McHenry County Blog

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

OWNER OF FORMER SOUTH SUBURBAN HOME HEALTH CARE BUSINESS SENTENCED TO 10 YEARS IN PRISON FOR $2.9 MILLION MEDICARE FRAUD

CHICAGO — The co-owner of a former south suburban home health care business was sentenced today to 10 years in federal prison for defrauding Medicare of more than $2.9 million by submitting tens of thousands of false claims annually that misrepresented medical services provided to beneficiaries.

BAHIR HAJ KHALIL, the executive manager and co-owner of House Call Physicians LLC, in Palos Hills, was the last of three defendants to be sentenced following Khalil’s conviction at a trial in September.

“I want the word to go forth from this sentence that this kind of crime does not pay and will be treated harshly,” U.S. District Judge Charles Kocoras said in Federal Court in Chicago. Judge Kocoras imposed the maximum sentence of 10 years on each of seven counts and ordered them to be served concurrently.

Khalil, 34, of Palos Hills, a native of Syria and a Canadian citizen who was not authorized to work in the U.S., has remained in federal custody since he was arrested in July 2011 and House Call Physicians closed its doors. He will be subject to deportation after completing his sentence.

“Khalil preyed on Medicare beneficiaries — people who were sick, elderly and disabled — and exploited them because they were vulnerable and easy to use to accomplish his fraud. To Khalil, the math was simple: Find people on Medicare; perform unnecessary tests and services; bill Medicare; get paid,” the government argued at sentencing.

Khalil was convicted of six counts of health care fraud and he and his business partner, MOHAMMED KHAMIS RASHED, 46, of Chicago, were also convicted of one count of visa fraud for attempting to illegally obtain a work visa for Khalil. Rashed, a former engineer for the City of Chicago who invested in House Call and was a co-owner, was sentenced by Judge Kocoras on Tuesday to six months in prison and fined $20,000.

A third defendant PASCHAL U. OPARAH, 47, of South Holland, a suspended podiatrist who pleaded guilty to health care fraud last April and cooperated with the government’s investigation, was sentenced on Dec. 12 to 18 months in prison, and was ordered to pay $791,095 in restitution.

Khalil was ordered to pay restitution and forfeiture, both in the amount of $2,934,392, representing proceeds from the fraudulent billing scheme.

The forfeiture includes approximately $155,575 that was seized when he was arrested.

Over the course of the fraud, Khalil wrote himself more than $400,000 in checks from the company’s bank account.

According to trial evidence and court records, the fraud scheme involved billing for:
services that were not medically necessary, including uncomfortable nerve conduction tests;
services purportedly provided by physicians when, in fact, they were performed by physician assistants; and services purportedly performed by a licensed podiatrist when, in fact, they were performed by Oparah, whose license was suspended.

Khalil also directed the false certification of patients as eligible for home health services when, in fact, they were not homebound as required by Medicare.

Although he had no medical training or license, Khalil established House Call Physicians in 2006 and engaged in Medicare fraud from that time until he was arrested in July 2011.

In secretly recorded conversations with physicians and physician assistants, Khalil made it clear that he believed that he, not the doctors, should decide when patients needed a procedure like a nerve conduction or bone density tests.

The government was represented by Assistant U.S. Attorneys Patrick Otlewski and Ryan Hedges.

The sentences were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois; Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; Lamont Pugh III, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Health and Human Services Office of Inspector General; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Inspector General. The U.S. Railroad Retirement Board Office of Inspector General also participated in the investigation. The investigation was conducted by the Medicare Fraud Strike Force, which expanded to Chicago in 2011, and is part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the Justice Department and HHS to focus their efforts to prevent and deter fraud and enforce anti-fraud laws around the country.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

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

CHICAGO AREA DERMATOLOGIST AND PSYCHOLOGIST CHARGED IN NATIONWIDE MEDICARE FRAUD STRIKE FORCE TAKEDOWN

Total of 91 Defendants Charged Nationwide for Submitting
Approximately $430 Million in False Billing

CHICAGO — An area dermatologist and a psychologist were charged this week with engaging in separate health care fraud schemes to defraud the Medicare program and/or private health insurers of millions of dollars, federal law enforcement officials announced today. Also today, a co-owner of a former south suburban home health care business was convicted of a federal charge, a week after the other co-owner was convicted of health care fraud by a federal jury.

