century Financial Enterprises, previously scheduled for July 21-23 (earlier), have been rescheduled. Donald Ayers and Randolph Speer now will be sentenced on August 6 while Roger Faulkenberry and James Dierker will be sentenced on August 7. A new date has not yet been set for Jon Beacham,who pleaded guilty in July 2007 and testified against the others at their trial earlier this year (Columbus Dispatch).
Indadeeq Omar of Eden Prairie, Minnesota was sentenced on July 17 in Minneapolis to 72 months in prison for defrauding Medica Health Plans out of an estimated $1.7 million in medical assistance payments from 2001 to 2004. Omar, an immigrant from a prominent Somali family, owned Global Interpreter Corp., which contracted with Medica to provide translation services to Medica members who needed it when receiving care. These claims were processed by Medica on behalf of the Medicaid public health care benefit program. A jury convicted Omar in December 2007 on 46 counts of health care fraud, money laundering and related charges for submitting thousands of bills for translation services that were never rendered. Tou Chaiker Vang, a Medica employee, fed inside information to Omar which enabled phony billings to match clinic visits by plan members. Vang pleaded guilty to conspiracy and testified against Omar; he was sentenced in April to one year and one day in prison. Omar’s husband, Mohamed Essa was indicted along with Omar but he fled the US. He was captured in April in South Africa and has since been returned to face trial (Star Tribune).
“It is not my practice to accept guilty pleas from people who are not guilty.” So said US District Judge Saundra Armstrong, according to a transcript of a June 10 hearing in Oakland in the case of Chi Yang, as reported Friday by Dan Levine in the Cal Law Recorder (via Law.com). Yang and his biotech company SynPep were indicted in 2006 for allegedly falsifying information about their products. Although Yang was about to plead to making a false statement rather than fraud, Armstrong didn’t believe the government had a case against Yang after questioning him. The parties have not been able to reach a new plea agreement and Armstrong has now set a trial date of November 3. The rejected plea called for prison time for Yang but if the case were to go to a jury, the potential consequences for Yang could be far greater.
In Washington on Friday, US District Court Judge Colleen Kotar-Kotelly sentenced Martin McLaren of Bethesda, Maryland to 37 months in prison for making false statements in relation to health care matters. McLaren, an anesthesiologist who owned the Pain Management Center based in Hyattsville, admitted to receiving at least $1.75 million as a result of fraudulent billings submitted to Medicare, Medicaid and private carriers between 2000 and 2006 (Washington Times, DOJ).
The trial of former National Century Financial Enterprises CEO Lance Poulsen on securities fraud and related charges has been postponed. It was scheduled to begin August 4 but US District Judge Algenon Marbley rescheduled the start date to October 1. He granted the delay because Poulson’s attorneys need more time to review 40 boxes of evidence they have recently received from the government. Poulsen was to have been tried with five other executives, all of whom were convicted on March 13, but his trial was delayed because he was indicted for witness tampering; he and an associate were convicted on all those counts on March 26. The delay pushes back the fraud trial of a seventh National Century executive, James Happ, from October 1 to December 1 (Columbus Dispatch).
Dr.William W. Hampton of Orange County was sentenced to 10 years in prison on Monday by US District Judge Audrey Collins in Los Angeles for his involvement in a scheme where patients were recruited for unnecessary surgery for “sweaty palm syndrome” and other bogus procedures. He was also ordered to pay nearly $2.5 million restitution to insurance companies he defrauded, although the total amount of the fraud was alleged to be over $9 million. A jury convicted Hampton on one count of health fraud last November, acquitted him on another and deadlocked on other counts which were later dropped by prosecutors. In the scheme, marketers working for Hampton and another doctor would recruit patients for the surgeries in exchange for cash or discounts on cosmetic surgeries. The other doctor, Mamdouh Bahna, pleaded guilty to health care fraud last year and is serving a 58 month prison sentence (OC Register, DOJ).
Hampton, two other doctors and 16 other defendants including marketers and hospital administrators have been indicted on state charges alleging over $150 million in unnecessary surgeries (Orange County DA, KABC video).
