Health Care Fraud! - Wheelchair Fraud Out Of Texas - Another White Collar Crime Comments Ethics Speaker Chuck Gallagher

Four folks have been convicted in a program to defraud the Medicare and Medicaid program through what has become widely known as a “motorized wheelchair fraud” scheme.

Carmelita Thurman, 35, who jointly ran three durable medical equipment (DME) companies in the Houston area pleaded guilty today to conspiracy to commit health care fraud and health care fraud in a hearing before U.S. District Judge Nancy F. Atlas. Thurman is the last of four charged by indictment for their involvement in a scheme to defraud Medicare and Medicaid. Michelle Ann Ray, 40, pleaded guilty last week. Terri Ann Orozco, 44, pleaded guilty early this month and Sharon Thomas, 41, pleaded guilty in October 2007.

Thurman, Orozco and Ray, jointly ran three DME companies in Houston: Twice as Nice Medical Supply, Top of the Line Medical Supply and Heart to Heart Medical Supply. From 2002 through 2004, the three companies billed Medicare and Medicaid primarily for motorized wheelchairs and related accessories for approximately $7 million and received $3.8 million in payments on the claims, but actually delivered less expensive scooters to the beneficiaries. The beneficiaries, who could sit, stand and walk, did not meet the medical necessity requirements to receive a motorized wheelchair and mostly did not use or need the scooters delivered by defendants.

Thomas, 40, by and through her Houston company called S&L Personal Care, bought fraudulent prescriptions for motorized wheelchairs from various Houston physicians, most of whom have since been convicted of health care fraud. Thomas billed her prescriptions through the other defendants’ DME companies.

During the conspiracy, the Medicare reimbursement rate in Houston, Texas, for a K0011 motorized wheelchair and related accessories was approximately $4,700; with the Medicaid 20 percent copay, the paid amount was close to $6,000. Both a motorized wheelchair and a scooter cost approximately $800 to $1,000 wholesale.

All four defendants face a statutory maximum penalty of 10 years imprisonment and a $250,000 fine for the health care fraud conviction and the conspiracy to commit health care fraud convictions and will be subject to a court supervision following release from prison for a maximum term of three years. Sentencing hearings for each of the four defendants have been set for various dates this spring.

Outcome: As an ethics and white collar crime speaker (www.chuckgallagher.com), I often talk to groups about the Truth about Consequences. In this case, the choices made will have far reaching effects. Likely, each will face an active prison sentence along with substantial restitution. Trying to bilk the government for money that is ill gotten is just down right stupid. I know from personal experience, that the minor gains that one thinks they get from poor choices never compare to the consequences that are suffered as a result of those choices.

Your thoughts?

Health Care Fraud - Texas Man Pleads Guilty - Comments by Chuck Gallagher Ethics Keynote Speaker

BRIAN KEITH WILSON entered his guilty plea to health care fraud in Texas on January 29th, 2008.
According to information presented in court, Wilson was CEO of Assessment Professionals, a drug and alcohol counseling center in Beaumont. From September 2004, until August 2005 Assessment Professionals, owned by Joseph Armstrong, submitted over 50,000 claims to Medicaid for individual and group therapeutic sessions allegedly conducted and provided to Medicaid-eligible adolescents for drug and alcohol abuse. Under the direction of Wilson, employees of Assessment Professionals would obtain children’s Medicaid numbers through various means, and then use those numbers to fraudulently bill Medicaid for drug and alcohol counseling.

Question: Was this the brainchild of the CEO? Was it done at the direction of the owner - Armstrong? And, what did either get out of it personally?

Wilson could receive up to 37 months in federal prison, must pay restitution of $347,161.89, and must provide assistance with the investigation and prosecution of others involved with Assessment Professionals. A sentencing date has not been set. Assessment Professionals’ counselors, Nicola Holtzman, Jimmie Admas, and Armando Carmona, and owner Duane Armstrong are still awaiting trial.

Prediction: Faced with over three years in prison and a substantial restitution order, Wilson will cooperate in order to convict those awaiting trial. For his efforts the federal prosecutor might suggest a downward departure from the minimum sentencing guidelines. However, Wilson will likely spend time in prison.

Every choice has a consequence. Unfortunately, it appears that Wilson is just beginning the consequence phase of his white collar crime actions. As a business ethics speaker (www.chuckgallagher.com), I see too many times issues that arise from choices that people knew were wrong to begin with. It is true - you reap what you sow.

