Tag Archives: Fraud

Houston-area woman gets 25 years in healthcare fraud scheme

Brenda Rodriguez, 58, of Richmond has been ordered to prison for 25 years. She was convicted of conspiracy and aiding and abetting healthcare fraud following a three-day trial in January 2019.



Rodriguez owned and operated the QC Medical Clinic in Richmond. She paid doctors to approve patients for home health care regardless of whether it was medically necessary. Rodriguez then sold those approvals to various corrupt home health care providers. These providers then billed Medicare for services that were either unnecessary or never provided.

Ultimately, the providers billed Medicare for over $11 million as a result of patients Rodriguez provided.

Three others have pleaded guilty in this case. However, one of them,  John Ramirez, M.D was sentenced to 25 years following his conviction for his role in a $25 million medicare fraud at a different clinic in SW Houston.

Nenna Iro and Magdalene Akharamen, owners of Houston area home-health agencies, each pleaded guilty to conspiracy to commit healthcare fraud in purchasing Plans of Care and other signed medical documents from QC Medical.  Iro was sentenced to seven years, while Akharamen got three years.

 

Houston oil and gas investor admits to fraud

Chris Bentley, who founded Bellatorum Resources in 2016, has shut the business and admitted to fraud. Based in Spring, TX, Bentley raised about $31 million from 150 wealthy individuals to buy mineral rights in Texas shale fields.



Unusually, he sent an email on April 9 to the investors admitting to acquiring ‘bad’ and ‘non-arms length’ deals, overspending on corporate overheads and failing to hire professionals to advise him. He has turned himself into authorities, though he has not been charged with anything yet.

Bentley is a former Marine, who became a landman (someone who negotiates to acquire oil and gas or mineral leases) in 2014. Only two years later, he started his own investment fund. In all, he raised eight funds. For the last fund, Bentley aimed to raise $100 million. He admitted that he was trying to raise funds to pay distributions on his earlier funds. Instead he only raised a couple of million. Much of that money was spent on expenses.

It’s not clear whether Bentley used the funds to enrich himself. However, it appears that all the $31 million raised has been lost.

https://finance.yahoo.com/news/exclusive-texas-energy-fund-shuts-102813500.html

 

Autism service provider agrees to pay $2.7 million to resolve fraud allegations

Dr. Domonique Randall, the former owner of The Shape of Behavior (“The Shape”), a Texas-based provider of therapy services for children with autism, has agreed to pay $2.7 million to resolve allegations the company submitted improper claims to TRICARE. TRICARE is the health care program for uniformed service members, retirees, and their families.



Dr. Randall lives in Spring, TX. Humana, TRICARE’s managed care support contractor, uncovered alleged improper claims. The settlement resolves allegations that nine separate TSOB locations submitted claims to TRICARE that

  • misrepresented the identity of the actual rendering providers
  • medical records could not substantiate
  • individual providers billed excessive hours on individual dates of service.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Blue Sprig Pediatrics, also based in Houston, acquired The Shape in October 2018. At that time, The Shape had 22 clinics in four states, including 19 in Texas.

 

https://www.justice.gov/usao-sdtx/pr/former-children-s-autism-service-provider-pays-over-27-million-resolve-health-care

Houston Pharmacy owner and Accountant charged with $134 million fraud

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.

 

https://www.justice.gov/usao-sdtx/pr/pharmacy-owner-and-accountant-indicted-134m-health-care-fraud-scheme

 

Four charged in $32 million healthcare fraud scheme

A medical director, operator and two unlicensed practitioners have been charged for their alleged role in a $32 million healthcare fraud scheme.



Farrah Forough Farizani, D.O, was the medical director of Hillcroft Physicians, a family practice in SW Houston. Her husband, Hamid Razavi was its operator. Elie Hajjar and Juan Acuna were unlicensed practitioners there.

Farizani, Razavi, Hajjar, and Acuña allegedly misled patients and staff to believe that Hajjar and Acuña were licensed to practice medicine in Texas.

The scheme began in 2010 and continued through 2017. Hajjar and Acuna examined, diagnosed, treated and prescribed prescriptions for patients. However, the practice billed Medicaid and Medicare as if Farizani had provided the services, even if, sometimes, she was out of the country.  Medicaid and Medicare were billed more than $32 million and paid out over $12 million.

