McHenry County Blog

A press release from the U.S. Attorney’s Office:

CHICAGO INVESTMENT ADVISOR SENTENCED TO SIX YEARS IN PRISON FOR CAUSING CLIENTS TO LOSE $1.6 MILLION IN FRAUD SCHEME

CHICAGO — A former Chicago investment advisor was sentenced today to six years in federal prison for an investment fraud scheme that swindled clients, causing them to lose more than $1.6 million.

The defendant, DIMITRY VISHNEVETSKY, pleaded guilty last August to wire fraud and bank fraud, admitting that he misappropriated funds raised from investors for his own purposes, including to pay for such expenses as

• mortgage and
• car payments
• travel and
• vacations
• restaurant bills
• athletic club dues
• to make trades for himself

while using additional investor funds to make Ponzi-type payments to clients.

Vishnevetsky, 34, of Chicago, was ordered to pay $1,684,763 in restitution, nearly all of it to a half-dozen investment clients, by U.S. District Judge Ruben Castillo, who likened Vishnevetsky’s conduct to a financial storm that devastated the lives of his victims.

Vishnevetsky was ordered to begin serving his sentence on May 28.

“This offense was entirely unnecessary,” the government argued at sentencing.

“There was no good reason for this fraud, and the defendant, who was skilled in the world of finances could have gotten a legitimate job. In fact, [he] obtained a Bachelor’s degree in business administration, and attended the University of Oxford.”

According to the court records, Vishnevetsky offered and purported to sell investments, including investments in funds which promised to trade S&P Futures, and a fund that could trade in things such as equities, futures contracts, and commodities, as well as brokerage and management services for some investors, and promissory notes, through Hodges Trading, LLC, and Oxford Capital, LLC, which he controlled. Three purported Oxford funds existed in name only, as did the promissory notes, which Vishnevetsky described as London Interbank Offered Rate (LIBOR) adjusted notes.

Between September 2006 and March 2012, Vishnevetsky made false representations about the profitability of his prior and current trading, the use of the invested funds, the risks involved, the expected and actual returns on investments and trading, as well as false representations about the funds he purportedly traded.

For example, Vishnevetsky created and provided some investors fraudulent trading results showing profits as high as 36 percent per year. In fact, any trades that Vishnevetsky actually made consistently resulted in losses, not profits.

The bank fraud conviction resulted from false statements Vishnevetsky made between 2007 and 2010 to Merrill Lynch Bank & Trust concerning his income and assets to cause the bank to issue, and later modify, two loans totaling approximately $519,500 to purchase a condominium in Chicago.

The government is being represented by Assistant U.S. Attorney Jacqueline Stern.

The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Commodity Futures Trading Commission, which filed a companion civil enforcement lawsuit, assisted in the investigation.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

A press release from the U.S. Attorney’s Office:

FORMER CHICAGO MAN SENTENCED TO 12 YEARS IN PRISON FOR $8 MILLION INVESTMENT FRAUD AND $1.5 MILLION TAX FRAUD

CHICAGO — A former Chicago man was taken into custody after he was sentenced today to 12 years in federal prison for an investment and tax fraud scheme in which he swindled 57 investors, some of whom he had purported to befriend, of just under $8 million and failed to pay nearly $1.5 million in federal income taxes.

The defendant, RANDY M. CHO, falsely caused investors to believe they were buying discounted shares of stock in well-known companies.

He then misused a significant portion of the $9.6 million he raised from investors for his own personal benefit, while using approximately $1.68 million he fraudulently obtained from new investors to make Ponzi-type payments to previous investors.

Cho pleaded guilty to wire fraud and tax fraud last August, resolving an indictment that was returned in December 2010 in U.S. District Court.

Cho, 41, of Seattle, and formerly of Chicago and Newton, Mass., was ordered to pay $7,995,707 in restitution to investors, and $1,496,339 to the Internal Revenue Service by U.S. District Judge James Zagel, who ordered Cho to begin serving his sentence immediately. Cho was also placed on three years of supervised release following his sentence.

In imposing sentence, Judge Zagel noted the unlikelihood that victims will receive any restitution.

The judge heard from two investors, and received letters from numerous others, who said that Cho’s crimes had irreparably damaged their lives and retirement security.

