Mohamed Mokbel and Fathy Elsafty have been charged with conspiracy to commit healthcare fraud. Mr. Mokbel is the owner of several Houston area pharmacies, while Elsafty is his accountant.
Mr. Mokbel was the CEO of 4M Pharmaceuticals, the parent company for several retail pharmacies that operated in Houston, Fort Worth, Florida and elsewhere. He also allegedly had ownership in the subsidiary pharmacies. Mr. Elsafty served as 4M’s accountant and tax preparer.
The indictment alleges that 4M functioned as an outbound telemarketing call center that solicited Medicare, Medicaid and commercial insurance patients nationwide. Call center employees would offer patients medically unnecessary diabetic supplies and topical creams. In many instance, 4M would bill the patient’s insurance plan, even if the patient had refused the solicitations.
4M would also target doctors by sending fax requests for prescriptions that patients often did not authorize. Some prescription requests were sent for dead patients.
The scheme ran from December 2013 to March 2020. 4M collectively received over $134 million in payments from Medicare and others.
The funds were allegedly used, in part, to pay for Mokbel’s $1.5 million residence in the Galleria area, $15 million in gambling and casino expenses and purchases and payments for a Ferrari and a Bentley. Mokbel also transferred and controlled over $6 million in health care fraud proceeds in certificate of deposit accounts at banks, according to the allegations.
Mokbel and ElSafty are charged with one count of a conspiracy to commit healthcare fraud, three counts of healthcare fraud and four counts of money laundering. All carry a possible prison sentence of 10 years in prison and a $250,000 maximum fine. The use of telemarketing to target people over 55 as a means to commit healthcare fraud carries an additional penalty of 10 years.
Previous trial and acquittal
In 1999 Mr. Mokbel was charged, with others, with money laundering and conspiracy in relation to a case where individual cans of infant formula had been purchased and then repackaged into trays for resale to wholesalers.
It was alleged at trial that some of the cans had been stolen. A jury convicted the defendants. However, an appeals court overturned the verdict because the evidence supporting the stolen goods charge was insufficient to meet the $5,000 minimum value threshold that applies to interstate transportation of stolen goods. Mr. Mokbel was cleared of all charges.