Articles Posted in Fraud

Federal health care fraud charges that have been making headlines for almost six years have reached a resolution against four defendants indicted with various charges. Early last week, a federal jury delivered “mixed verdicts” regarding four former executives of WellCare Health Plans.

WellCare Health Plans, Inc. is a publicly owned health care company that offers Medicaid and Medicare managed health care plans for more than its 2 million participants. The company began operations in 1985 as a Medicaid provider for Florida with its main headquarters located in Tampa. They have affiliations with more than 90,000 doctors and works with over 3,500 associates. The company is also a holding company for numerous affiliates, including Staywell, HealthEase, Harmony, and ‘ Ohana Health Plans. WellCare maintains local offices in Miami, Florida; Chicago, Illinois New York City; Baton Rouge, Louisiana: North Haven, Connecticut; Marietta, Georgia; and Houston, Texas.

In October 2007, more than 200 Special Agents accompanied by the FBI, the Department of Health and Human Services as well as the Florida Attorney General’s Medicaid Fraud Control Unit raided WellCare’s Tampa based headquarters and executed a search warrant of the company’s offices.

It was alleged that the company overstated expenses by handing in bogus documents to the state. Under selected mental health care agreements, WellCare was paid a flat fee for each patient and was expected to disburse at least eighty percent of the received funds on the care of each individual patient. Surplus amounts of more than 20 percent were to be refunded to the state. However, the company’s invented bogus outlays permitted them to keep the remaining monies.

Prosecutors went forward with the charges and with the testimony of a former employee had the allegations corroborated opening up a can of worms that came to at least a semi-conclusion last week.

In a plea agreement that has since been unsealed WellCare agreed in to repay $35 million of the ill-gotten gains, which was the company’s best approximation of the total amount that was deceptively retained by the company between the years of 2002-2006. The company was forced to restate its quarterly and annual profits after the raid occurred.

This action drove net income down by $32 million, and triggered resignation of the company’s top three officials. There were no criminal charges filed at the time but investigations were announced by both the States of Florida and Connecticut. The SEC also began an informal investigation. Several shareholder lawsuits and sealed whistleblower complaints were also filed. WellCare’s publicly traded stock (NTSE: WCG) was halted on the news. Once it reopened for trading it quickly fell to a low of eighty percent below that year’s (2007) annual high price per share.

In May of 2009 charges were filed and a Deferred Prosecution Agreement (DPA) was initiated in part of which the company agreed to pay $40 Million in restitution to the Florida Medicaid and Healthy Kids programs in repayment of proceeds from those platforms that WellCare was not entitled to, and additionally consented to another civil forfeiture of $40 Million. The company also had to accept all responsibility for the behavior that led to the investigation by the government as well as accepting its knowledge of the unlawful events that took place.

Among other terms of the DPA, the company was required to continue its cooperation in the ongoing federal and state criminal investigation of its former executives.

In March 2011 U.S. Attorney Robert E. O’Neill announced the return by a grand jury of an indictment charging five former officials of WellCare with conspiracy to commit Medicaid fraud, false statements, and further associated charges. Explicitly, the indictment charges that Todd S. Farha, 42, the former chief executive officer; Thaddeus M.S. Bereday, 45 former general counsel; Paul L. Behrens, 49 former chief financial officer; William L. Kale, 61, a former vice president of Harmony Behavioral Health, Inc., a exclusively-owned subsidiary of WellCare; and Peter E. Clay, 54, former vice president of Medical Economics were the focus of the indictment.

In 2012, WellCare paid $137.5 million to the nine states and the federal government to decide four lawsuits that had alleged abuses of the False Claims Act.

On June 10, 2013 after weeks of deliberation a jury of 10-women and two men provided an assortment of verdicts finding four of the executives guilty of at least some of the criminal charges against them but acquitting them of other allegations.

Farha, Behrens, and Kale were each found guilty of two counts of health care fraud but Farha was acquitted of six other charges including giving false statements. Behrens was found guilty of two counts of making false statements, but was acquitted of two other false statement charges. Clay was the lone defendant not convicted of health care fraud but was found guilty of two counts of making false statements.

Federal charges are still pending against former WellCare general counsel Thaddeus M.S. Bereday
The four men swindled the government out of more than $30 million. The money they appropriated to their company should have been used for people who were in need of their health care services, not to increase the earnings of a company that was already profitable, prosecutors said.

