McHenry County Blog

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

FORMER CONDO-HOTEL DEVELOPER ARRAIGNED AFTER BEING EXTRADITED FROM ITALY ON FEDERAL TAX EVASION CHARGE

CHICAGO — A former real estate developer who attempted to convert hotels in Chicago, Miami Beach, Fla., and elsewhere into condominium-hotels was arraigned today on federal tax evasion charges following his extradition from Italy.

The defendant, DAVID R. FALOR, who was a principal in The Falor Companies, Inc., was charged with

• two counts of federal income tax evasion
• one count of filing a false federal income tax return

in an indictment that was returned by a federal grand jury in December 2011 when Falor was living in Modena, Italy.

Falor, 73, formerly of Chicago and the Miami area, was returned to the United States on Friday after Italian courts ordered him extradited on one count of income tax evasion. He remains in federal custody after pleading not guilty this morning before U.S. District Judge Matthew Kennelly in Federal Court in Chicago.

According to the indictment, The Falor Companies, which ceased operating in 2006, attempted to convert hotels to condo-hotels by selling individual guest rooms to investors as separately titled condominium units, and renting them through a related hotel management company to other guests when the owner was not in residence, with the owner receiving a percentage of the rental fee.

The companies operated multiple condo-hotel ventures in the mid-2000s, including

• the Blake Hotel, located at 500 S. Dearborn St., in Chicago
• the Tides Hotel on Ocean Drive in Miami Beach

Falor was extradited on a tax evasion count alleging that he failed to pay income tax of approximately $341,093 on taxable income of approximately $1,048,802 during calendar year 2006.

During that year, Falor allegedly converted approximately $779,096 in payments that were recorded as loans from The Falor Companies, but which became taxable income when the companies went out of business and Falor used the funds for personal expenses. Falor allegedly failed to file a federal income tax return for 2006 or to pay any taxes.

The indictment also charged Falor with tax evasion and filing a false federal income tax return for 2005, but the government indicated in court today that those two counts will likely be dismissed at a later time because of the terms of Falor’s extradition.

In separate cases, Falor’s two sons also face federal tax charges in Chicago. Christopher Falor, a consultant to the condo-hotel projects, is awaiting sentencing after pleading guilty to mail fraud and tax counts, and Robert Falor, who was the chief operating officer of The Falor Companies, is in custody awaiting disposition of tax charges.

Gary Shapiro

The developments were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.

The government is being represented by Assistant U.S. Attorneys Ryan S. Hedges and Barry Jonas.

Tax evasion carries a maximum penalty of five years in prison and a $250,000 fine. In addition, defendants convicted of tax offenses face mandatory costs of prosecution and remain civilly liable to the Government for any and all back taxes, as well as a civil fraud penalty of up to 75 percent of the underpayment plus interest. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

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:

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.

Gary Shapiro

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:

TWO WEST SUBURBAN MEN TO BE ARRAIGNED ON FEDERAL CHARGES IN $28 MILLION INVESTMENT FRAUD SCHEME

CHICAGO — Two west suburban men are scheduled to be arraigned Thursday on federal charges alleging that they and a third defendant, who is a fugitive, fraudulently obtained more than $28 million from approximately 120 investors, federal law enforcement officials announced today.

The defendants conducted estate planning seminars, aimed primarily at retirees in Illinois and California, and purported to sell promissory notes for investments in Turkish bonds to individuals with substantial savings.

Instead, through the operation of a Ponzi-type scheme, investor funds were used to pay other investors, to speculate in failed real estate and restaurant ventures and to make more than $2.5 million in payments to the defendants, their friends and family.

Robert C. Pribilski, 54, of Lisle, a principal of USA Retirement Management Services, which had offices in Oakbrook Terrace and southern California, and John T. Burns III, 53,of Naperville, a salesman for USA Retirement who conducted seminars, are scheduled to be arraigned at 9:30 a.m.

Thursday before U.S. District Judge Charles Kocoras in Federal Court in Chicago.

A third defendant, Mahmut Erhan Durmaz, also known as “Francois E. Durmaz,” 42, formerly of Streamwood and Los Angeles, also a principal of USA Retirement, fled the United States in March 2010 and is a fugitive believed to be residing in Turkey.

Pribilski and Durmaz were each charged with five counts of wire fraud and four counts of mail fraud in a nine-count indictment that was unsealed last week and announced today.

Burns was charged with three counts of wire fraud and three counts of mail fraud. The indictment also seeks forfeiture of $28 million from all three defendants.

The charges were announced 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 U.S. Securities and Exchange Commission filed a civil enforcement action against Pribilski and Durmaz in March 2010 in Los Angeles. Durmaz fled the country the same day that a judge froze their personal and business assets.

According to the indictment, between 2005 and March 2010, the defendants offered and sold promissory notes that falsely represented USA Retirement “absolutely and unconditionally” promised to pay investors between 4.75 and 11 percent annually.

Pribilski and Durmaz falsely claimed that the interest would be generated from investments in Turkish bonds.

Instead, Pribilski and Durmaz operated a Ponzi-type scheme, using funds from the sale of promissory notes to make payments to other investors without disclosing that there were no Turkish bond investments.

In offering and selling USA Retirement promissory notes, all three defendants falsely told investors that they had many years of investment banking experience in the purchase and sale of Turkish bonds, and that they had personally profited from such investments through USA Retirement.