Cho used the misappropriated funds for himself and his business by making payments for

• his home and furnishings,
• automobiles, and
• jewelry, among other things.

He never invested in any shares of stock on behalf of any of his investors.

The sentence was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; Cory B. Nelson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Thomas Jankowski, Acting Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

“There was no good reason for this fraud, and the defendant, who was skilled in the world of finances, could have gotten a legitimate job,” the government argued at sentencing.

“The defendant caused enormous pain and suffering to many of the victims. Cho took life savings, retirement funds, business funds, and other money that victims could not afford to lose.”

Cho held himself out as a self-employed securities trader, who, from approximately 2001 to 2009, falsely represented that he would purchase at least $9.6 million in shares of stock in well-known companies for U.S. and foreign investors, including some in the Chicago area.

Cho claimed to have access to sell stock in these companies, which he offered as part of a “friends and family” investment pool, often in anticipation of purported initial public offerings.

Cho misrepresented that he had a special relationship with Goldman Sachs and was able to purchase discounted shares, and further misrepresented the timing or existence of public offerings, the potential profitability and safety of investments, and the use of the funds obtained from investors.

At various times, Cho falsely told investors that he could purchase specially-discounted shares of companies, including

• AOL/Time Warner, Inc.,
• Google, Inc.,
• Rosetta Stone, Inc., and
• Facebook, Inc.,

prior to their initial public offerings. For example, Cho falsely lulled an investor into believing that the victim had made a $1 million profit by investing in shares of Google stock when no such investment or profit existed.

During the investment fraud scheme, Cho failed to report approximately $4.8 million of additional income between 2004 and 2007, resulting in an underpayment of just under $1.5 million in federal income taxes.

The government was represented by Assistant U.S. Attorney Jacqueline Stern. The U.S. Securities and Exchange Commission, which brought a civil enforcement lawsuit against Cho, assisted in the investigation.

The Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

A press release from the U.S. Attorney’s Office:

FORMER FOREX TRADER SENTENCED TO 14 YEARS IN PRISON FOR TRADING FRAUD SCHEME THAT CAUSED 343 INVESTORS TO LOSE $17.6 MILLION

CHICAGO — A U.S. citizen who operated a foreign currency trading fraud scheme while living in Panama was sentenced today to more than 14 years in federal prison.

The defendant, Jeffery Lowrance, fraudulently obtained approximately $31 million from 452 investors.

After deducting Ponzi-type payments that he made to some investors, the scheme resulted in losses totaling approximately $17.6 million to 343 investors nationwide, including Chicago, when it collapsed in 2009.

Lowrance was arrested in February 2011 in Peru and extradited to Chicago.

Lowrance, 51, moved to Panama in approximately 2006 and he operated the fraud scheme from Panama City until approximately 2009, before fleeing to Peru.

He pleaded guilty to one count each of wire fraud and money laundering this past July.

He was sentenced to 170 months in prison and ordered to pay restitution totaling $17.64 million by U.S. District Judge Charles Norgle.

Lowrance “caused enormous pain and suffering to many of the victims. [He] took life savings, retirement funds, college tuition, and other money that victims had earned, inherited, or received through the sale of a business or an insurance settlement,” the government argued at sentencing.

The sentence was announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; William C. Monroe, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and Thomas Jankowski, Acting Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.

Lowrance owned Mentor Investing Group, Inc., initially located in San Diego and later Panama City, Panama.

He later owned and was chairman and chief executive officer of First Capital Savings & Loan, Ltd., which he incorporated in 2007 in New Zealand, and which took over Mentor’s purported business and investor accounts. Both businesses claimed to buy and sell foreign currencies (Forex trading) and offered and sold investments through a network of salesmen and investor referrals.

According to the court documents, between August 2004 and June 2009, Lowrance and others at his direction fraudulently solicited investments by making material misrepresentations, about, among other things, the profitability of First Capital’s Forex trading, the expected return on and risk involved with the investments, and the use of funds raised from investors. To conceal the fraud, he made Ponzi-type payments to investors and provided investors with fraudulent account statements. Among the specific misrepresentations was that investors would be paid as much as four to seven percent interest per month on their investments.

