Former Non-Profit Health Clinics CEO Sentenced to 18 Years for Funneling Millions in Grant Money to Private Companies

BIRMINGHAM – A federal judge today sentenced the former chief executive of two non-profit health clinics for the poor and homeless to 18 years in prison for funneling millions in federal grant money to private companies he formed to contract with the clinics. U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Roger C. Stanton, Internal Revenue Service-Criminal Investigation Special Agent in Charge Veronica Hyman-Pillot, and U.S. Department of Health and Human Services, Office of Inspector General, Special Agent in Charge Derrick L. Jackson announced the sentence.

U.S. District Judge Barbara Jacobs Rothstein sentenced JONATHAN WADE DUNNING, 53, of Hoover, for conspiracy, bank fraud, wire fraud and money laundering. The judge ordered Dunning to pay $13.5 million in restitution to the U.S. Department of Health and Human Services, the Health Resources and Services Administration, the Birmingham Financial Federal Credit Union and the non-profit health clinics Birmingham Health Care and Central Alabama Comprehensive Health.

Dunning orchestrated and led a criminal enterprise for his personal benefit that involved an extensive conspiracy and scheme to defraud HHS, HRSA, the non-profit clinics BHC and CACH, the credit union and others, out of more than $16 million over the course of seven years, the government said in its sentencing memorandum.

A federal jury in June convicted Dunning on 98 of 112 charged counts related to his involvement with BHC, CACH, BFFCU, and a group of for-profit businesses known as the “Synergy Entities.” Over the years, BHC and CACH received millions of dollars in federal grant funds through HRSA to further their missions of providing healthcare services to underserved populations.

“Jonathan Dunning formed Synergy Entities so he could bleed money away from non-profit clinics meant to provide medical care to the neediest of people and make himself rich by diverting millions of dollars into his personal accounts and businesses,” Vance said. “Motivated by greed, Mr. Dunning had no regard for the harm he caused others. He earned today’s prison sentence.”

“Heartless and appalling are just a few words to describe Jonathan Dunning’s actions,” Hyman-Pillot said. “The impact of his scheme extends beyond monetary loss. Citizens in need of medical attention were deprived of care due to his callous behavior. The judgment against Dunning is the consequence of his greed.”

“Stealing money away from programs that provided health care to poor and homeless people in order to live lavishly is an abominable crime,” Stanton said. “The FBI and its law enforcement partners are committed to joining forces and putting in the hours, and years if necessary, to stop this kind of crime.”

“This is one of the most outrageous fraud cases I have seen,” Jackson said. “Dunning embezzled millions of dollars in federal grant money that diverted desperately needed resources from those who need it most. Today’s sentencing sends a hard message to criminals like Dunning that they will be prosecuted to the fullest extent of the law, to include hard prison time and millions of dollars payable to U.S. taxpayers.”

Dunning was the chief executive officer of BHC and CACH for a period of time and left those jobs to run his for-profit businesses. Even after leaving his post as CEO, however, Dunning continued to exercise control over BHC and CACH. Between October 2008 and October 2011, Dunning served as president, board chairman and loan officer of the Birmingham credit union. From those various positions, he led the conspiracy that defrauded BHC, CACH, their funding agencies, and others.

“The need for medical care and clinical services for the homeless, indigent, and uninsured is well-known in this and other communities,” the government said in its sentencing memorandum. “Through the Synergy Entities, the defendant siphoned more than $16 million in money and property from two nonprofit health centers and the federal agency that funded them. He caused CACH to close its doors, drove BHC to the brink of bankruptcy, cost employees of CACH and BHC their jobs, precipitated the collapse of a credit union, and caused additional harm to others in the process. BHC and CACH had an essential mission of providing health care desperately needed by the communities they served. The defendant thwarted that mission and diverted the money and property to his personal benefit for one simple reason: greed.”

FBI, IRS-CID, and HHS-OIG investigated the case, which Assistant U.S. Attorneys Melissa K. Atwood, Tamarra Matthews-Johnson and John B. Ward prosecuted.


Fort Smith Man Pleads Guilty to Defrauding Investors and the Department of Health and Human Services

            Fort Smith, Arkansas – Kenneth Elser, United States Attorney for the Western District of Arkansas, announced that William Jackson Moates, Jr., age 49, of Fort Smith, Arkansas, pled guilty today to two counts of Wire Fraud and one count each of Mail Fraud, Theft Concerning a Program Receiving Federal Funds, Money Laundering, and Theft or Embezzlement from an Employee Benefit Plan. The Honorable Chief Judge P.K. Holmes, III accepted the plea in the United States District Court in Fort Smith.

