Nine People Sentenced in $172,000,000 Insurance Fraud Scheme

[nitpicker]

https://www.justice.gov/usao-sdfl/pr/nine-people-sentenced-172000000-insurance-fraud-scheme

Department of Justice
U.S. Attorney’s Office
Southern District of Florida

FOR IMMEDIATE RELEASE
Friday, March 31, 2017

Nine People Sentenced in $172,000,000 Insurance Fraud Scheme

Nine defendants were sentenced in federal court for participating in a massive insurance fraud scheme. Benjamin G. Greenberg, Acting United States Attorney for the Southern District of Florida, Adolphus P. Wright, Special Agent in Charge, Drug Enforcement Administration (DEA), Miami Field Office, Kelly R. Jackson, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), and Michael J. Satz, Broward State Attorney, announced the sentencing of nine of sixteen defendants who were previously charged in a five-count Information.

The criminal Information charged sixteen defendants with their participation in a complex fraud scheme regarding the manufacture and distribution of compounded medications. The fraud involved material misrepresentations to health insurance providers and illegal payments to coconspirators and medical professionals, including physicians. The fraud generated in excess of $172,000,000 in criminal proceeds for the members of the criminal enterprise.

United States District Judge Daniel T. K. Hurley imposed the following sentences: Clifford Carroll, 36, of Boca Raton, 180 months’ imprisonment; Todd Stephens, 52, of West Palm Beach, 120 months’ imprisonment; Joel McDermott, 41, of Boca Raton, 72 months’ imprisonment; Michael Kenna, 30, of Delray Beach, 60 months’ imprisonment; Todd Hanson, 47, of Zephyr Cove, NV, 96 months’ imprisonment; Christopher Mucha, 30, of Davie, 30 months’ imprisonment; Ian Flaster, 34, of Delray Beach, 36 months’ imprisonment; William Earl, 73, of Boca Raton, 24 months’ imprisonment; and Dr. Peter Williams, 56, of New Port Richey, 60 months’ imprisonment. In addition, the defendants forfeited over $30 million in assets. Hearings will be held at a later date to determine the amount of restitution owed to the government by each of the defendants. All sixteen defendants charged in this case have pled guilty, and the remaining defendants will be sentenced in May.

According to the Information, the defendants participated in a two-year conspiracy, which used various business entities, including Numed Care, LLC, ClinicalCorp, LLC, RX of Boca, and American Custom Compound Pharmacy, to perpetrate a complex fraud on numerous health care insurance providers. The defendants prepared medications in bulk quantities, which they alleged to be compounded medications for specific individualized patient needs. The defendants falsely represented to the health insurance providers that these medications were prepared in limited quantities for individual patients and were exempt from FDA inspection.

The health insurance providers compensated the defendants for the alleged costs of the ingredients for such medications. The defendants concealed from the health insurance providers that the defendants paid illegal kickbacks to physicians for the issuance of the compounded medications. Defendants unlawfully provided the physicians with pre-printed prescription pads. In order to facilitate the fraudulent scheme, the defendants used mass-marketing techniques and call centers, which made material misrepresentations in order to solicit potential patients. Defendants induced owners of failing pharmacies throughout the United States to participate in the scheme in order to perpetuate the fraud.
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