Lowrance used only a small portion of investors’ funds to do Forex trading. In addition to making Ponzi-type payments to investors, he misused investors’ funds to pay First Capital’s expenses, expenses of unrelated business ventures including a newspaper, and to make payments for his own benefit as the benefit of his family and associates.

The government was represented by Assistant U.S. Attorney Jacqueline Stern.

The case falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

A press release from the U.S. Attorney’s Office:

FORMER BURLING BANK EXECUTIVE ALLEGEDLY STOLE $3 MILLION FROM BANK OVER 15 YEARS; USED MONEY TO GAMBLE

CHICAGO — A former executive of Burling Bank in Chicago was indicted on federal bank fraud charges for stealing more than $3 million from the bank over the course of approximately 15 years and using the funds primarily for gambling. The defendant, Dora Asmussen, held various bank positions, including

• chief operating officer and
• executive vice president,

placing her in charge of the bank’s daily retail transactions, as well as certain accounting and record-keeping activities.

The alleged fraud occurred between approximately 1997 and August 2012.

Top of Burling Bank web site.

Asmussen, 52, of Gilberts, located in Kane County, was charged with three counts of bank fraud in an indictment returned yesterday by a federal grand jury.

She will be arraigned at a later date in U.S. District Court. The indictment also seeks forfeiture of $3,074,532.

The charges were announced today by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and William C. Monroe, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. The Federal Deposit Insurance Corporation’s Office of Inspector General also assisted in the investigation.

According to the indictment, Asmussen stole funds from the bank by fraudulently issuing checks drawn on her personal account at the bank and cashier’s checks, as well as misappropriating customers’ checks, and then used banks funds to cover the payment of those checks.

She made false entries in the bank’s internal records to steal the funds and conceal the thefts.

After drawing checks on her personal account, Asmussen prevented them from clearing and being debited to her account by physically removing those checks when they were delivered to Burling Bank by the Federal Reserve Bank, the indictment alleges.

She then made false entries in bank records, causing payments to be made from the bank’s funds to the payees on her personal checks.

At times, Asmussen allegedly used cashier’s checks payable to herself or her creditors, and in some instances forged the signature of the bank employee purportedly issuing the cashier’s checks.

She also misappropriated certain checks that customers deposited at the bank, manually entered credits to the customers’ accounts, and then debited the bank’s general ledger account in corresponding amounts to cover those checks, the charges allege.

She then deposited the customers’ checks into her own bank accounts, usually through automated teller machines.

To conceal her scheme, Asmussen allegedly provided false information to the FDIC, state regulators, the bank’s board of directors, and its auditors.

Bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, or an alternate fine totaling twice the loss or twice the gain, whichever is greater, and restitution is mandatory. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorney Jacqueline Stern.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

A press release from the U.S. Attorney’s Office:

CHICAGO INVESTMENT ADVISOR INDICTED FOR ALLEGEDLY CAUSING CLIENTS TO LOSE $1.5 MILLION IN FRAUD SCHEME

CHICAGO — A Chicago investment advisor allegedly engaged in an investment fraud scheme that swindled clients, causing them to lose approximately $1.5 million, federal law enforcement officials announced today.

The defendant, Dimitry Vishnevetsky, was charged with eight counts of mail or wire fraud and one count of bank fraud in a nine-count indictment returned yesterday by a federal grand jury.

Vishnevetsky allegedly raised approximately $1.7 million from investors and misappropriated at least $1.5 million for his own purposes, including to pay for such business and personal expenses as

• mortgage and car payments,
• travel and vacations,
• restaurant bills,
• athletic club dues, and
• to make trades for his own benefit,

while using additional investor funds to make Ponzi-type payments to clients.

Vishnevetsky, 33, of Chicago, will be arraigned at a later date in U.S. District Court.

Patrick Fitzgerald

The charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation. Also yesterday, the Commodity Futures Trading Commission filed a civil enforcement lawsuit against Vishnevetsky and his companies in Federal Court in Chicago.

According to the indictment, Vishnevetsky offered and sold investments, including commodities and promissory notes, primarily through Hodges Trading, LLC, and Oxford Capital, LLC, which purported to be in the business of providing brokerage/management services to investors and of managing commodities funds, including

• the Oxford Global Macro Fund,
• the Oxford Global Arbitrage Fund, and
• the Quantum Global Fund, which existed in name only.