The defendant, WILLIAM JACKSON MOATES, JR., and others owned several businesses operating in Fort Smith, Arkansas.  Those businesses included: Trilennium Financial Alliance, an investment, tax and accounting firm; T3Vest, an investment arm of Trilennium; Burrito Brothers, which operated a restaurant called Blaze’n Burrito; and B3NWCR, a credit card processing company operating under the name “Guardian.”

MOATES, with the assistance of others, solicited and received monies from investment clients and employee benefit plans that MOATES represented he would use to invest in various products to include annuities, precious metals, businesses, precious stones, art, automobiles and real estate.

MOATES established bank accounts for the investments, which gave him signature authority on the account and allowed the accounts to be linked to one another utilizing banking software provided by the bank.  This software gave MOATES and others the ability to make online transfers from one account to another.

From early-to-mid 2010 to January 2015, MOATES received investments from at least 25 different client investors, which were not invested as represented by MOATES.  Instead, those monies were diverted by MOATES to his own personal use, to pay back other investors, and by MOATES and others to the use of the various businesses.  MOATES used investor funds to renovate his home, take vacations, make credit card payments, make payments to personal iTunes and Amazon accounts, make contributions to local charitable organizations, and make home mortgage payments.  MOATES and others also diverted investor funds to pay operating and other business expenses for the businesses.

MOATES was also an agent of another corporation, Physicians Alliance.  Physician’s Alliance was a company that was set up by MOATES and others and initially funded with money received through an Advance Payment Agreement with the U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services.  The agreement provided for more than $2.5 million to be paid to Physicians Alliance beginning in February 2013, which could only be spent as authorized pursuant to an approved spending plan contained in the agreement.

As to Count Five, MOATES deposited $500,000 in investor funds in the form of a check, which caused an interstate wire to be sent from the Western District of Arkansas to the Federal Reserve Bank in St. Louis, Missouri, in order to settle the check.  MOATES did not invest those funds as he had represented to the client.

As to Count Eleven, MOATES sent an email from the Western District of Arkansas to an insurance brokerage firm in Topeka, Kansas, which had documents attached to it representing that an investment client had more than $7.5 million in annuities.  The documents were completely fabricated and were used to obtain an insurance policy for that client.

As to Count Twelve, MOATES obtained $200,000 in Federal monies given to Physicians Alliance pursuant to the advance payment agreement, which was not provided for in the approved spending plan.  This money was used to pay back an investment client that had given MOATES money that he never invested.

As to Counts Thirteen and Fourteen, MOATES mailed two annuity surrender requests for an investment client from the Western District of Arkansas to Austin, Texas, utilizing UPS, after representing to the client that he would invest the proceeds.  MOATES later received the proceeds from the surrender requests and never invested them as represented.  MOATES utilized $20,000 of those proceeds to make a credit card payment.

As to Count Twenty-Four, MOATES helped a small, family-owned pool company establish an employee benefit plan subject to ERISA.  The company initially funded the plan with a $150,000 check, which was given to MOATES.  MOATES established a bank account for the plan and provided the bank with a forged document purporting to have been signed by an agent of the company, which made T3Vest the plan sponsor.  This allowed MOATES to deposit the check into an account controlled by him, and he never invested the money on behalf of the plan.

The intended loss amount attributable to the defendant will be determined at a later date.  However, the defendant and the government agree that it is at least $3.5 million but less than $9.5 million.

Moates will be sentenced at a later date, and his sentence will be determined by the court after review of factors unique to this case, including his prior criminal record (if any), his role in the offense, and the characteristics of the violations. The sentence will not exceed the statutory maximum and in most cases will be less than the maximum. Each count of Wire Fraud carries a maximum penalty of 20 years imprisonment, a maximum fine of $250,000 or both; Mail Fraud carries a maximum penalty of 20 years imprisonment, a maximum fine of not more $250,000, or both; ; Theft Concerning ProgramsReceiving Federal Funds carries a maximum penalty of 10 years imprisonment, not more than $250,000 fine, both; Money Laundering carries a maximum penalty of 10 years imprisonment, a maximum fine of 250,000 or twice the value of the property involved in the transaction, or both; Theft or Embezzlement from Employee Benefit Plan carries a maximum penalty of 5 years imprisonment, not more than $250,000 fine, or both.

This case was investigated by the Federal Bureau of Investigation (FBI), Health and Human Services – Office of Inspector General, and the Department of Labor – Employee Benefits Security Administration.  Assistant United States Attorney Aaron Jennen is prosecuting the case for the United States.

Pharmacist in Crockett Co. Charged with 25 Counts of TennCare Fraud

NASHVILLE, Tenn. – A 76-year-old Crockett County pharmacist is charged with TennCare fraud involving billing the program for expensive medications that patients never received and the sale of bogus prescriptions for cash.

A Crockett County grand jury indicted Glen R. Bonifield after a six-month investigation involving the Office of Inspector General (OIG), the Tennessee Bureau of Investigation and the West Tennessee Drug Task Force – 28th District.