The Chicago charges are part of a nationwide takedown by Medicare Fraud Strike Force operations in seven cities, announced today by the Departments of Justice and Health and Human Services, that led to charges against 91 defendants for their alleged participation in schemes to collectively submit approximately $429.2 million in fraudulent claims.

In Chicago, two defendants were charged in separate indictments filed yesterday and Tuesday in U.S. District Court. One defendant, a licensed psychologist, was charged with health care fraud for allegedly over-billing the Medicare program, while the dermatologist was charged with mail and wire fraud for defrauding Medicare and private health insurance companies.

“Today’s enforcement actions reveal an alarming and unacceptable trend of individuals attempting to exploit federal health care programs to steal billions in taxpayer dollars for personal gain,” said Attorney General Holder. “Such activities not only siphon precious taxpayer resources, drive up health care costs, and jeopardize the strength of the Medicare program — they also disproportionately victimize the most vulnerable members of society, including elderly, disabled and impoverished Americans.”

“These cases ought to be taken as a warning that dishonest medical providers ought to think twice before cheating Medicare and private insurers,” said Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois.

Details of the Chicago cases follow:

United States v. Robert Kolbusz

Dr. Robert Kolbusz, a dermatologist in Downers Grove, was charged in a seven-count indictment returned yesterday with defrauding Medicare and private health insurance companies by submitting false claims for hundreds of patients resulting in millions of dollars of losses. Kolbusz falsely diagnosed patients with actinic keratosis, or sun-induced skin lesions that have the potential to become cancerous, and then billed Medicare, Blue Cross Blue Shield of Illinois, Aetna, and Humana for treatments that were ineffective and falsely documented.

Kolbusz, 55, of Oak Brook, was charged with four counts of wire fraud and three counts of mail fraud. He will be arraigned at a later date in U.S. District Court.

Between 2003 and 2010, Kolbusz allegedly falsely documented patients’ charts to support medically unnecessary, cosmetic treatments that he ordered. In some instances, he falsely documented the removal of more than 1,000 lesions from patients over several years of treatment, according to the indictment.

The government is represented by Assistant U.S. Attorneys Stephen Lee and Tinos Diamantatos. The case was investigated by the Federal Bureau of Investigation and the Health and Human Services Office of Inspector General (HHS-OIG.)

United States v. Sharon A. Rinaldi

Sharon A. Rinaldi, a licensed psychologist in Illinois, was charged in a five-count indictment returned on Tuesday with defrauding Medicare by submitting thousands of false claims for providing psychotherapy services to Medicare beneficiaries residing in skilled nursing homes in the Chicago area.

Rinaldi, 57, of Inverness, was charged with five counts of health care fraud. She is scheduled to be arraigned on Oct. 10 in U.S. District Court. The indictment also seeks forfeiture of more than $100,000 that was seized from her home and a personal bank account.

According to the indictment, between December 2008 and August 2012, Rinaldi claimed that she provided services to Medicare beneficiaries who were deceased at the time; that she provided services on certain dates when she was in other locations, such as Las Vegas and San Diego; and she inflated the number of hours that she had provided services on particular dates, often exceeding 24 hours in a single day.

The government is represented by Assistant U.S. Attorneys Paul Tzur. The case was investigated by the FBI and the HHS-OIG.

United States v. Khalil, et al.

In the home health care fraud case, which was indicted last year, a federal jury last week convicted Bhair Haj Khalil, the co-owner and executive manager of House Call Physicians LLC in Palos Hills, of six counts of health care fraud for submitting false claims totaling more than $2.5 million to Medicare, resulting in losses of more than $1.15 million.

