Eight Indicted in Fraud Case That Alleges $50 Million in Bogus Claims for Student Substance Abuse Counseling

Six Linked to Long Beach Treatment Program Taken into Custody Today

Eight people have been indicted for allegedly participating in a scheme that submitted more than $50 million in fraudulent bills to a California state program for alcohol and drug treatment services for high school and middle school students that, in many instances, were not provided or were provided to students who did not have substance abuse problems.

Six of the defendants who worked at the Long Beach-based Atlantic Health Services, formerly known as Atlantic Recovery Services (ARS), were arrested this morning by federal authorities.

The indictment, which charges the defendants with health care fraud and aggravated identity theft, alleges that ARS received more than $46 million from California’s Drug Medi-Cal program after ARS submitted false and fraudulent claims for group and individual substance abuse counseling services.

“The defendants named in the indictment are accused of exploiting a program that was set up to help a particularly vulnerable population – young people who are confronting drug and alcohol abuse,” said U.S. Attorney Eileen M. Decker for the Central District of California.  “According to the indictment, ARS and its employees engaged in a long-running fraud scheme to steal tens of millions of dollars from a program with limited resources that was designed to help underprivileged youth in recovery.  In the process, the defendants and ARS branded many innocent young people as substance abusers and addicts in order to boost enrollment numbers and billings.”

The defendants named in the indictment are:

  • Lori Renee Miller, 54, of Lakewood, California, the program manager at ARS who supervised substance abuse recovery managers and counselors;
  • Nguyet Galaz, 41, of Montclair, California, who oversaw services provided at approximately 11 schools in Los Angeles County;
  • Angela Frances Micklo, 56, of Palmdale, California, who managed counselors at approximately nine schools in Los Angeles County, including several in the Antelope Valley;
  • Maribel Navarro, 48, of Pico Rivera, California, who managed counselors at approximately ten schools in Los Angeles County;
  • Carrenda Jeffery, 64, of the Mid-City District of Los Angeles, who managed counselors at approximately three schools;
  • LaLonnie Egans, 57, of Bellflower, California, who managed counselors at three schools;
  • Tina Lynn St. Julian, 51, of Compton, California, who worked as a counselor at two schools; and
  • Shyrie Womack, 33, Egans’ daughter, also of Bellflower, who worked as a counselor at three schools.

Galaz and Micklo are expected to self-surrender in the coming weeks.  The six other defendants were taken into custody without incident this morning and are scheduled to be arraigned on the indictment this afternoon in U.S. District Court.

Today’s arrests are the result of a 40-count indictment that was returned by a federal grand jury on August 26 and unsealed this morning.

The eight defendants are all former employees of ARS, which received contracts to provide substance abuse treatment services through the Drug Medi-Cal program to students in schools in Los Angeles County.  The schools included various sites operated by Soledad Enrichment Action and public schools in Montebello, California, Bell Gardens,
Californina, Lakewood, and the Antelope Valley.

ARS allegedly submitted bogus claims for payment to the Drug Medi-Cal program for a decade, according to the indictment.  ARS shut down in April 2013, when California suspended payments to the company.

According to the indictment, the claims submitted to the Drug Medi-Cal program were false and fraudulent for a number of reasons, including:

  • ARS billed for services provided to students who did not have substance abuse disorders or addictions and therefore did not qualify to receive Drug Medi-Cal services;
  • ARS billed for counseling sessions that were not conducted at all;
  • ARS billed for counseling services that were not conducted in accordance with Drug Medi-Cal regulations regarding length, number of students, content and setting;
  • ARS personnel falsified documents, including treatment plans, group counseling sign-in sheets, progress notes and update logs (which listed the dates and times of counseling sessions); and
  • ARS personnel forged student signatures on documents.

“For counselors and supervisors to risk stigmatizing students as substance abusers, as alleged in this case, just to enrich themselves at taxpayer expense is outrageous,” said Special Agent in Charge Christian Schrank for the Office of the Inspector General of the Department of Health and Human Services. “This decade-long conspiracy to defraud Medi-Cal while disregarding the true health care needs of children will not be tolerated.”

Previously, 11 other defendants pleaded guilty to health care fraud charges stemming from the ARS scheme.  Those defendants are former ARS managers Cathy Fernandez, 53, of Downey, California; Erin Hoover, 37, of Long Beach, California; Elizabeth Black, 51, of Long Beach; Helsa Casillas, 44, of El Sereno, California; and Sandra Lopez, 41, of Huntington Park, California; and former ARS counselors Tamara Diaz, 45 of East Los Angeles, California; Margarita Lopez, 40, of Paramount, California; Irma Talavera, 27, of Paramount; Laura Vasquez, 52, of Pico Rivera; Cindy Leticia Ortiz, 29, of Norwalk, California; and Arthur Dominguez, 63, of Glendale, California.