Texas Preacher Convicted of White Collar Crime - $500,000 Worth! What Happened To Thou Shalt Not Steal? Comments By Ethics Speaker Chuck Gallagher

While I speak nationwide on white collar crime, fraud and ethics - I must say you don’t see this one often. I had to take a second read.

Reverend James Cornell Clark - a former Lubbock pastor - was convicted on 41 counts of various indictments charging him with various offenses related to defrauding the federal government of more than a half million dollars. Likewise, Clark was also found guilty in another trial of importing an alien for immoral purposes. Apparently, James Clark forced a Kenyan exchange student into prostitution.

James Clark was heard on tape; telling the young woman that she would have to provide sexual favors in return for what he had done for her after bringing her to Lubbock from Kenya. Apparently, Clark had paid for the young woman’s living expenses and college tuition at South Plains College and was now expecting something in return.

Sex and theft - Clark is working on breaking commandments in a big way!

Specifically the jury convicted Clark on 23 counts of mail fraud, five counts of making false statements or entries, three counts of possession of false papers to defraud the U.S. and 10 counts of money laundering. The entities that were charged in the superseding indictment, Mt Vernon Faith-In-Action Outreach Project, Mt Vernon United Methodist Community Development, Trinity Christian Outreach Ministries, Mt Vernon United Methodist Church Community Outreach Corporation and Clark Evangelistic Outreach Ministries, Inc., were also all convicted on money laundering charges.

I can’t begin to imagine how the members of Clark’s congregation must feel. Hopefully, they will have the foresight to know that the Bible is right - you do reap what you sow - and in Clark’s case his consequences will be severe.

The government presented evidence at trial that from April 2003 until April 2006, Clark negotiated Summer Food Program contracts and agreements for the Mount Vernon United Methodist church as being the non-profit corporation entity that was the sponsor of the program. The purpose of the Summer Food Program is to provide nutritious meals to needy children when schools are normally closed and the National School Lunch/School Breakfast Programs are not operational. The program is administered by the Texas Health and Human Services Commission and funded by the U.S. Department of Agriculture. Clark created the five charged corporate and business entities under his control, to receive funds for the Summer Food Program that allowed him to convert federal monies to his own personal use. Clark used these stolen federal monies to purchase his residence, vehicles and rental property; remodel his personal residence; and pay personal tuition.

Every choice has a consequence. Afraid in this case, Clark won’t see freedom for a long time to come.

Your thoughts and comments?

Ethics and Fraud Speaker Chuck Gallagher - signing off…

Stealing From Preachers - 69 Year Old Man Convicted in Dallas Texas - Comments By White Collar Crime Speaker Chuck Gallagher

The crime was theft - in its purest sense. Stanley Leitner, age 69, from Argyle, Texas was found guilty after little more than two hours of jury deliberation. His crime - an investment fraud scheme where he defrauded more than 100 victims, many of whom were pastors, their friends and families.

According to the U.S. Attorney’s news release:

Leitner was convicted on six counts of wire fraud, one count of securities fraud, one count of failing to disclose compensation for promoting a security, 13 counts of money laundering, and six counts of engaging in illegal monetary transactions. Each wire fraud count carries a maximum statutory sentence of 20 years in prison and a $250,000 fine. The securities fraud conviction carries a maximum statutory sentence of five years in prison and a $250,000 fine and the failure to disclose compensation for promoting a security count carries a maximum statutory sentence of five years in prison and a $250,000 fine. Each money laundering count carries a maximum statutory sentence of 20 years in prison and a $500,000 fine. Each count of engaging in illegal monetary transactions carries a maximum statutory sentence of 10 years in prison and a $250,000 fine. Leitner is scheduled to be sentenced by Judge Fish on April 22, 2008

Now, facing all those indictments, I am amazed that Leitner didn’t seek to plead guilty and forgo the jury trial. Surely he could not have thought that a jury would find him innocent? Hum, maybe he’s like Wesley Snipes (who’s on trial for tax fraud) and thought he didn’t understand what he was doing. Right!

From April 2004 to July 2005, Leitner was President and CEO of Megafund Corp., an entity he created to solicit investors to participate in (what he called a “High Yield” investment program. Leitner took the money - pooled it - and sent it to another individual’s overseas bank account in the Antilles. During this short fraudulent stint, Leitner raised more than $15 million from investors.

Leitner was found guilty of devising and executing a scheme to defraud his investors by making representations about the trading program he knew were not true, and not telling them material information he knew to be true, which led the investors into believing that there was little or no risk of losing the invested funds. In addition, Leitner failed to inform investors that he was not transferring to the program some of the funds investors sent to him, but instead was using those monies to fund several personal ventures and projects, including, among other things, a movie.