He also offered and sold promissory notes, described as London Interbank Offered Rate (LIBOR) adjusted notes, through Hodges Trading, which also existed in name only.

The indictment alleges that between September 2006 and March 2012, Vishnevetsky schemed to defraud investors and potential investors by making false representations about

• the profitability of his prior and current trading,
• the use of the invested funds,
• the risks involved,
• the expected and actual returns on investments and trading, and
• false representations about Hodges Trading, Oxford Capital and the commodities funds.

For example, Vishnevetsky created and provided some investors fraudulent trading results showing profits as high as 36 percent per year, the indictment alleges.

“In fact, to the extent that Vishnevetsky engaged in trading, the trading consistently resulted in net losses, not profits,” the indictment states.

The bank fraud count alleges that between 2007 and 2010, Vishnevetsky made false statements to Merrill Lynch Bank & Trust concerning his income and assets to cause the bank to issue, and later modify, two loans totaling approximately $519,500 to purchase a condominium in Chicago. Vishnevetsky subsequently stopped making payments on the loans, the charges allege.

The government is being represented by Assistant U.S. Attorney Jacqueline Stern.

Each count of mail or wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, while bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. The Court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

An indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

That’s what this press release from the U.S. Attorney’s Office incidcates:

WEST SUBURBAN MAN SENTENCED TO 10 YEARS IN FEDERAL PRISON
FOR SWINDLING 75 VICTIMS IN $28 MILLION “PONZI” SCHEME

CHICAGO — Saying a fraud defendant’s conduct was “despicable” and “outrageous” and caused “tragic” consequences for his victims, a federal judge sentenced a west suburban man to 10 years in prison for swindling some 75 victims, many of whom lost their retirement funds and life savings.

U.S. District Judge John Darrah nearly doubled advisory federal sentencing guidelines in imposing the 10-year prison term for Matthew Scott, who lured his victims, including many close friends, to invest approximately $28 million over nine years in a business that he falsely represented purchased used high-speed commercial printers that were re-sold for a substantial profit.

Scott, who then used the money instead to make “Ponzi-type” payments to earlier investors, had pleaded guilty in January to one count of mail fraud.

Scott, 51, of Elmhurst, was ordered to begin serving his sentence on Sept. 23 and was also ordered to pay $4.9 million in restitution.

Judge Darrah imposed the sentence last Thursday after hearing directly from three victims of the fraud scheme, as well as considering victim impact letters from more than a dozen others, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

Mail fraud carries maximum penalty of 20 years but Scott’s plea agreement anticipated a sentencing guidelines range of 63 to 78 months.  Judge Darrah determined that 10 years was a reasonable sentence under the circumstances.

Scott was president and sole owner of a printer repair company known as Gelsco, Inc., located in Northlake.

Between early 2000 and March 2009, he fraudulently obtained at least $28 million from approximately 75 investors, and caused the victims to lose a total of $4.9 million.

Scott admitted that he falsely told investors that their funds would be used to purchase, or finance the purchase of, printers that had a value of more than $100,000, which would be sold to third-parties.  He further told investors that there were specific buyers and sellers of printers, when, in fact, he and Gelsco did not purchase or finance any such printers.  Instead, Scott fabricated false purchase orders, invoices, promissory notes and other documents that he provided to investors.

He falsely told investors that Gelsco increased the cost of the printers approximately 10-12 percent and earned substantial profits, usually within 90 days or less, which he promised to split with the investors.  In fact, he never attempted to build a business or generate profits.

Over nine years, Scott had to continually raise funds from investors to make payments to earlier investors, all of which he concealed and intentionally failed to disclose to new and old investors alike.

The government was represented by Assistant U.S. Attorney Jacqueline Stern.

No wonder U.S. Attorney Patrick Fitzgerald, the FBI and other searching out wrong-doing in Illinois don’t have enough staff to clean up Illinois government.

Skim over the details of the health care and Medicare fraud below.

CHICAGO – Two Chicago area physicians are among four defendants who have been charged recently in three separate, unrelated federal healthcare fraud cases, federal law enforcement officials announced today.