Each health care fraud count is punishable by up to 10 years’ imprisonment. The maximum penalty of incarceration for each of the other convictions has a maximum of five years.

To read the latest FBI press release relating to this article click here

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The wet foot, dry foot program was the name given to a portion of the revision of the Cuban Adjustment Act of 1966 that was amended in the late 1990’s
The Act states, that any person(s) who fled Cuba and made it to “dry land” in the United States would be allowed to stay and apply for residency after remaining in the Country for over one year. They would then qualify for an expedited “legal permanent resident” status and, eventually, U.S. citizenship. At the time of its amendment, the U.S. government with Bill Clinton as President came to an agreement with the Cuban government that they would allow this scenario, but prevent Cuban refugees found at sea access to enter the country. A Cuban caught on the waters between the two countries would immediately be sent back to Cuba or to a third country.

Last week, U.S. Immigration and Customs Enforcement (ICE) officials arrested 20 people posing as Cubans who fled their country in an effort to obtain residence or citizenship using the Act to their benefit, taking advantage of the amended law.

According to federal officials who are handling the case, almost all of the detainees said that they were from Cuba with the idea of obtaining immigration papers. ICE did not stipulate what documents the detainee’s submitted to immigration authorities in their effort to obtain residence or citizenship.

In Miami federal court on Wednesday, at the detainees’ first appearance, a few of the accused revealed their actual nationalities. As it turned out, one of them said he had dual citizenship from Israel and Colombia. Another detailed that he was in possession of a Venezuelan passport. And a third stated that she had a U.S. passport as well as one originating from Cuba.

The current case includes suspects who were already living in South Florida cities comprising Miami, Miami Beach, North Miami and Doral in Dade county, and Hollywood, Davie, Sunrise and Miramar in Broward.

“These individuals came here seeking the freedom and benefits this country provides to Cuban nationals,” said Alysa Erichs, the special agent in charge of Homeland Security Investigations for the greater Miami-Dade area. “The operation identified and addressed vulnerabilities in the application process… These arrests by HSI should send a clear message that we will target anyone who tries to obtain immigration benefits fraudulently.”

She went on to say that many undocumented immigrants who obtain Cuban birth certificates come from South and Central America and in this particular case most of them were from Venezuela.

All the arrests were the product of an investigation, labeled “Havana Gateway”, by ICE’s Homeland Security Investigations (HSI) unit combined with the Customs and Border Protection, Citizenship and Immigration Services as well as the United States State Department’s Diplomatic Security Service.

Operation Havana Gateway, which began in August 2012, is the federally sponsored sting responsible for the current arrests. It is an ongoing effort and will continue moving forward, according to Erichs. She also mentioned that agents were expected to make further arrests.

Although a large amount of the detentions took place in Dade and Broward counties, other arrests were delivered on the West Coast specifically in Naples, and some as far north as Jacksonville where Ferdinando Enrique Bello, 52, was arrested when he was charged with filing an application for citizenship in which he deceitfully claimed that he was born in Cuba.

Miriam Licea, 57, of Miami, was charged with assisting two of the suspects provide fraudulent applications claiming Cuban citizenship. Licea’s arrest was related to an earlier case in which a defendant confessed to paying her $15,000 for a fake Cuban birth certificate.

At her bail hearing, Licea said that she didn’t want bail because her family had no money to pay for it. However the lawyer standing right next to her as she made that statement seemed to surprise her when he told her that it was her family had hired him, and they were willing to pay the $50,000 that the bond was set at.

Luis Enrique Legon Mena, 44, of Miramar, was charged with conspiring to persuade some of the suspects to stay illegally in the United States, apparently a notation to his suspected role as an expediter in providing falsified documents to immigrants without legal documentation, according to the ICE statement.

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A married couple charged with swindling seniors mainly in Florida, Colorado and Texas, as well as more than 30 other states across the country were among some of the recent enforcement actions taken by the Security & Exchange Commission (SEC). The victims were told they were investing in a charitable organization based in Tallahassee, Florida by purchasing charitable gift annuities (CGAs).

Richard K. Olive and Susan L. Olive who are both in their forties were apparently principals of the organization named We The People Inc. that implemented the transactions. The Olives originally stated that they were hired by the company. Looking into the matter, the SEC determined that the CGAs issued by We the People were different in numerous aspects from CGAs issued legitimately. The Olives purportedly collected over $75 million from more than 400 naïve and elderly investors. Research revealed that the company was organized as a nonprofit and run from the Olives’ home at 1308 Buckingham Circle in Franklin Tennessee.

