CEO Pleads Guilty to $424 Million Conspiracy in Medicare Fraud Scheme

Ilene Eng
By Ilene Eng
September 8, 2019US News
CEO Pleads Guilty to $424 Million Conspiracy in Medicare Fraud Scheme
Department of Health and Human Services Secretary Sylvia Mathews Burwell speaks as she joins Attorney General Loretta E. Lynch, center, and other law enforcement officials to hold a press conference announcing the result of a national Medicare fraud takedown that took place in 36 districts of the country, on June 22, 2016 in Washington, DC. (Photo by Allison Shelley/Getty Images)

The owner and Chief Executive Officer of a telemarketing company is guilty of money laundering and conspiring to defraud Medicare to gain health care kickbacks.

Lester Stockett, owner of Video Doctor USA and Telemed Health Group LLC, and CEO of AffordADoc, pleaded guilty before U.S. District Judge Madeline Cox Arleo in New Jersey on Friday, in a statement from the Department of Justice (DOJ).

The 52-year-old admitted that he and his co-conspirators solicited illegal kickbacks and bribes from patient recruiters, pharmacies, and brace suppliers to convince doctors to order orthotic braces for those on Medicare and other insurance.

According to the DOJ, the health care provider and the receiver made the orders after only a short phone call.

Braces suppliers submitted more than $424 million in false and fraudulent claims to Medicare.

His cohorts were Floridians Creaghan Harry, 51, and Elliot Loewenstern, 56.

They marketed themselves as a telemedicine enterprise that “made revenue of ‘$10 million per year’ and ’20 percent profit’ from payments by beneficiaries who enrolled in a membership program and paid for the telemedicine consultations.” That was false because the revenue came through bribery.

“The extent of Mr. Stockett’s fraud and money laundering, literally, knew no bounds. From the U.S. to Latin America, the Philippines, and the Dominican Republic, the FBI followed the trail of ill-gotten gains back to Stockett and his conspirators. They stole precious federal funds earmarked to assist the elderly,” said Special Agent in Charge Gregory W. Ehrie of the FBI’s Newark Field Office.

Stockett and his co-conspirators were aware of the violation, but still paid the illegal kickbacks and bribes through companies and bank accounts they opened in the country and in the Dominican Republic. He also admitted that they hid the existence of the foreign entities by fabricating fake statements to financial institutions, and lying to the IRS.

They were involved in domestic and international money laundering from March 2016 to April 2019. They transferred a surplus of about $10 million in illegal kickback payments from a U.S. bank account to a Dominican Republic bank account. To hide this exchange, they transferred over $9.8 million from that same Dominican Republic bank account to the bank accounts of AffordADoc, Stockett’s company in the United States.

Stockett agreed to pay $200 million in restitution and forfeit assets and property.

Stockett’s sentencing is scheduled on Dec. 16. Harry’s and Loewenstern’s case is still pending with no trial set yet.

The DOJ concludes its statement by warning the public, doctors, and other medical professionals to contact the FBI hotline if they were involved with such schemes.

$48 Billion in Taxes Wasted on Improper Medicare-Medicaid Payments

Sen. Rand Paul (R-Ky.) in his latest “Waste Report” says more than $50.2 billion of taxpayer money has been wasted by the U.S. government on questionable initiatives, with the top money-waster identified as improper Medicare and Medicaid payments totaling $48 billion.

In the Summer 2019 edition of “The Waste Report” published by his office on Aug. 30, the senator identified government spending deemed as “wasted American tax dollars” on a variety of projects, including $466,991 spent on studying frog mating calls in Panama; $10 million spent on improving “green growth” in Peru; and more than $2 billion spent to convert an abandoned mental hospital into the headquarters for the Department of Homeland Security (DHS).

The senator’s office took on a more stern tone in commenting about the studies on the tungara frog of Panama, funded by the National Science Foundation (NSF).

“As of this writing our government has piled up a debt over $22 trillion, along with a 10-month deficit of $866 billion that is projected to rise to over $1 trillion by the end of the fiscal year,” the report read. “As we deal with this crisis and also wrestle with paying for actual priorities, do we really want government funding studies of a non-endangered frog’s mating habits?”

The Waste Report also questioned why the State Department is spending up to $100,000 to “expand and strengthen” Pakistan’s film industry.

“Why do Pakistanis need American tax dollars to further build its capacity?” Paul commented in the report. “Why are Americans responsible for paying to make Pakistani films better? Simply put, Americans are not responsible, but their State Department is intent on wasting their hard-earned money anyway.”

The Bulk of the Waste

The report noted that the Centers for Medicare and Medicaid (CMS) had by far wasted the most. The federal agency had spent in fiscal year 2018 (pdf) an estimated $48 billion in improper payments—payments that either were made in an incorrect amount or should not have been made at all.

This has been a recurring issue for CMS, with the Government Accountability Office (pdf) listing the federal agency as a “high-risk program” for wasteful spending every year since 1990.

Paul also noted that CMS itself predicts that its Medicare Hospital Insurance (HI) trust fund “will be entirely depleted come 2026.”

“Under even good circumstances, never mind the ones in which Medicare finds itself, both the program and the American people can ill-afford to be paying out nearly $50 billion in improper payments,” the report read. “Perhaps the real improper payment is the giant amount of mandatory spending Congress allocates to CMS, allowing Medicare and Medicaid to grow unabated.”

The report noted that Medicare ranks second in the federal budget, just behind Social Security. Medicare cost $582 billion in fiscal year 2018.

The Waste Report is in its fifth year of publication in a project called the Waste Book project, an initiative by Paul who describes it as “an ongoing project cataloguing egregious examples of waste within the U.S. government.”

“When it comes to wasteful spending, the federal budget is a target rich environment,” CEO of Adam Andrzejewski told The Center Square. “Senator Paul should be commended for doing the hard work of oversight. Identifying examples of waste creates downward pressure on spending, which is exactly what Washington needs.”

The Epoch Times contributed to this report

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