Gustavo Smith of Miami, now a fugitive, was sentenced on July 2 to 130 months in prison by US District Judge Marcia Cooke in Miami. Smith was convicted by a jury in April on 17 counts including conspiracy, seven counts of health care fraud, seven counts of false claims, one count of money laundering conspiracy and one count of money laundering. His Miami-based durable medical equipment companies, Medstar Services and Orthotics Fitters, billed $4.6 million in claims to Medicare from 2005 to 2007 using names and Medicare numbers of patients who never heard of him and Medicare provider numbers of doctors who never heard of him and never prescribed the equipment. Smith was allowed bond with home confinement and electronic monitoring, but he fled the US on June 14 (Miami Herald, DOJ).
In Columbus on Monday, US District Judge Algenon Marbley scheduled sentencing for five former executives of National Century Financial Enterprises. Four of the five who were convicted on March 13 will be sentenced: Donald Ayers and Randolph Speer on July 21 and Roger Faulkenberry and James Dierker on July 22. The fifth defendant from that trial, Rebecca Parrett, remains AWOL. The five were convicted on securities fraud and related counts in the 2002 collapse of the company which caused investor losses of $1.9 billion. On July 23, former director of securitizations Jon Beacham will be sentenced; he pleaded guilty in July 2007 to conspiracy and wire fraud counts (Columbus Dispatch).
Attorneys for James Dierker, one of the five National Century Financial Enterprises executives convicted on March 13, on Tuesday filed a motion for acquittal based on claims of newly discovered evidence; alternatively they asked that he be granted a new trial. Dierker testified during the trial that he was unaware of any fraud. Tuesday’s motion asserts that prosecutors withheld SEC documents that would have supported his defense. The documents allegedly show that Dierker relied on opinions of outside auditors who failed to properly evaluate company records, leading him to believe the company was sound (Columbus Business First).
Dierker is the only one of the four rearrested executives who was allowed out on bond pending sentencing. He was National Century’s associate director of marketing and vice president of client development, a lesser position than the other convicted executives, and he faced fewer charges. He was found guilty on one count of conspiracy to commit securities/wire fraud and three counts of money laundering.
Angela Isley of Atlanta, former COO of medical supplier Orthoscript, Inc., was convicted on Monday by a federal trial jury in Atlanta on 52 counts including health care fraud, mail fraud and money laundering. Isley was indicted in February 2007 in connection with a three year scheme in which she allegedly submitted $600,000 in fraudulent claims to Medicare and embezzled $360,000 to pay her and her partner’s credit card bills. The Medicare billing fraud involved assigning incorrect product codes to certain products to obtain higher reimbursements.The embezzlement entailed coding company checks as legitimate business expenses while using them to pay her bills. Sentencing is scheduled for July 28 before US District Judge Charles Pannell (Atlanta Business Journal).
Federal prosecutors in Columbus, Ohio on Monday moved to recoup some of the funds lost in the 2002 collapse of National Century Financial Enterprises: the government is seeking to “attach a $1.7 billion IOU” to each of the five National Century executives who were convicted in March (here and earlier) on multiple counts including conspiracy, wire fraud, securities fraud and money laundering. US District Judge Algenon Marbley is expected to rule on the motion in June (Columbus Dispatch).
After a hearing in Columbus that lasted all day Wednesday, US District Judge Algenon Marbley ruled that convicted National Century Financial Enterprises executives Donald Ayers, Randolph Speer and Roger Faulkenberry were flight risks and will remain in custody. The fourth, James Dierker was released on bond pending sentencing. The four executives and a fifth, company co-founder Rebecca Parrett, were convicted on March 13 of securities fraud and related charges in connection with the company’s 2002 collapse (here and earlier). All were allowed to remain free on bond with electronic monitoring, but Parrett disappeared (here) and remains at large. The other four were taken into custody on April 2 following disclosure of an alleged plot to escape to Aruba (here and here). Dierker currently works in marketing for Victoria’s Secret, and testimony from the company’s president and CEO Sharen Turney apparently helped convince Judge Marbley that Dierker would not flee (Columbus Business First, AP).
Meanwhile, the US Marshal Service is offering a reward for information leading to the arrest of Parrett — but won’t say how much the reward is (Columbus Dispatch).