A CGA, (Charitable Gift Annuity) is a gift vehicle that falls under the category of Planned Giving. It encompasses a contract concerning a donor and a charity, where the donor hands over cash and/or property to the charity in exchange for a limited tax deduction and a lifetime sum of annual revenue from the charity. In the occurrence of the donor’s death, the charity keeps the remaining equity and all accrued interest of the original gift.

According to the SEC’s complaint against the couple filed in U.S. District Court for the Southern District of Florida, it is charged that the CGAs were issued primarily to benefit the Olives as well as additional third-party organizers and consultants, not the senior investors. Only a slight amount of the money that was raised was essentially guided to any charitable organizations. In the meantime, the Olives received in excess of $1.1 million in commissions and salary. They also tapped investor funds for their own usage. The couple has now been charged by the SEC with defrauding the seniors and dramatically overstating the amounts of the contributions.

The sentencing of an insider trading informant who succeeded in avoiding incarceration for his cooperation assisted in the SEC investigation.

We The People claimed that from June 2008 to April 2012 its operations were as a nonprofit organization however it was found that their CGAs were far from legitimate.

One example of public reports showed that it donated $21.8 million for the assistance of AIDS orphans in the country Zambia when in fact the supplies marked for that venture were donated by others, and the organization only donated a trivial amount of money to the third party that was the shipper of the supplies.

Their promotional materials were filled with several falsifications, omissions and oversights. They claimed that their CGAs were worth the “full” amassed value of the assets conveyed by investors when they weren’t. It appears that the method that they use to calculate the CGAs’ value were of substantially lesser than full value, since the organization skimmed off a substantial percentage of the actual value and retained it as a “charitable gift.”

It was also claimed by the organization that they had a 110% reserve of its total liabilities in trust in its continuing effort to “reinsure” its products through “highly rated” commercial insurance firms. As it turned out, this too was a falsehood. The organization had no restricted-access trust accounts, therefore any reserves at all. They never reinsured anything whatsoever.

Their marketing materials also failed to divulge that the Olives had been affiliated with several previous indictments and governing sanctions for retailing the equivalent type of phony products in the past. They were operating within an obscure Florida law that allowed them to sell CGAs in the state. The organization also neglected to reference the significant commissions that were paid to the couple as well as others, in the amount of several million dollars.

The SEC filed a separate complaint against the company’s in-house counsel William G. Reeves. The organization and Reeves both agreed to resolve the charges against them without admitting or denying the allegations. The settlements are contingent upon court approval.

We The People acquiesced to an ultimate judgment that will permit the selection of a receiver to safeguard the more than $60 million of donators’ monies still in possession of the company. Additionally, the final judgment also affords for repayment of ill-gotten gains and delivers injunctive relief under the antifraud and registration requirements of the federal securities laws.

Reeves agreed to a cooperation agreement with the authorities. The terms of his settlement demonstrate his assistance in the investigation and foreseen assistance in the imminent prosecution against the Olives. He also agreed to a suspension from practicing or appearing before the SEC for a period of no less than five years, and assented to a final judgment supporting injunctive relief under the requirements of the federal securities laws that were violated. It will be determined by the court at a later date if a monetary penalty should also be enacted against Reeves.

In the Denver Regional Office, Michael Cates and Ian Karpel conducted the SEC’s investigation. The proceedings against the Olives will be headed by the SEC’s Nicholas Heinke and Dugan Bliss.

Related Reading:
Definition a Charitable Gift Annuity: Click Here

SEC complaint against the Olives: Click Here

SEC complaint against the organization: Click Here

SEC complaint against Reeves: Click Here

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In a news release from the Department of Insurance, former full-time North Carolina resident Nathan Daniel Cooperman, 40, was charged with one count of insurance fraud and one count of obtaining property by false pretense in an announcement made by Insurance Commissioner Wayne Goodwin detailed at the time of Cooperman’s arrest in Manhattan on January 2nd.