Bonifield is charged with 25 counts of TennCare fraud and one count of theft over $10,000.  He’s being held on $350,000 bond and is scheduled to appear in Crockett County Circuit Court on Friday, October 7, 2016.

“Law enforcement is working together across Tennessee to win the battle against TennCare fraud and prescription drug abuse, and this effort is a great example of that effort,” Inspector General Manny Tyndall said.

Johnie Carter, Special Agent in Charge of the 28th Drug Task Force, said the investigation began in 2015 with agents purchasing controlled pills and crack cocaine from pharmacy employees as well as passing bogus prescriptions with Bonifield in exchange for cash. A search of the pharmacy yielded approximately 35 pounds of controlled substances along with illegal weapons and alcohol. While processing that evidence, agents discovered large discrepancies in controlled substance accounting. Carter said some 195,000 controlled substance pills remain unaccounted for by inventory.

Agents received information that Bonifield was providing controlled substances to patients and billing TennCare for Abilify, an expensive antipsychotic which the patients say they never received.  Agents say that in one instance, TennCare was billed nine times for a total of $7,857.85 for Abilify, an antipsychotic medication used to treat schizophrenia. The patient was given a different medication and told that it was Abilify.

Carter says the investigation is continuing and branching out into other areas and people involved with the pharmacy and pharmaceutical diversion. The 28th Drug Task Force is made up of officers assigned full-time from the Crockett and Gibson County Sheriff’s Offices and the Humboldt, Milan and Trenton Police Departments.

The OIG, which is separate from TennCare, began full operation in February 2005 and has investigated cases leading to more than $3 million being repaid to TennCare, with a total estimated cost avoidance of more than $163.6 million for TennCare, according to latest figures. To date, 2,740 people have been charged with TennCare fraud.

Anyone can report suspected TennCare fraud by calling 1-800-433-3982 toll-free from anywhere in Tennessee, or visit the website and follow prompts that read “Report TennCare Fraud.”

Owner of Los Angeles Medical Supply Company Sentenced to 60 Months in Prison for Multimillion-Dollar Medicare Fraud Scheme

A Los Angeles man who was the owner of a medical supply company was sentenced to 60 months in prison for his role in a scheme that fraudulently billed more than $4 million to Medicare.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Assistant Director in Charge Deirdre L. Fike of the FBI’s Los Angeles Field Office and Special Agent in Charge Christian Schrank of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Los Angeles Region made the announcement.

Valery Bogomolny, 44, was convicted of six counts of health care fraud following a jury trial on Nov. 6, 2015, before U.S. District Court Judge S. James Otero of the Central District of California.  In addition to the prison sentence, Judge Otero ordered Bogomolny to pay $1,266,860.03 in restitution.

According to evidence presented at trial, between January 2006 and October 2009, Bogomolny used his company, Royal Medical Supply, to bill Medicare $4 million for power wheelchairs (PWCs), back braces and knee braces that were medically unnecessary, not provided to beneficiaries or both.  The evidence further showed that Bogomolny created false documentation to support his false billing claims, including creating fake reports of home assessments that never occurred.  PWCs were delivered to beneficiaries who were able to walk without assistance and Bogomolny signed documents stating that he had delivered equipment when, in fact, the equipment was not actually delivered.

The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Central District of California.  Fraud Section Trial Attorneys Ritesh Srivastava and Claire Yan are prosecuting the case.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,900 defendants who collectively have billed the Medicare program for over $10 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Former Philadelphia Doctor Sentenced To 30 Years For Running Pill Mill And Distributing Oxycodone Resulting In Patient Death

PHILADELPHIA – Today, a federal judge sentenced William J. O’Brien III, a former doctor of osteopathic medicine, to 30 years in prison for illegal distribution of controlled substances resulting in death and additional charges arising from O’Brien’s operation of a pill mill.  United States District Court Judge Nitza I. Quiñones Alejandro also ordered the defendant to serve five years of supervised release upon release from prison; pay restitution of $342,504 to the bankruptcy trustee in connection with his conviction for conspiracy to commit bankruptcy fraud; and pay a special assessment of $12,300. The court also entered a judgment of forfeiture.

“We are pleased with the substantial sentence imposed on the defendant in this case,” said United States Attorney Zane David Memeger. “Those doctors who distribute dangerous prescription drugs for no legitimate medical purpose need to be held fully accountable when their irresponsible conduct leads to death and addiction among patients.”

On July 14, 2015, a grand jury in Philadelphia charged O’Brien and nine codefendants in a 139-count Second Superseding Indictment (‘the indictment”) with conspiring to distribute controlled substances and other crimes. O’Brien was also charged with 121 separate counts of distribution of controlled substances, and distribution resulting in death. In addition to O’Brien, the defendants charged in the indictment included members and associates of the Pagans Motorcycle Club (“Pagans”), an outlaw gang known for violence and drug dealing. O’Brien and his paramour Elizabeth Hibbs were charged with conspiracy to engage in money laundering, conspiracy to commit bankruptcy fraud, and making false statements under oath in bankruptcy proceedings.