Another defendant, Dr. Leland Whitson, 75, of Redondo Beach, California, the former Medical/Clinical Director of ARS, previously pleaded guilty to making a false statement affecting a health care program.

The dozen defendants who have already pleaded guilty are pending sentencing by U.S. District Judge Philip S. Gutierrez.

Each of the eight defendants named in the indictment unsealed today potentially faces decades in federal prison if convicted.  For example, if convicted, Miller faces a statutory maximum sentence of 324 years in federal prison.

An indictment contains allegations that a defendant has committed a crime.  Every defendant is presumed innocent until and unless proven guilty in court.

The cases against the 20 defendants are the result of an investigation by the Office of Inspector General of the Department of Health and Human Services; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; and IRS – Criminal Investigation.

Former Investment Banking Analyst and Two Friends Charged in Insider Trading Scheme

An analyst with J.P. Morgan Securities and two longtime friends were taken into custody this morning after being charged in a federal grand jury indictment that alleges they participated in an insider trading scheme that netted more than $600,000 in illicit profits.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division made the announcement.

Ashish Aggarwal, 27, of San Francisco; Shahriyar Bolandian, 26, of Los Angeles; and Kevan Sadigh, 28, of Los Angeles, are named in an indictment that was unsealed this morning and charges each defendant with one count of conspiracy to commit securities and tender offer fraud, 13 substantive counts of securities fraud, 13 substantive counts of tender offer fraud and three substantive counts of wire fraud.  Bolandian also is charged with one count of money laundering.

The defendants surrendered to the FBI this morning, and are scheduled to be arraigned this afternoon before U.S. Magistrate Judge Patrick J. Walsh of the Central District of California.

Between June 2011 and June 2013, Aggarwal was employed by J.P. Morgan Securities, LLC (JPMS) as an investment banking analyst in its San Francisco office.  According to the indictment, through his employment, Aggarwal allegedly obtained material, non-public (inside) information about upcoming mergers and acquisitions involving publicly-traded companies.  The indictment alleges that Aggarwal disclosed this information to his friend Bolandian who, in turn, shared the information with Sadigh, who is also a friend of Bolandian.  Bolandian and Sadigh then allegedly used the inside information to trade in advance of the public announcements of Integrated Device Technology Inc.’s April 2012 planned acquisition of PLX Technology Inc., and Salesforce.com Inc.’s June 2013 acquisition of ExactTarget Inc.  According to the indictment, through this scheme, Aggarwal, Bolandian and Sadigh netted more than $600,000 in illicit profits, which the defendants allegedly used to, among other things, cover previous trading losses and to repay liabilities incurred by Aggarwal and Bolandian.

The case was investigated by the FBI.  The case is being prosecuted by Trial Attorneys Thomas B.W. Hall and Alexander F. Porter of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Paul Stern of the Central District of California.  The Securities and Exchange Commission provided valuable assistance.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Two Individuals Plead Guilty to Conspiring to Defraud Consumers through Fraudulent Debt Relief Services Firms

Two individuals pleaded guilty today for their roles at fraudulent debt relief services companies that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees, the Justice Department and U.S. Postal Inspection Service (USPIS) announced.

Athena Maldonado, 30, and Christopher Harati, 31, both of Orange County, California, pleaded guilty to a one-count information alleging conspiracy in connection with debt relief companies known as Nelson Gamble & Associates (Nelson Gamble) and Jackson Hunter Morris & Knight LLP (Jackson Hunter).  According to the information filed in the case, the defendants and their co-conspirators portrayed the debt relief companies as law firms and attorney-based companies that would negotiate favorable settlements with creditors.  Clients made monthly payments expecting the money to go toward settlements.  The companies instead took an amount equal to at least 15 percent of clients’ total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.

“Debt relief service scams prey on vulnerable consumers trying to climb out of tough financial situations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Justice Department will aggressively pursue the criminals who operate these schemes.”

Maldonado admitted that she acted as the “legal department” for both companies, and used multiple aliases when responding to complaints submitted by state attorney general offices, the Better Business Bureau and private attorneys.  Maldonado admitted that, after Nelson Gamble changed its name to Jackson Hunter, she responded to consumer complaints by falsely stating, among other things, that the two companies were not related and that Jackson Hunter could not refund money paid to Nelson Gamble.