In fact, the defendants had no such banking experience and did not make any investments in Turkish bonds.

Pribilski and Durmaz allegedly used approximately $2.5 million of investor funds for their own benefit, including to pay for their

• homes,
• cars, and
• other expenses,

and to provide medical insurance and substantial salaries and bonuses to themselves and Burns.

Each count of wire and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 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 government is being represented by Assistant U.S. Attorney Ryan S. Hedges.

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.

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.

Gary Shapiro

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.

Still another press release about legal action by Chicago’s U.S. Attorney’s Office against those who commit financial fraud:

FIVE DEFENDANTS INDICTED IN ALLEGED $15.7 MILLION MORTGAGE FRAUD SCHEME TO HELP FINANCE FAILED NORTH SHORE DEVELOPMENT

CHICAGO — Three partners in a failed North Shore development project, a title company executive and a loan officer were charged in a federal indictment unsealed yesterday with engaging in a $15.7 million residential mortgage and construction loan fraud scheme to help finance the failed mixed-use commercial development known as the Center of the Northshore, federal law enforcement officials announced.

The five defendants allegedly caused various lenders and a title company to lose at least $8.45 million.

Lots of vehicle pass the 14-acre Northbrook plot at Dundee Road and Skokie Boulevard involved in this indictment

The loan proceeds allegedly were used to make lulling interest payments on multiple fraudulent residential mortgages, as well as to make interest payments on a $26.2 million loan to finance the purchase of 14 acres at the intersection of Dundee Road and Skokie Boulevard in Northbrook for the proposed mixed-use development, which ultimately fell into foreclosure.

The 11-count indictment, which was returned by a federal grand jury on May 26, was unsealed after four of the five defendants were arrested yesterday by federal agents. The arrests and charges were announced today by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Thomas A. Kelly, Special Agent-in-Charge of the U.S. Secret Service in Chicago; and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

The defendants and charges against each are as follows:

• Edward Renko, 49, of Glenview, who was chief executive officer of the now-defunct EAG Capital Holdings, Inc.; two counts of wire fraud and one count each of bank fraud and making a false statement to influence the action of a bank;
• Alexander Field, 42, of Northbrook, formerly president of EAG Capital; three counts of wire fraud and one count of bank fraud;
• Gary Fishkin, 54, of Glencoe, formerly chief operating officer of EAG Capital; two counts of wire fraud and one count each of bank fraud and making a false statement to influence the action of a bank;
• Kalliope Shaykin, 51, of Chicago, formerly president of Absolute Title Services, Inc., in Schaumburg; seven counts of wire fraud and one count of making a false statement to influence the action of a bank; and
• Tatyana Furman, 41, of Northbrook, formerly a loan officer and mortgage broker at American United Mortgage Co., in Northbrook, which was 50 percent-owned by EAG Capital; seven counts of wire fraud.

Renko, Field, Fishkin and Furman were arraigned yesterday before Magistrate Judge Maria Valdez in U.S. District Court, and were ordered to remain in federal custody pending a detention hearing at 11 a.m. Tuesday. Shaykin was not arrested and was scheduled to be arraigned today before U.S. District Judge Harry Leinenweber in Federal Court.

According to the indictment, between June 2006 and November 2007, the defendants fraudulently obtained at least $8.45 million in residential loan proceeds by repeatedly obtaining mortgages secured by residences owned by Renko, Field and Fishkin, located respectively at 711, 700 and 688 Greenwood Rd., Northbrook.

The mortgages were obtained purportedly to refinance existing loans secured by those residences, but instead of using the loans to pay off the existing mortgages, the defendants allegedly converted the fraudulently obtained loans to their own use, including to pay personal expenses, business expenses, and interest payments on the $26.21 million loan financing the purchase of property for the proposed Center of the Northshore.

On multiple occasions, the indictment alleges that Furman prepared, and Renko, Field and Fishkin signed, fraudulent mortgage loan applications that contained false statements that failed to disclose the respective defendant’s existing mortgage liabilities and the purpose of the loans.

Shaykin allegedly created and submitted to lenders fraudulent title insurance policies under the name of Title Company A that intentionally omitted prior existing mortgages and liens on the respective defendant’s residences.

The indictment alleges that Renko, Field and Fishkin distributed at least $720,000 in fraudulently obtained loan proceeds to Shaykin through various means, and that those four defendants distributed at least $240,000 to Furman through various transactions.

Overall, Renko, Field and Fishkin obtained home mortgages and a construction loan totaling at least $15,790,000 and caused actual losses to lenders and Title Company A totaling at least $8.45 million.

The indictment seeks forfeiture totaling nearly $10.5 million from all five defendants.

The government is being represented by Assistant U.S. Attorney Ryan S. Hedges.

Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. However, four of the wire fraud counts allegedly affecting financial institutions, together with bank fraud and making a false statement to influence the action of a bank, each carry a maximum penalty of 30 years in prison and a $1 million fine. As an alternative, the Court may impose a maximum fine totaling twice the loss to any victim or twice the gain to any defendant, whichever is greater, and restitution is mandatory. If convicted, the Court must determine a reasonable sentence to impose under the advisory United States Sentencing Guidelines.

The public is reminded that 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.

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.