Each of the physicians, who were charged in separate cases, allegedly defrauded either Medicare and/or private health care insurers – in one case for more than $13 million – by either billing for services they never provided or inflating the services they did provide to patients.

In the third case, the operator and manager of two former suburban Chicago durable medical equipment providers allegedly defrauded Medicare and Medicaid by providing power wheelchair or orthotic devices that were not prescribed or medically necessary and the recipients were not qualified to receive.

“Health care fraud remains an important priority of federal law enforcement. We will use all of our resources to ensure that dishonest physicians and other medical providers do not profit from cheating Medicare and private insurers,”

said Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.

Mr. Fitzgerald announced the cases, all three of which were charged or unsealed this week in U.S. District Court, with

• Robert D. Grant, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation;
• Lamont Pugh, Special Agent-in-Charge of the U.S. Department of Health and Human Services Office of Inspector General in Chicago; and
• James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Inspector General in Chicago.
• The Office of Personnel Management Office of Inspector General also participated in the investigations.

The defendants in all three cases were charged with one or more counts each of health care fraud. If convicted, each count carries a maximum penalty of 10 years in prison and a $250,000 fine. The Court, however, would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.

In each case, the public is reminded that charges are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. The details of each case follow:

United States v. Sushil Sheth

Dr. Sushil Sheth, a cardiologist with privileges at three unnamed Chicago area hospitals, was charged with health care fraud in a criminal information filed Wednesday in U.S. District Court.

Between January 2002 and July 2007, he allegedly received approximately $13.4 million – $8.3 million from Medicare and $5.1 million from other health care insurers – in fraudulent reimbursement for the highest level of cardiac care when those services were not performed, and then used the proceeds for his own benefit.

Sheth, 47, of Burr Ridge and whose business office is in Flossmoor, will be arraigned at a later date in U.S. District Court.

According to the charges, Sheth used his hospital privileges to access and obtain information about patients without their knowledge or consent. He then hired individuals to bill Medicare and other insurance providers for medical services that he purportedly rendered to patients whom he knew he never treated.

Typically waiting almost a year after the treatment was purportedly provided, Sheth submitted false claims for reimbursement for providing the highest level of cardiac care – requiring hands-on treatment in an intensive care unit – on multiple days during patients’ hospital stays.

The charges seek forfeiture of approximately $13.4 million and two parcels of real estate in Scottsdale, Ariz. The Government has seized or restrained approximately $11.3 million in various bank and investment accounts held by Sheth and his wife.

The government is being represented by Assistant U.S. Attorney Steven J. Dollear. The case was investigated by the FBI and the Inspector General’s offices of the Department of Health and Human Services and the Labor Department.

United States v. Otto Garcia Montenegro

Dr. Otto Garcia Montenegro, a general practice physician who owned and operated a private medical clinic, Montenegro Clinic, Inc., in Elmwood Park, where he treated dozens of patients each week, was charged with health care fraud in a criminal information filed yesterday in U.S. District Court.

Between early 2003 and May 2007, he allegedly submitted false health insurance claims totaling approximately $500,000 to Blue Cross Blue Shield of Illinois and other private medical insurance providers. The insurers paid Montenegro approximately $373,000 based on the false claims, the charges allege.

Montenegro, 47, of Elmwood Park, will be arraigned at a later date in U.S. District Court.

According to the charges, Montenegro did not collect deductibles and co-payments from patients and, instead, submitted hundreds of fraudulent insurance claims to insurers for services and treatments that he knew he did not actually provide in order to exhaust patients’ deductibles and co-pays and obtain money for himself. As part of the scheme, he allegedly created hundreds of bogus bills falsely identifying visits and treatments that never occurred.

The government is being represented by Assistant U.S. Attorney Jacqueline Stern.

The case was investigated by the FBI and the Labor Department’s Office of Inspector General.

United States v. Stephen Anthony Pam and Shavon Keyona Williams

Stephen Anthony Pam, who controlled and operated two former durable medical equipment companies in suburban Chicago that supplied motorized wheelchairs, scooters, reclining lift chairs and orthotic devices, and Shavon Keyona Williams, who at various times worked as office manager or salesperson for both business, were each indicted on 34 counts of health care fraud for allegedly fraudulently billing millions of dollars to Medicare and Medicaid and other health care benefit programs.