The indictment charges all four with one count of conspiracy to commit health care fraud. Farizani, Razavi and Hajjar are also charged with five counts of making false statements relating to health care matters.

https://www.justice.gov/opa/pr/four-charged-32-million-health-care-fraud-scheme

Houston woman charged with $3.6 million PPP loan fraud

LaDonna Wiggins, 37, has been charged with bank fraud and money laundering in relation to two Paycheck Protection Program (PPP) loans. She received $3.6 million and allegedly used these funds to buy two houses, multiple vehicles and luxury goods.



She made two loan applications for her businesses Wiggins & Graham Enterprise, dba ‘The Concession Stand and Pink Lady Line. In May 2020, she submitted an application for the first business stating she had 108 employees. The application for the second business was made the following month. She stated that she had 107 employees for that business.

Both loans were funded by Kabbage, Inc, an online funding company for small business owners.

Some of the funds were allegedly spent as follows;

  • $688k for a house in Cypress, Texas
  • $248k for a house in Katy, Texas
  • $79k for a 2020 Range Rover
  • $52k for a 2020 Nissan Murano
  • $63k at Chanel
  • $188k on a new swimming pool
  • $180k on construction work
  • $6k on an aquarium and tropical fish
  • $200k to buy an unnamed business

If convicted, Wiggins faces up to 30 years in federal prison and a possible $1 million maximum fine. The government also intends to seize the remaining cash in her bank accounts (approx. $0.5 million), the two houses and the Range Rover.

Wiggins indictment – pdf

https://www.justice.gov/usao-sdtx/pr/local-woman-charged-fraudulently-receiving-millions-under-cares-act

You can read about the other Houston-area residents charged with PPP fraud;
Six-houston-area-men-charged-in-16-million-ppp-loan-fraud/
Houston-woman-charged-with-1-9-million-ppp-loan-fraud/
Houston-man-charged-with-spending-covid-relief-funds-on-lamborghini/
Houston-funeral-director-charged-with-ppp-fraud/
Another-houston-man-charged-with-ppp-fraud/

Houston scientist settles grant fraud allegations

Dr. Rouzbeth Shahsavari has agreed to pay nearly $150,000 to resolve allegations that he and his company defrauded the National Science Foundation (NSF) and the Navy.



Dr. Shahsavari is the owner and chief scientist at C-Crete Technologies Ltd in Stafford, SW Houston. He started his company while completing his PhD at Massachusetts Institute of Technology (MIT).  The company is developing new uses for advanced materials using nanotechnologies and advanced computations.

The company applied for grants to NSF and the Navy in 2015 and 2016. One of the conditions of any grant was that the applicant must have a subaward agreement with a collaborating research partner. Dr. Shahsavari said he had such an agreement with Rice University when, in fact, he did not. (He is, though, an Assistant Professor at Rice).

The company also failed to notify Navy personnel that their designated principal investigator had stopped working for the company almost three months before the grant was awarded.  Assuming the allegations were true, in both circumstances, the company was ineligible to receive the $147,589 grant.

The claims resolved by the settlement are allegations only. There has been no determination of liability.

https://www.justice.gov/usao-sdtx/pr/houston-scientist-settles-grant-fraud-allegations

Energy trader pleads guilty for role in $1m insider trading scheme

John Ed James, 51, of Katy, has pleaded guilty to conspiracy to commit commodities fraud and wire fraud for his role in an insider trading scheme.



James was a natural gas trader and owner of his own trading firm. He worked with Marcus Schultz, who was a natural gas trader at a large company in Houston. Two other unnamed individuals, a broker and an energy trader, were also involved in the scheme.

Instead of trading futures contracts openly and competitively, Schultz disclosed to James and the unnamed broker material non-public information that he would be willing to accept on behalf of the company. The broker would arrange offsetting trades with James and the other individual. The group would net the difference between the price of these trades and the price that would have been obtained in arms-length transactions. Illicit gains totaling $966,403 were split among the group.

The scheme began in 2013 and ran until June 2016.

Schultz pleaded guilty in July 2020 and is scheduled to be sentenced in June 2021. In September, the Commodity Futures Trading Commission ordered Schultz to pay a penalty of $669,750 and disgorge $427,067 in ill-gotten gains. If the Federal court imposes fines or penalties on Schultz, the CFTC amounts would be offset.

Sentencing for James is set for April 2021.

