Letter of Apology » Health Fraud

Fifth Amendment Capitalist: Peanut King Takes Five At The House

Solomon Wisenberg — Thu, 12 Feb 2009 23:46:50 +0000

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.

What’s The Matter With Kansas? Judge Monti Belot Scolds AUSA Tanya Treadway in Schneider Health Care Fraud Trial

Solomon Wisenberg — Wed, 28 Jan 2009 14:59:30 +0000

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.

Lance Poulsen Convicted On All Counts

Dave Westheimer — Sat, 01 Nov 2008 06:35:03 +0000

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).

Lance Poulsen Trial: Sherry Gibson Testifies

Dave Westheimer — Mon, 13 Oct 2008 05:56:53 +0000

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.

(Columbus Dispatch, Columbus Bizjournal)

Poulsen Trial: Witnesses Describe Cooked Books

Dave Westheimer — Tue, 07 Oct 2008 05:50:57 +0000

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).

Opening Statements Today In Poulsen Trial

Dave Westheimer — Thu, 02 Oct 2008 06:28:38 +0000

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.

Poulsen’s Fraud Trial Begins Today

Dave Westheimer — Wed, 01 Oct 2008 17:07:16 +0000

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.

(Columbus Dispatch, Columbus Bizjournal)

Medical Equipment Company Owner Convicted In Motorized Wheelchair Fraud

Dave Westheimer — Wed, 24 Sep 2008 06:13:30 +0000

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).

Two Texas Chiros Indicted In Staged Accident Scheme

Dave Westheimer — Tue, 16 Sep 2008 05:32:23 +0000

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).

Recruiter In Skid Row Medicare Fraud Scheme Pleads Guilty

Dave Westheimer — Sat, 30 Aug 2008 06:21:20 +0000

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).