Pam, 47, of Sugarland, Tex., was arrested on January 23 in Houston after returning from a foreign trip. He remains in federal custody while being transferred to Chicago to face prosecution. Williams, 30, of Chicago, will be arraigned at a later date in U.S. District Court. They were indicted by a federal grand jury on December 11 and the indictment was unsealed following Pam’s arrest.

Pam controlled and operated the former Alliance Healthcare Services & Medical Equipment, Inc., in Glen Ellyn, and the former Medlinc Concepts, Inc., in Oak Brook.

Between 2004 and 2008, the defendants allegedly falsely claimed to Medicare and Medicaid that power wheelchairs or orthotic devices were medically necessary for beneficiaries when they knew that physicians had not ordered or prescribed such equipment and that beneficiaries did not qualify to receive them under Medicare and Medicaid rules.

As part of the fraud scheme, Pam and Williams allegedly submitted hundreds of claims for reimbursement to Medicare and Medicaid totaling more than $5 million, falsely stating that Alliance and Medlinc had delivered equipment to beneficiaries when they knew that either no equipment was actually delivered;

beneficiaries received less expensive scooters or reclining lift chairs instead of more expensive power wheelchairs; or beneficiaries received orthotic devices that were less in quantity or Medicare-approved quality than what was billed.

In one aspect of the fraud scheme, the indictment alleges that between February 2005 and May 2006, approximately 99 percent of the Alliance claims submitted to Medicare and Medicaid were for power wheelchairs and accessories that were never supplied.

These claims totaled approximately $4.7 million. Pam, through Alliance, allegedly received reimbursements from these claims totaling more than $1.8 million, and the indictment seeks forfeiture of that amount.

The government is being represented by Assistant U.S. Attorneys Felicia Manno Alesia and Ryan Hedges. The case was investigated by the Department of Health and Human Service’s Office of Inspector General and the FBI.

No wonder U.S. Attorney Patrick Fitzgerald, the FBI and other searching out wrong-doing in Illinois don’t have enough staff to clean up Illinois government.

Skim over the details of the health care and Medicare fraud below.

CHICAGO – Two Chicago area physicians are among four defendants who have been charged recently in three separate, unrelated federal healthcare fraud cases, federal law enforcement officials announced today.

Each of the physicians, who were charged in separate cases, allegedly defrauded either Medicare and/or private health care insurers – in one case for more than $13 million – by either billing for services they never provided or inflating the services they did provide to patients.

In the third case, the operator and manager of two former suburban Chicago durable medical equipment providers allegedly defrauded Medicare and Medicaid by providing power wheelchair or orthotic devices that were not prescribed or medically necessary and the recipients were not qualified to receive.

“Health care fraud remains an important priority of federal law enforcement. We will use all of our resources to ensure that dishonest physicians and other medical providers do not profit from cheating Medicare and private insurers,”

said Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois.

Mr. Fitzgerald announced the cases, all three of which were charged or unsealed this week in U.S. District Court, with

• Robert D. Grant, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation;
• Lamont Pugh, Special Agent-in-Charge of the U.S. Department of Health and Human Services Office of Inspector General in Chicago; and
• James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Inspector General in Chicago.
• The Office of Personnel Management Office of Inspector General also participated in the investigations.

The defendants in all three cases were charged with one or more counts each of health care fraud. If convicted, each count carries a maximum penalty of 10 years in prison and a $250,000 fine. The Court, however, would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.

In each case, the public is reminded that charges are not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. The details of each case follow:

United States v. Sushil Sheth

Dr. Sushil Sheth, a cardiologist with privileges at three unnamed Chicago area hospitals, was charged with health care fraud in a criminal information filed Wednesday in U.S. District Court.

Between January 2002 and July 2007, he allegedly received approximately $13.4 million – $8.3 million from Medicare and $5.1 million from other health care insurers – in fraudulent reimbursement for the highest level of cardiac care when those services were not performed, and then used the proceeds for his own benefit.

Sheth, 47, of Burr Ridge and whose business office is in Flossmoor, will be arraigned at a later date in U.S. District Court.

According to the charges, Sheth used his hospital privileges to access and obtain information about patients without their knowledge or consent. He then hired individuals to bill Medicare and other insurance providers for medical services that he purportedly rendered to patients whom he knew he never treated.