Mary Lou Hernandez, owner of Angel Care Medical Supply in San Antonio, was sentenced on April 9 by US District Judge W. Royal Furgeson to 24 months in prison. In November 2006, Hernandez pleaded guilty to a 3-count Information charging her with conspiracy, health care fraud and violation of the anti-kickback statute. She admitted paying $800 to$1000 kickbacks to five area doctors for Certificates of Medical Necessity which were needed to get reimbursement for motorized wheelchairs or scooters from Medicare and Medicaid. She then fraudulently billed approximately $3 million to Medicare and $1.4 million to Medicaid for the unnecessary equipment between 2001 and 2004. The doctors involved have not yet been charged (San Antonio Express-News, DOJ).
A federal jury in McAllen, Texas on Monday convicted former Hidalgo County Commissioner Guadalupe Garces Jr. and his wife, Araceli Garces on one count of conspiracy and several substantive counts of health fraud. They used their Edinburg, Texas ambulance company A-Stat Ambulance Inc. to transport people to and from dialysis clinics knowing that transportation by ambulance was not medically necessary. They billed Medicare and Medicaid $12 million and received $4.5 million in payments. Then after Medicare and Medicaid suspended payments, they incorporated A-Care E.M.S. Inc. in the name of their 20 year old son and continued the scheme, billing another $3 million and receiving $1.6 million in payments. US District Judge Ricardo Hinojosa scheduled sentencing for July 18 and allowed the couple to remain free on their current bonds. They could face up to 10 years in prison (AP, DOJ).
Brent Detelich of Clearwater, Florida, formerly a chiropractor in Hermitage, Pennsylvania, was sentenced on Friday to three years in prison by US District Judge Joy Conti in Pittsburgh. Detelich was convicted by jury trial in March 2007 on one count of health care fraud and one count of mail fraud. Detelich owned and operated Detelich Chiropractic and Advanced Medical and Holistic of Hermitage. Between 1996 and 2000, he submitted over $91,000 in fraudulent claims to Highmark Blue Cross/Blue Shield for chiropractic treatment and services which were never rendered. When Highmark paid the claims, he split the payments with some of his patients who were involved in the fraud (AP).
We note that Detelich authored a chapter in a PowerPoint presentation for chiros published in 2005 called The Complete Insurance Guide. His contribution: “Dr. Detelich focuses on the billing- and insurance-related aspects of a chiropractic activecare approach.” No kidding!
Jailed former National Century Financial Enterprises CEO Lance Poulsen said Monday that a confidential informant was lying when he told authorities that Poulsen told him that four convicted National Century executives had a plan to flee to Aruba if they were convicted. The four executives — Donald Ayers, Randolph Speer, Roger Faulkenberry and James Dierker — were arrested on April 2 (earlier) following disclosure of the alleged plan and the disappearance of the fifth executive, Rebecca Parrett (earlier), who remains at large.
Poulsen’s statement came in a letter from one of his attorneys which was attached to a motion filed on Friday by attorneys for Randolph Speer, who denies any knowledge of a plot and says the whole story was made up by the informant to reduce his prison sentence. Poulsen believes that the confidential informant is Robert Cihy, an inmate where Poulson is currently jailed. Cihy is being held on federal bank robbery charges; in a remarkable coincidence, he reached a plea agreement with the government on April 3, one day after the four executives were arrested. However, US District Judge Algenon Marbley on Monday denied a motion to compel the government to disclose its source. A bond revocation hearing for the four executives is scheduled for April 16 (Columbus Business First, Columbus Dispatch).
In Miami on Wednesday, Rita Campos Ramirez of Miami was sentenced to 10 years in prison by US District Judge Alan S. Gold for her role in a $170 million Medicaid fraud scheme. Campos pleaded guilty last August to one count of conspiracy to commit health care fraud and one count of submitting false claims to Medicare. Campos admitted that from 2002 to 2006 she owned and operated R&I Medical Billing Inc., a medical billing company submitted bills to Medicare on behalf of HIV infusion clinics; she knowingly submitted approximately $170 million in fraudulent medical bills to Medicare on behalf of 75 HIV infusion clinics in Miami-Dade County that were part of the scheme. Medicare wound up paying about $105 million and Campos received about $5 million personally (DOJ Press Release).