Khalil, 34, formerly of Palos Hills and who is in federal custody, and his business partner, Mohammed Khamis Rashed, 46, of Chicago, were also convicted of visa fraud for attempting to illegally obtain a work visa for Khallil.

After a trial for both defendants last month, Khalil was convicted by a jury on Sept. 25, while Rashed’s case was tried by U.S. District Judge Charles Kocoras, who issued his guilty verdict today.

A third defendant, Paschal U. Oparah, a suspended podiatrist, pleaded guilty in the case last spring. All three are scheduled to be sentenced in December.

Evidence in the case showed that the fraud scheme involved billing for home health services as if they were performed by physicians when they were actually performed by physicians’ assistants; billing for podiatry services that were actually performed by Oparah, whose license was suspended; and falsely certifying that patients were eligible for home health services when they were not and causing medically unnecessary tests to be provided to Medicare beneficiaries.

The government is represented by Assistant U.S. Attorneys Patrick Otlewski and Ryan Hedges. The case was investigated by the FBI, the HHS-OIG, and the U.S. Department of Labor Office of Inspector General.

The charges in these cases carry the following maximum penalties on each count: health care fraud and visa fraud — 10 years in prison, and mail and wire fraud — 20 years in prison, and a $250,000 maximum fine, or an alternate fine totaling twice the loss or twice the gain, whichever is greater. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The Medicare Fraud Strike Force operations, which expanded to Chicago in February 2011, are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,480 defendants who collectively have falsely billed the Medicare program for more than $4.8 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The results of the nationwide takedown were announced today by Attorney General Holder, HHS Secretary Kathleen Sebelius, Assistant Attorney General Lanny A. Breuer of the Criminal Division, FBI Associate Deputy Director Kevin Perkins, Inspector General Daniel R. Levinson of the HHS-OIG, and Dr. Peter Budetti, Deputy Administrator for Program Integrity of the Centers for Medicare and Medicaid Services (CMS). Mr. Shapiro announced the Chicago charges together with William C. Monroe, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, and Lamont Pugh III, Special Agent-in-Charge of the Chicago Regional Office of the HHS-OIG.

The public is reminded that indictments contain only charges and 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.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

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

CEO AND HEAD TRADER OF BANKRUPT SENTINEL MANAGEMENT INDICTED IN ALLEGED $500 MILLION FRAUD SCHEME PRIOR TO FIRM’S 2007 COLLAPSE

CHICAGO — The chief executive officer and the head trader of the bankrupt Sentinel Management Group, Inc., were indicted on federal fraud charges for allegedly defrauding more than 70 customers of more than $500 million before the firm collapsed in August 2007, federal law enforcement officials announced today.

Sentinel, which was located in suburban Northbrook, managed short-term cash investments of futures commission merchants, commodity pools, hedge funds, at least one pension fund, and other customers.

The defendants, Eric A. Bloom and Charles K. Mosley, allegedly misappropriated securities belonging to customers by using them as collateral for a loan that Sentinel obtained from Bank of New York Mellon Corp. (BoNY) that was in part used to purchase millions of dollars worth of high-risk, illiquid securities not for customers, but for a trading portfolio maintained for the benefit of Sentinel’s officers, including Mosley, Bloom, certain Bloom family members, and corporations controlled by the Bloom family.

Bloom, the president and CEO of Sentinel who was responsible for its day-to-day operations, allegedly misled customers four days before Sentinel declared bankruptcy by blaming Sentinel’s financial problems on the “liquidity crisis” and “investor fear and panic” when he knew that the actual reasons for Sentinel’s financial problems were its purchase of high-risk, illiquid securities, excessive use of leverage, and the resulting indebtedness on the BoNY credit line, which had a balance exceeding $415 million on Aug. 13, 2007.

Sentinel declared bankruptcy on Aug. 17, 2007.

Bloom, 47, of Northbrook, and Mosley, 48, of Vernon Hills, will be arraigned on a date yet to be scheduled in U.S. District Court in Chicago.

They were each charged with

• 18 counts of wire fraud,
• one count of securities fraud, and
• one count of making false statements to an employee pension plan

in a 20-count indictment that was returned by a federal grand jury yesterday. The indictment seeks forfeiture of more than $500 million.