Typically waiting almost a year after the treatment was purportedly provided, Sheth submitted false claims for reimbursement for providing the highest level of cardiac care – requiring hands-on treatment in an intensive care unit – on multiple days during patients’ hospital stays.

The charges seek forfeiture of approximately $13.4 million and two parcels of real estate in Scottsdale, Ariz. The Government has seized or restrained approximately $11.3 million in various bank and investment accounts held by Sheth and his wife.

The government is being represented by Assistant U.S. Attorney Steven J. Dollear. The case was investigated by the FBI and the Inspector General’s offices of the Department of Health and Human Services and the Labor Department.

United States v. Otto Garcia Montenegro

Dr. Otto Garcia Montenegro, a general practice physician who owned and operated a private medical clinic, Montenegro Clinic, Inc., in Elmwood Park, where he treated dozens of patients each week, was charged with health care fraud in a criminal information filed yesterday in U.S. District Court.

Between early 2003 and May 2007, he allegedly submitted false health insurance claims totaling approximately $500,000 to Blue Cross Blue Shield of Illinois and other private medical insurance providers. The insurers paid Montenegro approximately $373,000 based on the false claims, the charges allege.

Montenegro, 47, of Elmwood Park, will be arraigned at a later date in U.S. District Court.

According to the charges, Montenegro did not collect deductibles and co-payments from patients and, instead, submitted hundreds of fraudulent insurance claims to insurers for services and treatments that he knew he did not actually provide in order to exhaust patients’ deductibles and co-pays and obtain money for himself. As part of the scheme, he allegedly created hundreds of bogus bills falsely identifying visits and treatments that never occurred.

The government is being represented by Assistant U.S. Attorney Jacqueline Stern.

The case was investigated by the FBI and the Labor Department’s Office of Inspector General.

United States v. Stephen Anthony Pam and Shavon Keyona Williams

Stephen Anthony Pam, who controlled and operated two former durable medical equipment companies in suburban Chicago that supplied motorized wheelchairs, scooters, reclining lift chairs and orthotic devices, and Shavon Keyona Williams, who at various times worked as office manager or salesperson for both business, were each indicted on 34 counts of health care fraud for allegedly fraudulently billing millions of dollars to Medicare and Medicaid and other health care benefit programs.

Pam, 47, of Sugarland, Tex., was arrested on January 23 in Houston after returning from a foreign trip. He remains in federal custody while being transferred to Chicago to face prosecution. Williams, 30, of Chicago, will be arraigned at a later date in U.S. District Court. They were indicted by a federal grand jury on December 11 and the indictment was unsealed following Pam’s arrest.

Pam controlled and operated the former Alliance Healthcare Services & Medical Equipment, Inc., in Glen Ellyn, and the former Medlinc Concepts, Inc., in Oak Brook.

Between 2004 and 2008, the defendants allegedly falsely claimed to Medicare and Medicaid that power wheelchairs or orthotic devices were medically necessary for beneficiaries when they knew that physicians had not ordered or prescribed such equipment and that beneficiaries did not qualify to receive them under Medicare and Medicaid rules.

As part of the fraud scheme, Pam and Williams allegedly submitted hundreds of claims for reimbursement to Medicare and Medicaid totaling more than $5 million, falsely stating that Alliance and Medlinc had delivered equipment to beneficiaries when they knew that either no equipment was actually delivered;

beneficiaries received less expensive scooters or reclining lift chairs instead of more expensive power wheelchairs; or beneficiaries received orthotic devices that were less in quantity or Medicare-approved quality than what was billed.

In one aspect of the fraud scheme, the indictment alleges that between February 2005 and May 2006, approximately 99 percent of the Alliance claims submitted to Medicare and Medicaid were for power wheelchairs and accessories that were never supplied.

These claims totaled approximately $4.7 million. Pam, through Alliance, allegedly received reimbursements from these claims totaling more than $1.8 million, and the indictment seeks forfeiture of that amount.

The government is being represented by Assistant U.S. Attorneys Felicia Manno Alesia and Ryan Hedges. The case was investigated by the Department of Health and Human Service’s Office of Inspector General and the FBI.