In a related case, on Wednesday seven Miami area residents were indicted on charges that they set up a fake HIV infusion clinic and billed Medicare for $11 million in non-existent treatments (AHN). And in a previous related case, Dr. Orestes-Alvarez Jacinto was sentenced to 18 months in prison last October after pleasing guilty to conspiracy to commit health care fraud. He was a doctor at St. Jude’s Rehab Center, one of the clinics serviced by R&I Medical Billing; he admitted submitting $7 million in fraudulent claims to Medicare, of which $5 million was paid.
Honest, they were just going to help look for Natalee Holloway: The FBI on Wednesday arrested four of the five executives of National Century Financial Enterprises who were convicted on March 13 of securities fraud and related charges in connection with the company’s 2002 collapse (here and earlier); US District Judge Algenon Marbley ordered the arrests of Donald Ayers, Randolph Speer, Roger Faulkenberry and James Dierker after the FBI learned of an alleged plan to flee the country. According to a filing in US District Court in Columbus:
- The (FBI) developed information from a confidential source, who reported to FBI that (former National Century CEO Lance Poulsen) told the confidential source that the NCFE defendants had a plan to flee to Aruba if they were convicted.
This follows the disappearance of the fifth executive, Rebecca Parrett, who remains at large. The new filing alleges that Parrett attempted to obtain false identification papers before the trial. All five defendants had been allowed to remain under house arrest with electronic monitoring pending sentencing. Poulsen faces trial August 4 on similar fraud charges; he and his associate Karl Demmler were convicted of witness tampering last week in connection with the fraud charges. Columbus Business First, Columbus Dispatch.
In Columbus, Ohio on Thursday evening, US District Judge Gregory Frost issued a bench warrant for the arrest of Rebecca Parrett, one of the five executives of National Century Financial Enterprises convicted on March 13 on fraud charges in connection with the company’s 2002 collapse (here and earlier). Parrett, a co-founder of the company and vice chairwoman, secretary, treasurer and director, was found guilty of one count of conspiracy, six counts of securities fraud, one count of wire fraud and one count of money laundering. After the verdicts were announced, US District Judge Algenon Marbley allowed all five convicted executives to remain under house arrest with electronic monitoring pending sentencing. Parrett was supposed to report to the Pretrial Services Office near her home in Carefree, Arizona, for installation of an electronic ankle bracelet but she failed to show up and her whereabouts are unknown. The US Marshal’s Office has begun a search. Columbus Business First, Bloomberg.
After about 6 hours of deliberation yesterday and today, a federal jury in Columbus, Ohio has convicted former National Century Financial Enterprises CEO and co-founder Lance Poulsen and his associate Karl Demmler on one count each of conspiracy to obstruct justice, witness tampering, witness tampering by influencing testimony and corruptly persuading a federal witness. They face a possible maximum of 55 years in prison. The charges arose from their attempt to pay former National Century Executive VP for compliance Sherry Gibson $500,000 to $1 million to have a “memory lapse” when called to testify against Poulsen in his fraud trial in connection with National Century’s 2002 collapse. Poulsen’s trial on 47 counts including conspiracy, wire fraud, securities fraud and money laundering is now scheduled to begin August 4.
US District Judge Algenon Marbley has not set a date for sentencing but ordered Demmler held without bond because of threats he made against two local judges and an attorney in the taped conversations which were entered into evidence at the trial. Poulsen is already in custody because his bond on the original fraud charges was revoked after he was indicted on the witness tampering charges. Columbus Business First, Bloomberg, our earlier trial coverage here, here and here.
The defense rested on Monday in the in the witness tampering trial of former National Century Financial Enterprises CEO and co-founder Lance Poulsen and his associate Karl Demmler (earlier here and here). The government rested on Friday after playing tapes of conversations between Poulsen and Demmler which appear to confirm that Poulsen suggested to Demmler that former Executive VP for compliance Sherry Gibson should plead unfamiliarity with the fraud charges against Poulson and other executives (AP here). The defense had contended that it was all a misunderstanding and that Poulson was merely seeking to help Gibson; however, when Poulson took the stand in his own defense Monday, he alleged that Gibson was an abusive employee “both sexually and physically” and that she had stabbed him in the back by agreeing to become a government witness. The case is expected to go to the jury today Columbus Business First here.