On June 28, 2016, after a six-week trial, a jury found O’Brien guilty of all charges in the indictment except for four distribution counts. All codefendants in the case have pleaded guilty and are awaiting sentencing.

The evidence at trial showed that O’Brien worked together with Pagans and their associates to operate a “pill mill” out of O’Brien’s medical offices. O’Brien wrote fraudulent prescriptions for oxycodone and other drugs, while the Pagans and their associates recruited “pseudo-patients” to buy the fraudulent prescriptions. O’Brien charged $250 cash for the first appointment to obtain prescriptions for controlled substances and $200 cash for each subsequent visit. Oxycodone (30 mg) was in high demand by drug dealers who could sell each pill on the street for $25 to $30. O’Brien sold prescriptions for these dangerous and addictive drugs to hundreds of “pseudo-patients.” After filling the prescriptions, the Pagans and their associates resold the pills on the street. The trial evidence showed that from March 2012 to January 2015, more than 700,000 pills containing oxycodone and other Schedule II controlled substances were distributed by O’Brien in furtherance of the conspiracy.  O’Brien generated for himself an estimated $2 million in cash proceeds from the drug trafficking conspiracy.

In connection with his operation of the pill mill, and as proven at trial, O’Brien intentionally distributed, for no legitimate medical purpose, oxycodone, methadone, and cyclobenzaprine, a muscle relaxer, to Joseph Ennis, 38, of Bucks County. Mr. Ennis had initially sought treatment from O’Brien following a car accident. On December 17, 2013, O’Brien prescribed oxycodone and methadone without a legitimate medical purpose, which combined with the cyclobenzaprine, led to Mr. Ennis’ death. Mr. Ennis died five days later on December 22, 2013 from the combination of these substances. At sentencing, Mrs. Bridget Shaw, Mr. Ennis’ sister, asked the Court to consider “the countless victims [O’Brien] fooled who are not here to represent themselves. The patients he turned into addicts for his profit and their families who are now left swimming in hospital bills or worse, wondering how this hell came to be . . . Rather than save lives, according to the oath he took, he chose to ruin them.”

The case was investigated by the Federal Bureau of Investigation, the Food and Drug Administration Office of Criminal Investigations, and the Department of Health and Human Services Office of the Inspector General. It is being prosecuted by Assistant United States Attorneys Mary Beth Leahy and David E. Troyer.

Ambulance Company Owner Sentenced To 10 Months In Prison

Bassem Kuran, 23, of Philadelphia, PA, was sentenced today to ten months in prison for making false statements to Medicare through VIP Ambulance, Inc., an ambulance company that Kuran owned and which he served as President. The Honorable Gerald J. Pappert, United States District Judge, ordered that upon Kuran’s release from prison, he must serve three years of supervised release, and further ordered Kuran to pay restitution to Medicare in the total amount of $66,901.93.

At his guilty plea hearing, Kuran admitted that through his company, VIP, he submitted false billings for the purported transport of three patients that VIP did not actually transport. He also submitted billings for patients who were able to walk and could travel safely by means other than ambulance and who, therefore, were not eligible for ambulance transportation under Medicare requirements. As a result of the fraudulent scheme at VIP, the Medicare program paid nearly $67,000 for fraudulent claims from VIP for these three patients.

The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, the Federal Bureau of Investigation, and the U.S. Department of Labor Office of the Inspector General. It is being prosecuted by Assistant United States Attorneys Mary E. Crawley and Paul W. Kaufman.

09-19-2016 New Jersey Medical Biller Settles False and Fraudulent Claims Case and Agrees to 5-Year Exclusion

On September 19, 2016, Susan Toy, entered into a $100,000 settlement agreement with OIG and agreed to be excluded from participating in Federal health care programs for a minimum of five years. On July 1, 2016, OIG issued a letter to Toy, proposing to impose a civil money penalty and program exclusion on her, pursuant to the Civil Monetary Penalties Law. The settlement agreement resolves OIG’s allegations that Toy prepared and submitted claims for services that were never performed. Toy, through her health care billing company, prepared and submitted claims for an obstetrics and gynecology physician practice located in New Jersey. Toy was responsible for preparing and submitting claims based, in part, on superbills identifying the services purportedly performed during a patient encounter. OIG contended that Toy prepared and submitted claims for Current Procedural Terminology code 91122 (anorectal manometry) for patient encounters where the procedure was neither performed nor identified as performed on the superbill. Senior Counsels David Blank and Tamara Forys represented OIG with the assistance of Paralegal Specialist Mariel Filtz.