Harati admitted that he worked as a client relations manager for the companies and handled complaint calls from clients.  He admitted he told customers that Nelson Gamble and Jackson Hunter were separate companies, falsely stated that Jackson Hunter was a nationwide law firm with years of experience and made other misrepresentations designed to convince customers to stay with the company.

The defendants each face a statutory maximum sentence of five years in prison and a $250,000 fine, or an alternate fine of twice the loss or twice the gain, whichever is greater, along with mandatory restitution.  Their sentencing dates have not been set.

On Dec. 3, 2014, a grand jury in Santa Ana, California, returned a 22-count indictment charging Jeremy Nelson, Elias Ponce and John Vartanian, all of Orange County, for mail fraud, wire fraud, and conspiracy to commit mail and wire fraud in the same fraudulent scheme.  The trial in that case is scheduled to begin on Feb. 16, 2016, in Los Angeles.

The Federal Trade Commission (FTC) brought a civil case against Nelson Gamble, Jackson Hunter and other defendants in September 2012, alleging that the defendants falsely claimed they would reduce consumers’ unsecured debt by 50 percent or more, made unauthorized charges to their bank accounts and called phone numbers listed on the National Do Not Call Registry.  For more information about debt relief firms, the FTC encourages consumers to review this page on their website.

Principal Deputy Assistant Attorney General Mizer commended the USPIS team assigned to the Civil Division’s Consumer Protection Branch for their investigative efforts, and thanked the U.S. Attorney’s Office of the Central District of California for their contributions to the case.  The case is being prosecuted by Trial Attorney Alan Phelps of the Consumer Protection Branch.

Southern California Physician Sentenced to 22 Months in Prison for Medicare Fraud

A Southern California physician was sentenced to 22 months in federal prison today for his role in a conspiracy to commit Medicare fraud.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Region and Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office made the announcement.

Dr. Jason C. Ling, 43, of Spring Valley, California, pleaded guilty in June 2014, to conspiracy to commit health care fraud.  According to his plea agreement, between March and November 2010, Dr. Ling conspired with others to defraud the Medicare program by writing medically unnecessary prescriptions for expensive power wheelchairs and other durable medical equipment (DME).  Dr. Ling obtained patients for his Spring Valley medical clinic from a street-level recruiter, or “marketer,” who referred Medicare beneficiaries for medically unnecessary DME prescriptions.  Dr. Ling’s prescriptions were provided to owners of DME companies, including Eucharia Okeke, who used the fraudulent prescriptions to submit approximately $496,794 in false claims to Medicare.

In addition to the prison term, U.S. District Judge George H. Wu of the Central District of California ordered Dr. Ling to pay $311,145 in restitution to the Medicare program.

Eucharia Okeke, pleaded guilty for her role in the conspiracy on Aug. 25, 2014.  Her sentencing hearing is scheduled for Feb. 26, 2015.

The case was investigated by the FBI and the Los Angeles Region of HHS-OIG.  The case was prosecuted by Trial Attorney Alexander F. Porter of the Criminal Division’s Fraud Section.

The case 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 Central District of California.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 2,000 defendants who have collectively billed the Medicare program for more than $6 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.

Rite Aid Corporation Pays $2.99 Million for Alleged Use of Gift Cards to Induce Medicare and Medicaid Business

Rite Aid Corporation, a Delaware corporation and national retail drugstore chain with its principal place of business in Camp Hill, Pennsylvania, has paid the United States $2.99 million to resolve allegations that it violated the False Claims Act by inappropriately using gift cards as inducements, the Department of Justice announced today.

The settlement resolves allegations that Rite Aid offered illegal inducements to Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies.  The government alleged that from 2008 to 2010, Rite Aid had knowingly and improperly influenced the decisions of Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies by offering them gift cards in exchange for their business.

“This case demonstrates the government’s ongoing commitment to enforcing accountability, transparency and fairness in the retail pharmacy industry,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division.  “The government will continue to advocate for the best interests of Medicare and Medicaid patients, and prevent pharmacies from improperly manipulating their healthcare choices.”

“This settlement holds Rite Aid accountable for exerting undue influence on individuals when they make important healthcare decisions about where and when to fill prescriptions,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California.  “Corporate profit should never steer an individual away from making the right healthcare decision.”