Two Dallas-area men were sentenced to prison last week by US District Judge Sam A. Lindsay for their roles in a scheme involving submission of fraudulent claims to Medicare for power wheelchairs and accessories. Friday Udo Johnny, the owner of Metropolitan Home Medical Equipment in Grand Prairie, was sentenced to 37 months in prison, and Emmanuel “Bob” Edet of Mesquite was sentenced to 30 months in prison; both were ordered to pay restitution. Both men pleaded guilty last year to conspiracy to commit health care fraud and pay illegal remunerations. They admitted to conspiring to pay illegal kickbacks to Lloyd McGriff, M.D., a Dallas physician currently serving a 16 month federal prison sentence. McGriff executed 257 fraudulent Certificates of Medical Necessity (CMNs) for which Johnny and Edet paid $200 each. Over an 11 month period in 2002 and 2003, they submitted more than $1.7 million in claims to Medicare, and Medicare paid the two men $905,000 based on the fraudulent CMNs and claims. Dallas Morning News, DOJ.
In opening statements on Tuesday in the witness tampering trial of former National Century Financial Enterprises CEO and co-founder Lance Poulsen and his associate Karl Demmler (earlier), the defense sought to portray Poulson’s $500,000 offer to former Executive VP for compliance Sherry Gibson as a misunderstanding. According to defense attorney Peter Anderson, Poulsen only sought to “make her whole” because she had gone to prison and given up her assets in her plea deal. And according to Demmler’s attorney Darryl Parker, Demmler was the intermediary because he was a longtime friend of Gibson and was only urging her to use the money to get a new attorney. However, Gibson took the stand on Tuesday afternoon and testified that she construed the initial offer as a bribe, contacted the government and agreed to wear a wire at future meetings with Demmler. The jury heard tapes in which Demmler offered to set Gibson up with an offshore account for a 10% fee if she took Poulsen’s offer and told her ” “Money laundering is my business on private contracts.” And regarding the testimony she was to give in Poulsen’s now-delayed fraud trial, Demmler said “Don’t remember. You don’t have to lie. You’re not lying. He’s not asking you to lie” and referred to a scene in Godfather II where a witness forgets testimony. The government also has taped conversations between Poulsen and Demmler in which they allegedly used code words in case their phones were bugged. Poulson is expected to take the stand in his own defense. Gibson’s testimony in the recently completed fraud trial of five other National Century executives (earlier) also included testimony implicating Poulsen in the fraud. Columbus Business First here and here.
A jury was selected Monday in the witness tampering trial of former National Century Financial Enterprises CEO and co-founder Lance Poulsen, and opening arguments are to begin today in Columbus, Ohio before US District Judge Algenon Marbley. Poulsen had been indicted in 2006 on 47 counts including conspiracy, wire fraud, securities fraud and money laundering in connection with the same acts for which five former executives were convicted last week (earlier) and is scheduled for trial on August 4 in that case. But in this case, he and an associate, Karl Demmler were indicted on one count each of conspiracy to obstruct justice, witness tampering and witness tampering by influencing testimony. The indictment alleges that they attempted to bribe Sherry Gibson, National Century’s former Executive VP for compliance, with $500,000 to “develop amnesia” on the witness stand in the fraud case. Gibson pleaded guilty in 2003 to one count of conspiracy to commit securities fraud and agreed to cooperate with prosecutors; she was sentenced to 48 months in prison in June 2004. She was the government’s star witness in the case that concluded last week and is scheduled to testify in this case. Columbus Business First has the story here.
Jodi Andes in the Columbus Dispatch analyzes last week’s verdicts here.