As a keynote speaker(www.chuckgallagher.com), I talk to audiences nationwide about choices and consequences. Leitner is soon to face the consequence of his misguided actions. Based on the sentencing guidelines and the magnitude of the crime, I would expect that Mr. Leitner will see his last days on this earth in prison. Every choice has a consequence. My presentations deal with the Truth About Consequences and in this case…Leitner’s choices will yield consequences that I doubt he ever imagined.

Your thoughts?

Wesley Snipes - And the Jury’s Still Out! But What Does Conspiracy Mean?

January 30th has passed and the jury still has reached no verdict in the Wesley Snipes case. What does that mean? Probably it means they are doing their job!

Senior U.S. District Judge William Terrell Hodges announced that jurors had a question. He displayed a copy of jury instructions marked with yellow highlighter and red marks, and told the lawyers present that the jury had a question about the meaning of the term “conspiracy.”

Snipes, Douglas Rosile and Eddie Ray Kahn are each charged with one count of conspiracy to defraud and one count of aiding and abetting the making of a false and fraudulent claim as part of an alleged tax fraud scheme. Snipes also is charged with six counts of willfully failing to file federal income tax returns between 1999 and 2004.

Because none of the defendants were in the courtroom Wednesday afternoon, Hodges told the attorneys he would study the matter overnight and address with them the question of what to tell the jury Thursday morning.

The following was written in the White Collar Crime Prof Blog:

There are many levels to this trial. On the surface we see the courtroom battle with many years without tax returns, but also a question as to why he may not have filed them. Was it a conspiracy or was there a legitimate question? We also see a case in closing arguments while outside the courthouse an election is occuring. And finally we see an all-white jury coming from an all-white venire deciding the guilt or innocence of Snipes.

Commentary: I don’t see, in this country, whether you like the law or now, how one can be confused as to whether you are to file tax returns and pay taxes on income received. For years Snipes wasn’t confused. He earned money and paid taxes - just like any good citizen of this country. Then he met Kahn. Now I fear he’ll experience the Wrath of Kahn…by going to prison. (Could be wrong - doubt it)

What changed? Did Snipes somehow gain amnesia about this past earnings and taxes paid? Did he feel somehow that the laws had changed and he was no longer required? Or, did he fall prey to the likes of Kahn and his army of tax evaders (oops…I mean tax patriots)?

My bet is by week end we will see a guilty verdict on one or more levels.

Your comments?

Mortgage Fraud - FBI Announces 14 Companies Under Investigation - No Great Surprise Says Ethics Speaker Chuck Gallagher

In a CNN report it was announced that the FBI has opened criminal investigations of 14 companies related to sub-prime mortgage loans. The following is quoted from the CNN report:

Neil Power, chief of the FBI economic crimes unit, attributed the increase “to good old-fashioned greed.”

“On insider trading, we’re looking in some cases at whether executives were aware that the value of their holdings would be going down and the executives traded on that information,” said Power.

“On accounting fraud, we’re looking at housing developers who may have reported cash reserve accounts to reflect falsely inflated values.”

Over the past several months, I have been reporting multiple instances of mortgage fraud - convictions and sentences that followed. With the flow of free (or at least it seemed that way) money - it was inevitable the “greed” as Neil Power put it, would kick in. And, kick-in it did.

According to senior officials the number of suspicious activity reports jumped from 35,000 in 2006 to 48,000 in 2007 and for 2008 is on track to exceed 60,000. According to FBI reports (per CNN) 56% of the cases had losses of more than $1 million.

Officials identified the states that are the “top 10 mortgage fraud hot spots” as California, New York, Texas, Florida, Georgia, Utah, Illinois, Indiana, Ohio and Michigan.

Surprise NO! Considering that just this past week a Pennsylvania mortgage broker was sentenced to 3 years for a fraud scheme and a Texas Broker/Real Estate Developer plead guilty to bank fraud for his real estate activities, it is going to be a long time before the issues related to mortgage fraud completely surface.

I would not be surprised if there are multiple restrictions and controls put in place so that this type of greed and the consequences that follow can be avoided in the future.

As a business ethics and white collar crime speaker (www.chuckgallagher.com) , I address groups routinely about the Truth About Consequences. Every choice has a consequence and, today, we are just exposing the tip of the iceberg when it comes to mortgage fraud.

Wesley Snipes - Patriot or Plain Idiot?

How many times did I hear in federal prison, people convicted of tax fraud claiming that they were just patriots imprisoned by a government gone amok. Fact was - they were in prison for their misguided belief. Considering that today the closing arguments were being made in the Wesley Snipes tax fraud case, we will likely see either a conviction (my prediction) or the miracle of the century - Snipes acquittal.