It is alleged that Cooperman, who presently resides at 218 First Ave., New York, N.Y, submitted a claim to the Travelers Claims Hartford Auto Insurance Company on Aug. 25, 2007, claiming that an engagement ring valued at $50,000 was one of the articles stolen in the course of a burglary of his Durham, North Carolina home. Cooperman still owns and maintains the property according to investigators from the Department of Insurance.

Travelers settled the claim for just under the insured assessment of $50, 000, which was wholly paid to Cooperman. However, as the investigation continued investigators received what became a crucial lead relayed by Cooperman’s ex-fiancé that the claim was fabricated and she still had the ring in her possession. Investigators now allege that the ring was never stolen and Cooperman deliberately lied and made false and fraudulent claims to acquire the reimbursement for the insured value of the ring. Presently, no charges have been filed against Cooperman’s ex-fiancé and it hasn’t been affirmed whether she was an informed party to the false claim or not. But since it was she that informed the Department of Insurance of the alleged fraud it is has been assumed that she had no knowledge of the false claim at the time of its initiation. At this time, the name of Cooperman’s ex-fiancé has not been released.

Cooperman is now being detained by the New York City Police Department as he awaits extradition to North Carolina to face these charges and stand trial. It has not been specified if his ex-fiancé will testify against him.

Our search of the traditional informational criminal databases and public records Websites has not found any prior charges or convictions against Cooperman.

The Department of Insurance maintains a staff of 20 affirmed state law enforcement officers devoted to investigating and prosecuting assertions of insurance fraud as well as and bail bonding fraud. Since the time that Wayne Goodwin began his term as Insurance Commissioner in 2009, criminal investigators have established in excess of 14,000 grievances, resulting in more than 600 arrests, 300 convictions of a criminal nature, and there are presently more than 100 court cases awaiting prosecution. These efforts have provided more than $48 million in repayment and monetary retrievals for the victims.

It is estimated that 10 cents of every dollar paid in insurance premiums is responsible for the payment of falsified claims. If you feel you have knowledge and would like to report suspected fraudulent activity of this nature, please call the Department of Insurance Criminal Investigations Division at 919-807-6840. All callers may remain anonymous. Information for reporting false claims can also be found at their Website, located at: http://www.ncdoi.com

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Setting up a Pay Pal account for donations and using her Facebook page to publicize her idea a Bronx, New York woman allegedly set a fraudulent scam into motion claiming to be the aunt of one of the children slain in the Newtown, Connecticut. School massacre at Sandy Hook Elementary School.

On Thursday the FBI arrested Nouel Alba, 37, for allegedly amassing fraudulent “funeral fund” donations for one of the children killed in the Newtown school bloodbath; fictitiously claiming that she was the child’s aunt.

She was charged with making false statements to federal agents. She then faced a U.S. magistrate in Hartford, Connecticut, who released her on a $50,000 bond. The penalty of such a conviction could have her face a maximum of five years in prison and a $250,000 fine.

According to the FBI, Alba used her Facebook page, as well as telephone and text messages to ask for donations for the purported “funeral fund” of 6-year-old Noah Pozner, who was the first child to be buried of the twenty children and six adults massacred on Dec. 14 at Sandy Hook Elementary School in Newtown, Ct.

The complaint against her charges that she instructed potential targets to donate money to a PayPal account which was controlled and accessed by her. When she was contacted by FBI Special Agents who were in charge of scrutinizing fundraising scams associated with the Newtown tragedy, Alba untruthfully specified that she did not post any material related to the Newtown events on her Facebook account or solicit any donations. She also stated to them that she did not access her PayPal account at all recently. In spite of the preceding statement, Alba went on to tell agents that she immediately refunded any donations that she did receive.

FBI Special Agent in Charge Kimberly Mertz was quoted as saying “It is unconscionable to think that the families of the victims in Newtown and a sympathetic community looking to provide them some sort of financial support and comfort have become the targets of criminals.” She went on to comment “Today’s arrest is a stern message that the FBI will investigate and bring to justice those who perpetrate Internet fundraising scams, especially those scams that exploit the most vulnerable in their time of shared sorrow.”

Apparently, Alba is not a novice to these types of scams. According to The New York Post Alba also posted messages on the Web claiming she had founded numerous charities to help storm victims in the days after Hurricane Sandy hit.

But it turned out that the postings were packed with deceitful claims, as well as an invalid tax-ID number for one of the so called charitable organizations.