After two days of deliberations following the five week trial of five former executives of National Century Financial Enterprises, a federal jury in Columbus, Ohio on Thursday convicted all five defendants on all charges, which included conspiracy, wire fraud, securities fraud and money laundering. The defendants were National Century co-founders Rebecca Parrett and Donald Ayers and former executives Randolph Speer, Roger Faulkenberry and James Dierker. The Columbus Business First story here details the specific counts against each defendant. Investors, including many institutions and government bodies, lost $1.9 billion in the 2002 collapse of the health care provider financing company. US District Judge Algenon Marbley allowed the defendants to remain free but subject to electronic monitoring pending sentencing, which is expected in 60 to 90 days.
Former CEO and co-founder Lance Poulsen is scheduled for trial on
August 4, 2008 on the same charges but he first faces a March 17 trial for witness tampering in the case. The witness is said to be Sherry Gibson, National Century’s former Executive VP for compliance, who was the star prosecution witness in this case (earlier).
Defense attorneys for defendants Donald Ayers and James Dierker wrapped up the defense’s closing statements on Tuesday morning in the National Century fraud trial; Ayers’ attorney Brian Dickerson stressed the prosecution’s failure to call two cooperating witnesses — former company CFO John Snoble and compliance director Brian Stucke, who have pleaded guilty and were expected to provide key testimony. Following the prosecution rebuttal, Judge Marbley was scheduled to give jury instructions on Tuesday afternoon. Columbus Dispatch story here.
The defense rested Monday and closing arguments began in the healthcare finance fraud trial of five former executives of National Century Financial Enterprises. Co-founders Rebecca Parrett and Donald Ayers and former executives Randolph Speer, Roger Faulkenberry and James Dierker face multiple charges of conspiracy, wire fraud, securities fraud and money laundering in the 2002 collapse of the company, once the country’s largest source of health care provider financing. AUSA Wes Porter placed the blame on the defendants, saying “Every company takes its course because of the actions of people.” Porter accused the company of loaning providers in poor financial shape more than the value of their accounts receivable and lying to investors and auditors about the value of of the future receivables. Attorneys for Faulkenberry, Speer and Parrett each argued that the government had not met its burden of proof that their clients intended to commit fraud or engaged in any conspiracy. Closing arguments continue today with attorneys for Ayers and Dierker and prosecution rebuttal. Columbus Business First story here.
Department of Uh-oh: Jon Bryant, a computer programmer testifying for the defense as an expert witness in the healthcare finance fraud trial of five former executives of National Century Financial Enterprises, was revealed by prosecutors to have been an FBI informant in the same case back in 2002. Bryant testified that crashes in nine of National Century’s computer hard drives would have made it impossible for anyone to draw conclusions about the data. But on cross examination, AUSA Doug Squires asked Bryant if he ever told the FBI there was fraud at the company, if he had ever told the FBI about improper funding, and if he had ever taken documents from the company showing wrongdoing. Bryant said he could not recall but said it was “possible”. And after leaving court, when asked if he had told defense attorneys he had given company documents to the FBI, he said “No. It kinda slipped my mind.” Columbus Dispatch here.
The prosecution rested on Monday as the healthcare finance fraud trial of five former executives of National Century Financial Enterprises entered its fifth week (earlier here and here). Former National Century CFO John Snoble and compliance director Brian Stucke, both cooperating witnesses who have pleaded guilty, were expected to testify but were not called. The twelfth and final prosecution witness was Terrence Glomski, former asset manager for Lincoln Capital, which was acquired by Lehman Brothers in late 2002 after the collapse of National Century. Glomski testified that his pension fund clients were only able to recover $2.9 million of the $49.8 million they had invested in National Century’s AAA rated bonds. US District Judge Algenon Marbley on Tuesday denied a defense motion for acquittal, and the defense called its first witness. Robert DeLuca, a healthcare accounting consultant, testified that the company’s broad definition of receivables meant that National Century’s governing documents allowed the advance of the unsecured loans to health care providers which ultimately brought down the company. Under cross examination he admitted that he had no expertise in securities law. Bizjournal here and here.