“Pharmacies are not allowed to improperly influence the decision-making of Medicare and Medicaid patients about where to fill prescriptions,” said Special Agent in Charge Glenn R. Ferry for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Pharmacy chains that manipulate patient choices in this way will be held accountable.”

The settlement resolves allegations filed by Jack Chin under the qui tam, or whistleblower provisions of the False Claims Act, which authorizes private parties to sue for fraud on behalf of the United States and share in the recovery.  Chin will receive approximately $508,300 of the settlement.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  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 this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.

This case was investigated jointly by the Commercial Litigation Branch of the Civil Division, the U.S. Attorney’s Office for the Central District of California, the National Association of Medicaid Fraud Control Units and HHS-OIG.

The claims settled by today’s agreement are allegations only and there has been no determination of liability.

Manager of Three Los Angeles Medical Clinics Indicted in $4 Million Medicare Fraud Scheme

An indictment was unsealed today charging two managers and operators of three Los Angeles medical clinics with Medicare fraud and conspiracy to pay illegal kickbacks for medical procedures that were never actually provided.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Acting U.S. Attorney Stephanie Yonekura 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) and Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office made the announcement.

Hovik Simitian, 47, of Los Angeles, and Anahit Shatvoryan, 49, of Glendale, California, were each charged in the Central District of California with one count of conspiracy to commit health care fraud, six counts of health care fraud and one count of conspiracy to pay health care kickbacks.

According to allegations in the indictment, Simitian and and Shatvoryan managed and operated three medical clinics – Columbia Medical Group Inc., Life Care Medical Clinic and Safe Health Medical Clinic – out of two suites in the same Los Angeles office building.  From approximately February 2010 through June 2014, Simitian and Shatvoryan paid marketers illegal kickbacks to recruit Medicare beneficiaries to the clinics.  They then submitted false claims to Medicare for services – including procedures such as anorectal manometry and nerve conduction tests – that were not medically necessary and never actually provided.

From approximately February 2010 through June 2014, the clinics allegedly submitted a total of $4,526,791 in false and fraudulent claims to Medicare, and Medicare paid $1,668,559 on those claims.

The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.

This case is being investigated by the FBI and HHS-OIG, 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.  This case is being prosecuted by Trial Attorneys Blanca Quintero and Alexander F. Porter of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Los Angeles Physician Indicted in $33 Million Medicare Fraud Scheme

A Los Angeles physician was indicted today for a $33 million scheme to defraud Medicare, announced Assistant Attorney General Leslie R. Caldwell 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 U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) for the Los Angeles Region and Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office.

Robert A. Glazer, 67, of Los Angeles, California, was indicted in the Central District of California and charged with one count of conspiracy to commit health care fraud.

According to court documents, Glazer operated a medical clinic located in Los Angeles.    From approximately January 2006 through May 2014, Glazer allegedly billed Medicare for services that were not medically necessary, and at times were not provided to the Medicare beneficiaries.    In addition, Glazer allegedly signed prescriptions, certifications, and other medical documents for medically unnecessary home health services, hospice services, and power wheelchairs and other durable medical equipment (DME).    Glazer’s co-conspirators then sold the prescriptions and certifications to DME supply companies, home health agencies, and other providers, knowing that the prescriptions and certifications were fraudulent.    Based on these fraudulent prescriptions and certifications, the DME supply companies, home health agencies, and other providers then allegedly submitted false and fraudulent claims to Medicare.
As further alleged in court documents, from approximately January 2006 through May 2014, fraudulent prescriptions and certifications from Glazer were responsible for approximately $33,484,779 in false and fraudulent claims to Medicare, and Medicare paid approximately $22,056,332 on those claims.

The 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 Central District of California.    This case is being prosecuted by Trial Attorneys Fred Medick and Blanca Quintero of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are 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 .

Nursing Home Operator to Pay $48 Million to Resolve Allegations That Six California Facilities Billed for Unnecessary Therapy

The Ensign Group Inc., a skilled nursing provider based in Mission Viejo, Calif., that operates nursing homes across the western U.S. has agreed to pay $48 million to resolve allegations that it knowingly submitted to Medicare false claims for medically unnecessary rehabilitation therapy services, the Justice Department announced today.  Six of Ensign’s skilled nursing facilities in California allegedly submitted the false claims:  Atlantic Memorial Healthcare Center, located in Long Beach; Panorama Gardens, located in Panorama City; The Orchard Post-Acute Care (a.k.a. Royal Court), located in Whittier; Sea Cliff Healthcare Center, located in Huntington Beach; Southland, located in Norwalk; and Victoria Care Center, located in Ventura.