The case is one of the largest criminal financial fraud cases ever prosecuted in Federal Court in Chicago.

The indictment was announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor Office of Inspector General in Chicago. Also assisting in the investigation were the Labor Department’s Employee Benefits Security Administration, the Commodity Futures Trading Commission, and the Securities and Exchange Commission. The CFTC and the SEC filed separate civil enforcement lawsuits following the collapse of Sentinel, which remains in bankruptcy proceedings.

According to the indictment, between January 2003 and August 2007, Bloom and Mosley fraudulently obtained and retained under management more than $500 million of customers’ funds by falsely representing the risks associated with investing with Sentinel, the use of customers’ funds and securities, the value of customers’ investments, and the profitability of investing with Sentinel.

Bloom and Mosley allegedly used customers’ securities invested in Sentinel’s “125 Portfolio” and its “Prime Portfolio” as collateral for its credit line with BoNY to purchase millions of dollars worth of high-risk, illiquid securities, some of which were collateralized debt obligations (CDOs).

Mosley allegedly purchased the CDOs from two brokerage firms and received substantial personal benefits from those firms in the form of gifts, vacations, expensive tickets to sporting events, and parties.

The indictment alleges that Bloom and Mosley lied about customers’ investments and engaged in an undisclosed trading strategy with Sentinels’ own “House Portfolio,” which they traded for the benefit of themselves and Bloom family members.

In addition to his salary, Mosley received an annual bonus based on the profitability of the House Portfolio.

The undisclosed trading strategy included extensive leverage and a high concentration of CDOs that was inconsistent with the representations Bloom and Mosley made to customers regarding separate investment portfolios.

The undisclosed strategy affected all customers, regardless of the trading portfolio in which they were invested, because the defendants allegedly used customers’ securities as collateral when they borrowed money from the BoNY and so-called “repo” lenders, and then used the borrowed money to carry out the undisclosed trading strategy. (Under a repurchase agreement, known as a “repo,” a party such as Sentinel, effectively a borrower, sold securities to a counterparty, effectively a lender, with an agreement to repurchase the securities at a later date.)

“The use of their customers’ securities as collateral allowed the defendants to borrow more money than Sentinel otherwise could, subjected the customer securities to potential legal claims by creditors, and allowed the defendants to employ leverage to the extent that Sentinel itself, and all of the customer portfolios, were at increased risk of adverse market movements and insolvency,” the indictment states.

As part of the fraud scheme, Bloom and Mosley allegedly falsely represented to customers the returns generated by the securities in each Sentinel portfolio.

Rather than giving customers the actual returns generated by a particular portfolio, the defendants on a daily basis pooled the trading results for all of Sentinel’s portfolios and then allocated the returns to the various portfolios as they saw fit, the indictment alleges.

To conceal the scheme, to encourage customers to invest additional funds, and to otherwise lull customers, Bloom and Mosley on a daily basis allegedly caused false and misleading account statements to be created and distributed to customers, including via email.

These account statements reported returns earned by customers without disclosing that the returns actually were allocated by the defendants and were not the result of the market performance of the customers’ particular portfolios.

The account statements also listed the purported value of securities being held by each portfolio without disclosing that the securities were being used as collateral for Sentinel’s loan from BoNY.

The daily account statements were also misleading in that many of them, particularly those issued in July and August 2007, contained incorrect securities and inflated values of certain securities, the indictment alleges.

In July and August 2007, when Bloom and Mosley knew that Sentinel was approaching insolvency, and that defaulting on the over- $400 million bank line of credit was a real possibility, they allegedly caused millions of dollars in investments in Sentinel to be obtained and retained by concealing Sentinel’s true financial condition from customers.

Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or, alternatively, a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater, and restitution is mandatory. Securities fraud and making false statements to a pension plan each carry a maximum penalty of five years in prison and a $250,000 fine. 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. Attorneys Clifford C. Histed and Patrick M. Otlewski.

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 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.