In the third week of the healthcare finance fraud trial of five former executives of National Century Financial Enterprises (earlier), the prosecution’s star witness testified on Thursday that the deception by management began years before the company collapsed in 2002, resulting in a $1.9 billion loss to investors. Sherry Gibson, National Century’s former Executive VP for compliance, testified that the complex scheme to falsify records and lie to investors and auditors dated back to 1995 and involved all the firm’s principals and senior executives. Gibson pleaded guilty in 2003 to one count of conspiracy to commit securities fraud and agreed to cooperate with prosecutors; she was sentenced to 48 months in prison in June 2004. The trial continues before US District Judge Algenon Marbley in Columbus, Ohio. Bizjournals story here.
Two brothers from the Vineland, New Jersey area were sentenced to prison on Friday by US District Judge Freda Wolfson in Trenton for submitting $5.5 million in false claims to Medicaid for medical services never rendered at their two adult day care centers. Ernest Galletta, vice president of Horizon National Healthcare LLC, was sentenced to 55 months in prison. His brother George Galletta, the owner of Horizon, was sentenced to six months in prison and six months home confinement; he received a lesser sentence because his brother had hidden the fraud from him for more than two years. They had each pleaded guilty on November 2, 2007 to single count informations of conspiracy to commit healthcare fraud. AP here, DOJ Press Release (.pdf) here.
The trial of five former executives of National Century Financial Enterprises is scheduled to begin today in Columbus, Ohio before US District Judge Algenon Marbley. Co-founders Rebecca Parrett and Donald Ayers and former executives Randolph Speer, Roger Faulkenberry and James Dierker face multiple charges of conspiracy, wire fraud, securities fraud and money laundering. The privately held National Century was once the largest source of health care provider financing in the US. It collapsed six years ago and investors, including institutions and government bodies, lost $1.9 billion in what prosecutors allege was a massive and complex fraud scheme. Four former employees who have pleaded guilty are expected to testify. Former CEO and co-founder Lance Poulsen is scheduled for trial on August 4, 2008 but he first faces a March 7 trial for witness tampering. The Columbus Dispatch story is here; AP here.
Arthur Vanmoor: Mensa member, inventor and patent holder; notorious “Big Pimpin’ Pappy” of the escort service business in Broward County, Florida until he was convicted on state racketeering and prostitution charges (2004 story here). Now Vanmoor has been convicted by jury trial on 19 federal counts including mail fraud, wire fraud, Food Drug & Cosmetic Act violations and conspiracy; the March 2005 indictments arose from his operation of websites offering fake cures for cancer, migraine, flu and other diseases or conditions. Vanmoor’s websites falsely claimed to be selling FDA approved drugs and contained fake articles written by fake doctors; evidence at the trial showed that Vanmoor continued to operate the websites in violation of a December 2005 restraining order. Sentencing has not been scheduled; the DOJ Press Release is here.
Attorney Robert Arledge of Vicksburg, Mississippi on Thursday was sentenced to 78 months in prison and ordered to pay $5.8 million in restitution by US District Judge David Bramlette in Jackson. Arledge was convicted by jury trial in October on 7 counts including conspiracy, wire fraud and mail fraud in a scheme to defraud Wyeth Pharmaceutical by knowingly allowing clients to submit false Fen-Phen claims for $250,000 each to a settlement fund. More than 20 claimants were charged in the scheme; most have been sentenced. WAPT has the AP story here.
Merck/Schering-Plough’s Vytorin is a combination of Merck’s Zocor and Schering’s Zetia. Zocor’s patent has expired and Zetia has never been proven effective in improving clinical outcomes. The pharmaceutical joint venture company has been under fire for repeatedly refusing to release the results of clinical trials which examined the effectiveness of Vytorin over Zocor alone. The trials ended in early 2006 . After announced delays in November 2006 and April 2007, the company issued a press release in November 2007 (here) in which it attempted to change the endpoints of the study. After a storm of protest, the company released the results Monday (here): Vytorin is no more effective than Zocor alone. A Bloomberg story here has further details, including calls by two Congressmen for further investigation of the ad campaign for Vytorin. Sandy Szwarc at Junkfood Science has analyzed the developing story here and previously here.
Now it has been reported (Brandweek NRx via Junkfood Science) that Schering President Carrie Smith Cox sold 900,000 shares of company stock worth $28 million last spring, after the clinical trials ended but long before the results were released.
Whatever comes next, we can only hope for the demise of the obnoxious and misleading Vytorin commercials.