  “Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

Between January 1, 1999, and August 31, 2011, these six Ensign skilled nursing facilities allegedly submitted false claims to the government for physical, occupational and speech therapy services provided to Medicare beneficiaries that were not medically necessary.  Specifically, Ensign provided therapy to patients whose conditions and diagnoses did not warrant it, solely to increase its reimbursement from Medicare.  The government further alleged that Ensign created a corporate culture that improperly incentivized therapists and others to increase the amount of therapy provided to patients to meet planned targets for Medicare revenue.  These targets were set without regard to patients’ individual therapy needs and could only be achieved by billing at the highest reimbursement levels.  The government also alleged that Ensign billed for inflated amounts of therapy it had not provided and that certain patients were kept in these facilities for periods of time exceeding what was medically necessary for treatment of their conditions.

“The case against The Ensign Group involves a company that regularly bilked Medicare by submitting inflated bills that, in some cases, sought money for services that simply were never provided to patients,” said U.S. Attorney for the Central District of California André Birotte Jr.  “This settlement – one of the largest Medicare fraud cases against a nursing home chain in U.S. history – demonstrates our commitment to protecting taxpayers who fund important programs that benefit millions of Americans, but don’t want to see their hard-earned money wasted on fraud or abuse.”

In addition to paying the settlement amount, Ensign also agreed that each of its skilled nursing facilities across the nation would be bound by the terms of a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG).

“Billing Medicare for costly, unnecessary skilled nursing services — as the government alleged here — inflates health care costs borne by taxpayers,” said Special Agent in Charge for the Los Angeles Region of the HHS-OIG Glenn R. Ferry.  “This settlement again puts on notice those who would consider defrauding federally funded health care programs.”

This civil settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius.  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 this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered more than $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The allegations settled today arose from lawsuits filed by two former Ensign therapists under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring suit on behalf of the government and to share in any recovery.  The dollar amount that the whistleblowers in this case, Gloria Patterson and Carol Sanchez, will receive has not been determined.  The lawsuits are captioned as United States of America ex rel. Gloria Patterson v. Ensign Group Inc., Case No. SACV 06-6956 CJC (ANx) (C.D. Calif.) and United States of America ex rel. Carol Sanchez v. Ensign Group Inc., Case No. SACV 06-0643 CJC (ANx) (C.D. Calif.).

The case was handled by the U.S. Attorney’s Office for the Central District of California, with assistance from the Commercial Litigation Branch, Civil Division, U.S. Department of Justice and the U.S. Department of Health and Human Services Office of Inspector General.   This action was supported by the Elder Justice and Nursing Home Initiative, which coordinates the department’s activities combating elder abuse, neglect and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid and other federal health care programs.

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

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 out 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, Calif., 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 Sept. 30, 2013, and Oct. 2, 2013, Agbu’s co-defendants, Alejandro Maciel, 43, of Huntington Park, Calif., 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 Dec.12, 2013, and Oct. 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 & 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.

Former Owner of Los Angeles Medical Equipment Supply Company Indicted in $4 Million Medicare Fraud Scheme

A former owner of a Los Angeles medical equipment supply company has been indicted for allegedly engaging in a $4 million Medicare fraud scheme.

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), and Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office made the announcement.

Valery Bogomolny, 41, of Los Angeles, Calif., was indicted in the Central District of California on six counts of health care fraud, each of which carries a maximum penalty of 10 years in prison upon conviction. Bogomolny was taken into custody on Sept. 27, 2013, and the indictment was unsealed following his initial appearance in federal court that afternoon.

According to court documents, Bogomolny was the owner and president of Royal Medical Supply, a durable medical equipment (DME) supply company located in Los Angeles.  From approximately January 2006 through October 2009, he allegedly engaged in a scheme to commit health care fraud through the operation of Royal by providing medically unnecessary power wheelchairs and other DME to Medicare beneficiaries and submitting false and fraudulent claims to Medicare.  Court documents allege that Bogomolny knew the prescriptions and medical documents were fraudulent and that some of the beneficiaries did not receive the DME, yet he certified to Medicare with the submission of each claim that the DME was received and was medically necessary.

Bogomolny, through Royal, allegedly submitted approximately $4 million in fraudulent claims to Medicare for power wheelchairs and related services, and Medicare paid Royal approximately $2.7 million on those claims.

The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

The case was investigated by the FBI and HHS-OIG 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.  This case is being prosecuted by Trial Attorney Fred Medick of the Criminal Division’s Fraud Section.

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 and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.