Federal prosecutor M. Scotland Morris portrays Wesley Snipes as a common criminal with worked with idiots like Eddie Ray Kahn to defraud the government of their duties as a citizen to file and pay their taxes. While Robert Barnes, Snipes attorney, portrays Snipes as a patriotic American who was legitimately seeking information about his tax liability. (If the jury buys that one - well, there’s some outstanding property in the Everglades for sale.)

According to Rick Cundiff with the Star-Banner:

Prosecutor Morris went first, telling jurors Snipes conspired with Kahn and Rosile to file a fraudulent refund claim for $7.3 million in taxes on his 1997 return, and sought to illegally deny his ongoing tax liability for 1999 through 2004.

“Nobody likes paying taxes. Nobody,” Morris said. “But paying taxes is the privilege we pay to live in a civilized society … That’s what this case is about - three men who believe they are above the law. They’re not above the law. Tell them that.”

Barnes invoked the Founding Fathers and said the Internal Revenue Service deprived Snipes of his civil rights by not responding to his letters seeking information.

“It may have been protest,” he said of filings by Snipes and by Kahn on Snipes’ behalf. “Protest is not criminal. It may have been disagreement. Disagreement is not criminal. It may have been frivolous. Frivolous is not fraud.”

Barnes urged jurors to acquit Snipes in the name of American freedoms.

In the name of American freedoms? What American freedom is it that allows us to avoid filing tax returns? What American freedom is it that allows us to avoid paying income taxes on the money we earn? What is Barnes talking about?

“The liberty to ask questions … the liberty to challenge your government. The liberty to engage your government. These liberties are American liberties,” Barnes said. “The Liberty Bell may be cracked in Philadelphia, but it can still be heard in Ocala.”

The last time I checked, challenging your government was perfectly legal as long as it was done through the legal legislative or judicial process. Here Snipes is taking the judicial road to challenge something he will lose and ultimately end up paying the price with his freedom. Sorry, but that to me is the mark of a plain idiot.

Every choice has a consequence. Snipes (unless I’m dramatically wrong) will pay the price of his choices with his freedom and while he spends time in federal prison, perhaps will come the knowing that he was duped by the likes of Kahn. But, maybe not, maybe they’ll share a cell together so they can experience the joy of knowing they took a stand for the civil liberties of us all.

For now, I’m going to do my tax return.

Senator Grassley To Ministries - You Better Cooperate! Additional Information Sought from Benny Hinn, Creflo Dollar, Eddie Long and Others

When the Senator from Iowa asks for information over which he has authority - well, let’s put it this way, “Render unto Caesar what is Caesar’s” and in this case - Grassley is Caesar when it comes to the taxing authority of the government.

Sen. Charles Grassley, the top Republican on the Senate Finance Committee, is preparing another round of letters to Christian television ministries, prodding them to answer questions about their spending and the way they are governed, a spokeswoman said back in mid-January.

Jill Gerber, Grassley’s finance committee spokeswoman, said the the follow-up letters would go out in the next few weeks to ministries that have raised concerns or not responded. Gerber said the letters will describe Congress’ authority and duty to investigate and evaluate laws over which it has legislative authority—in this case, tax-exempt policy.

“Customarily, people come to recognize the wisdom of responding to requests by senior members of the Finance Committee, and particularly by Sen. Grassley, before a subpoena becomes necessary,” she said.

Democratic Sen. Max Baucus of Montana, the finance committee chairman, has not commented publicly on Grassley’s investigation. But Carol Guthrie, communications director for the committee’s Democratic staff, said this week Baucus is aware of the investigation, and suggested that the ministries ought to cooperate.

Gaining support of the Democratic chairman would not only give the investigation added heft, it would deflect criticism like that of Dollar, the most outspoken critic among the ministers under scrutiny.

So what’s next: Well, it appears that the next move is in the hands of the ministries in question. It seems that some want to fight, like Creflo Dollar. Dollar commented on the Fox Business Network that he felt is was Grassley, and not the committee, who was pushing the investigation.

Considering the comment from the Democratic Finance Committee Chairman, Max Baucus, it would appear that Creflo needs to rethink his position. One doesn’t want to get into a power play with the powerful Senate Finance Committee. Right now, I don’t think politics are on the side of any of the ministers or their ministries. Thus far the only ministry that has taken the high road (and who I feel will be rewarded for her position) is the Missouri-based Joyce Meyer Ministries. Smart move on her part.