Later in the week during an interview with CNN before her arrest, Alba denied being involved in any scams whatsoever.
Alba’s latest alleged swindle was uncovered when NBC News reported last week that the ploy initiated within an hour from the time that the shootings took place. They said that a woman wrote on her Facebook page, “All we know is 18 kids have been killed … still no word on my nephew.”

NBC traced the Facebook account to Alba, and then went to her home and recorded an audio interview with her in which she denied writing the post as well as any requests for charitable contributions on her Facebook page.

“I’m disgusted by it,” the slain boy’s uncle, Alexis Haller, expressed to NBC News. “I think it’s disgusting behavior.”

Federal and state authorities “are actively monitoring the Internet and investigating multiple fundraising scams” stemming from the killings according to U.S. Attorney David Fein.

Alba’s broadly disseminated photograph was posted on the Scrapbook Stamp Society website on Friday but according to Sherri Baldy, owner and CEO, she is not associated with the organization as anything more than what she labeled a “crafter”. Alba joined the organization about a year ago but has not been active for most of the time, Baldy said.

Related Reading: Common Fraud Schemes (FBI Website)
Related YouTube Video: https://www.youtube.com/watch?v=KYcXus2bvjY
Video and more related comments on You Tube

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South Florida healthcare professionals including doctors and nurses were detained and charged with submitting fraudulent claims to Medicare; totaling in excess of two-hundred million dollars.

Federal judge Peter Palermo set bail on most of the defendants between $100,000 and $150,000 each. A total of 33 South Florida health care professionals were arrested as part of the ongoing federal investigation.

In federal court one of the accused members of the group seemed confused, saying to Palermo “I don’t even know what I’m charged with.” Palermo told him, “You’re charged in a conspiracy to receive health care kickbacks.” Some of the defendants will face a hearing on Friday. .

Also in Miami, Federal authorities said that three people were arrested at LTC Professional Consultants and charged in a scheme to swindle the system. Authorities said that another nearby Miami based healthcare facility; Professional Homecare Solutions was involved with fraudulent billing for home health care; totaling in excess of 74 million dollars.

Another facility: Hollywood Pavilion, a psychiatric hospital, was also said to have been involved in $67 million of suspected fraudulent billing. Five people affiliated with the hospital, including its chief executive officer, were charged in this case, one of the nation’s largest strikes ever against Medicare fraud. The defendants allegedly fraudulently billed Medicare paying bribes and kickbacks to patient brokers, then creating false documents to cover their tracks.

Medicare scams involving medical equipment and physical therapy has prospered in South Florida for years, making the area a national focus for Medicare exploitation.

At a press conference on Thursday, Attorney General Eric Holder said the case revealed an alarming trend of criminal attempts to steal billions of taxpayer dollars Holder labeled Thursday’s action against Medicare fraud one of the largest of its kind.
“The total includes over $230 million in home health care fraud, more than $100 million in mental health care fraud, and approximately $49 million in ambulance transportation fraud.

“Thanks to the outstanding work of federal authorities – and the assistance of state and local partners – as of today, most of these individuals have been arrested or surrendered,” Holder said.

“Such an act not only takes precious resources but it drives up health care costs and affects the strength of Medicare,” Holder said. “And it disproportionately victimizes some of the most vulnerable people in our society: the elderly and impoverished Americans.”

“Many of those arrested violated the sacred oath they took to be medical practitioners,” said Holder.

Holder further went on to say that the federal government was determined to be very aggressive in its ongoing crackdown on Medicare fraud.

The arrests revealed were a share of a nationwide take down of Medicare fraud suspects in Baton Rouge, La, Brooklyn, N.Y, Chicago, IL, Dallas and Houston, TX as well as Los Angeles, CA. More than 60 medical professionals were arrested in the operation and allegedly responsible for more than a total of $429 million in fraudulent claims. A federal strike force charged more than 90 people in total.

In addition to Thursday’s arrests, Health and Human Services Secretary Kathleen Sibelius mentioned that her agency used new authority under the federal health care law to stop future payments to many of the health care providers suspected of fraud.

She unwaveringly stated that the arrests target “criminal enterprises that have been lining their pockets with funds from the Medicare trust fund.”

“We’ve taken down enterprises that in some cases have been robbing taxpayers for years,” she said.

This week’s Medicare fraud bust follows another colossal takedown in May, when officials arrested more than 100 people and charged them with defrauding the government of more than $450 million.

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