The case is the first time that the Department of Justice has prosecuted insider trading in the commodity markets since the relevant law was passed as part of the Dodd-Frank Act in 2011.

https://www.justice.gov/usao-sdtx/pr/former-natural-gas-trader-pleads-guilty-role-commodities-insider-trading-scheme

Famous Houston pastor gets 6 years for $3.5 million fraud

Kirbyjon Caldwell, a famous Houston pastor, has been sentenced to 6 years in prison for conspiracy to commit wire fraud. Caldwell was ordered to pay restitution in the amount of $3,588,500, as well as a fine of $125,000.



Mr Caldwell built up Windsor Village United Methodist Church in SW Houston into a 18,000 member mega church and was a spiritual advisor to President Bush. He offered the benediction at both his inaugurations and officiated at the wedding of President Bush’s daughter, Jenna. He was also a spiritual advisor to President Obama.

Former Investment Banker

Caldwell is a former director at Continental Airlines (until 2011) and NRG Energy (he left the board one month after he was indicted in 2018).  He was also a minority owner in the Houston Texans until recently. Prior to becoming a pastor he was an investment banker on Wall Street and worked for a bond firm in Houston. He has a master’s degree from Wharton School of Business.

The fraud scheme

Caldwell was charged along with Gregory Smith, a Shreveport-based investment advisor. Smith pleaded guilty in July 2019. Smith was also sentenced to 6 years back in November.

Between April 2013 and August 2014, Caldwell and Smith raised $3,588,500 from 29 investors through a fraudulent offer and sale of various pre-1949 Chinese bonds. Caldwell and Smith falsely represented to these investors that the bonds were safe, risk-free, worth tens, if not hundreds of millions of dollars and could be sold to third parties. In reality, the bonds have no investment value.

The Chinese government doesn’t recognize the validity of bonds issued prior to the communist takeover of 1949. It has never paid out on any of these bonds, except once in 1987. As part of the negotiations over Hong Kong, the Brits received 36 cents on the dollar. The US courts have generally said that the People’s Republic of China can assert sovereign immunity in not paying these debts.

Caldwell kept approximately $0.9 million and used it to pay down personal loans, mortgages and credit cards. Smith received $1.1 million of the total monies raised.

Caldwell surrendered his clergy credentials before pleading guilty in March 2020.

At the sentencing hearing, Caldwell’s lawyers presented evidence that he has repaid his victims more than $4 million. They also pleaded for him to be confined to his home, rather than going to prison, citing his ongoing treatment for prostate cancer, as well his hypertension and the threat COVID-19 poses for those incarcerated with underlying conditions.

Caldwell was ordered to report to the Bureau of Prisons on June 22, 2021.

https://www.justice.gov/usao-wdla/pr/former-houston-texas-pastor-sentenced-federal-prison-his-role-multimillion-dollar

Houston Doctor pleads guilty to receipt of kickbacks

Dr. Ghyasuddin Syed has pleaded guilty to receiving $475,992 in kickbacks from the owner of a Houston toxicology laboratory. Dr. Syed operates a pain management clinic in Baytown.



Uday Shah, who owned and operated several labs, originally pleaded guilty in October 2019.  He was sentenced to 24 months’ imprisonment. Timothy Andrews of Deer Park, who worked as a marketer for Mr Shah, pleaded guilty in June 2019. He got 15 months.

The scheme ran from November 2014 through August 2017. Mr Shah paid kickbacks to Dr Syed, though the payments were disguised as rent payments from Mr Shah to entities controlled by Dr. Syed or his wife, Shazana Begum. In return, Dr. Syed referred urine drug testing to Shah’s labs, including Pinnacle Laboratories in Lexington, Kentucky.  Medicare paid the labs $325,739 to which they were not entitled.

Dr. Syed is scheduled to be sentenced in March 2021 in the Eastern District of Kentucky.  He faces up to five years in prison for the conspiracy to violate the Anti-Kickback Statute, and a maximum fine of $250,000.

Dr. Syed’s wife, Shazana Begum, has entered into a pretrial diversion agreement wherein she admitted her role in the offense. She agreed to be under the supervision of the United States Probation Office for 12 months, to pay restitution of $325,739 along with Shah and Andrews, and to perform community service.

It appears that the case was first brought to the attention of authorities by a lawsuit filed in 2015 by an employee at the laboratory in Kentucky. However, the lawsuit remained sealed until September 2019.

https://www.justice.gov/usao-edky/pr/toxicology-lab-owner-and-marketer-sentenced-payment-kickbacks-doctor-pleads-guilty