Otherwise, it is reported that Kenneth Copeland ministries is willing to cooperate, but to what extent is not clear. Neither has there been much word from Benny Hinn and his ministries. Eddie Long and Creflo Dollar have both taken a public fighting stand - an unwise move in my opinion.

My guess, as this is written, is that Grassley has signaled, much like Bush before the Iraq war, his intention giving the uncooperative ministries another chance to comply. Lack of compliance by the end of January will result in further investigation and an outcome that many of these folk don’t really want.

I could be wrong, but it seems like the writing is on the wall. What Creflo and Eddie don’t want is Senator Grassley’s version of “Shock and Awe!”

You thoughts?

Business Ethics Speaker, Chuck Gallagher, signing off…

Chuck Norris’ Kickstart Foundation Former CEO James Brasher - Guilty! Comments By White Collar Crime Speaker Chuck Gallagher

Every choice has a consequence! Unfortunately James D. Brasher, age 47, is finding that out too well. As the former Chief Executive Officer of Chuck Norris’ Kickstart Foundation, Brasher has plead guilty to uttering a forged security. In layman’s terms - he took money from the foundation.According to the US Attorney’s office news release:

Brasher pleaded guilty before U.S. District Judge Keith P. Ellison, Thursday, Jan. 24, 2008. According to the factual basis recited in court during the hearing, Brasher confessed to opening bank accounts in names similar to that of Norris’ foundation. As donation checks to the foundation were received at headquarters, Brasher would fraudulently endorse them and deposit them to the accounts under his control. The checks included one from the Hugh Hawthorne Foundation in the amount of $30,000 and one from the Mitchell Foundation in the amount of $100,000. Both checks were intended as gifts to the Chuck Norris charity. Instead, Brasher used some of the money for paying debts and living expenses.

Brasher faces a maximum sentence of up to ten years imprisonment, a fine of $250,000 and a three-year-term of supervised release. Ellison has scheduled sentencing for April 10, 2008.

As a former convicted felon (not something I am proud of), I know where Brasher is headed. Some call it “Club Fed”. I can say from personal experience, it is fed, but there is no “club” about it. Life in prison is hard - even if you are placed in a minimum security facility. Brasher will have time, however, to think - realizing that the short-term benefit he thought he received from his theft will be far outweighed by the consequence he will face now and following for the rest of his life for his poor choices.

As I speak to groups about white collar crime and prevention techniques, it is clear that Brasher fit a classic pattern: (1) need; (2) opportunity and (3) rationalization. My guess is that Brasher had a need due to debt (perhaps excessive although I can’t say that as a fact) and opportunity due to his position of trust within the foundation. Internal controls would likely have prevented what may have been an otherwise, honest man, from exploiting a character flaw.

As I started with - Every choice has a consequence - perhaps Brasher will leave prison in years to come with an understanding of that fact and help others in some way. For now, he will soon experience the opposite of his role as CEO - likely he’ll be cleaning toilets in some federal prison, all the while being given time to think.

 

Arlington, Texas Appraiser - Gandhi Ben Morka - Sentenced to 5 Years! Comments by Business Ethics Speaker Chuck Gallagher

False appraisals for property purchased in the Dallas / Fort Worth area lands Gandhi Ben Morka a 60 months federal prison sentence and a $2.3 million restitution bill!

Background: Seems that Morka, age 52, from Arlington, TX was convicted on one count of conspiracy to commit mail fraud and wire fraud, four counts of wire fraud and two counts of mail fraud. The government presented evidence at trial that Morka conspired to defraud Countrywide by locating single family residences in and around the Dallas, Texas area that were for sale and recruiting straw purchasers and borrowers to purchase the targeted residences. Then Morka would prepare appraisals on the properties, inflating the value to an amount far greater than the fair market value, double in most instances.

Every choice has a consequence. As a business ethics speaker, (www.chuckgallagher.com) I find that more and more as I speak to financial institutions the theme of mortgage fraud rears its ugly head. There are three components to most frauds: (1) need or perceived need; (2) opportunity; and (3) rationalization. As we entered the era of easy credit and sub-prime mortgages, there was almost too much opportunity and without effective controls in place the landscape was ripe for fraud.

Now as we see the pendulum swing the other way the crimes that have been committed are coming to light. Morka has been in the custody of the bureau of prisons since his conviction in late August, ‘07. With the time he will be facing, he will be able to reflect on the effectiveness of doing a proper appraisal - although that service he will likely be prohibited from ever doing again.

Business Ethics Speaker - Chuck Gallagher - signing off…