A former area motorcycle and recreational vehicle dealer and his accountant, together with eight other defendants who allegedly acted as straw buyers in sham vehicle sales, were indicted on federal charges alleging a nearly $74 million fraudulent financing scheme that resulted in approximately 20 lenders losing more than $56 million. All 10 defendants were charged with at least one count of bank fraud, and eight of them were also charged with federal tax offenses in a 36-count indictment that was returned by a federal grand jury yesterday, federal law enforcement officials announced today.
The alleged bank fraud scheme involved two prongs: in one, the dealership fraudulently obtained more than $31.3 million in direct financing through five lines of credit from Fifth Third Bank, which lost more than $27.1 million; and, in the second, individual straw borrowers obtained some 200 fraudulent loans totaling nearly $42.4 million, which resulted in some 18 financial institutions losing more than $29.5 million. At least 62 of these individual loans were made to the eight defendants who allegedly acted as straw buyers.
The charges allege that all 10 defendants fraudulently obtained money for their personal uses and benefit, enabling them to maintain lavish lifestyles, operate various businesses, and/or make investments. The money they obtained created the false appearance of personal wealth and helped induce the lenders to advance funds more readily due to their misplaced confidence that the defendants had sufficient personal wealth to repay the loans. The tax offenses against eight of the defendants include one or more counts each of tax evasion, failing to file an income tax return, or filing a false federal tax return.
Lead defendant Russell S. Ott, 50, of Oswego, was the owner of Emily Inc., which did business as Pro Source Motorsports, which was last located in Morris, Illinois. Between 1995 and October 2008, Pro Source, the dealership at the center of the scheme, sold new and used motorcycles, luxury motor homes, recreational vehicles, all-terrain vehicles, boats, and jet skis. In 2007 and 2008, Ott also had ownership interests in Liberty Cycle in Libertyville and Huntley Chevrolet in Libertyville. Ott was charged with one count each of bank fraud and tax evasion.
Defendant Brian McMahon, 54, of Naperville, was Ott and Emily Inc.’s certified public accountant, who also owned Triumph Suzuki in Naperville between 2001 and 2004 when he sold it to Ott. McMahon was charged with one count of bank fraud and two counts of filing false tax returns.
All 10 defendants will be ordered to appear for arraignment on dates to be determined in U.S. District Court.
Direct Lending Fraud
According to the indictment, Ott and McMahon fabricated false personal and business tax documents and financial statements and provided them to Fifth Third Bank, which between May 2007 and October 2008 extended Pro Source approximately $31,368,457 through five different credit lines, which funded traditional “floor plan loans.” As part of the scheme, Ott faxed false flooring requests with fictitious vehicle identification numbers for non-existent recreational vehicles or real VINs for actual RVs but with dramatically inflated values. Ott sometimes “double floored” vehicles by obtaining separate financing from Fifth Third and a different lender for the same vehicle.
Straw Borrower Fraud
According to the indictment, Ott enlisted the other eight defendants as straw borrowers so they could obtain fraudulent loan proceeds to share with Ott even though they did not actually purchase the vehicles—usually very expensive RVs—for which the loans were made and the vehicles generally did not exist. The lenders who financed these loans generally deposited the funds into Emily Inc.’s bank account, and then Ott periodically disbursed the proceeds to straw borrowers to operate and support their own businesses and lifestyles, make investments, and make monthly payments on some of the loans to perpetuate the scheme.
Ott allegedly made personal use of the fraudulently obtained funds to operate Pro Source, which operated at a loss from approximately 2001 through 2008; and to make the following purchases—a house in Elburn for approximately $679,491 and make subsequent improvements which increased the home’s cost to more than $1.1 million; a $258,000 vacation home in Butternut, Wisconsin; a $350,000 rental home in South Elgin; a Sky Hawk 172 Cessna airplane and hanger for approximately $200,000; and pick-up trucks and other vehicles for family members and employees of Pro Source. He also used the money to invest in and purchase other vehicle dealerships, including more than $3.6 million in Huntley Chevrolet and more than $1 million in Liberty Cycle.
The other eight defendants, who allegedly acted as straw buyers, and details of their charges and alleged personal use of the funds are as follows:
Andrew W. Stacy, 51, of Elburn, a parts manager at Pro Source between 1998 and 2000. In late 2005, with financial assistant from Ott, Stacy acquired TUF Powersports, a motorcycle dealership in DeKalb, which he operated until it closed in late 2008. Stacy acted as a straw borrower on six fraudulent loans totaling more than $2.5 million, and after making certain periodic payments, used a portion of the funds to operate TUF Powersports and for personal expenses.
Scott F. Darville, 48, of Racine, Wisconsin, who owned and operated Pro Source of Woodstock, in 1998 and 1999. In 2000, Darville became the owner of Racine MotorSports Ltd., a motorcycle dealership he operated until it closed in 2009. Darville acted as a straw borrower on nine fraudulent loans totaling nearly $2.5 million, and after making certain periodic payments, retained more than $2 million, which he used to operate Racine Motorsports and for personal expenses.
F. Peter Mignin, 63, of Geneva, who owned and operated Northwest Investment Company Inc., which formerly did business as Schaumburg Honda, a new and used motorcycle dealership. Mignin also owned RPM Management LLC, doing business as Liberty Cycle, which he agreed to sell to Ott in 2007, and Mignin held an ownership interest with Ott in 2007 and 2008 in Huntley Chevrolet. Mignin acted as a straw borrower on 10 fraudulent loans totaling more than $3.8 million, and after making certain periodic payments, retained more than $3.4 million, which he used to operate Schaumburg Honda, Liberty Cycle, and for personal investments and expenses, including $450,000 toward the construction of his home, residence, and an $863,000 investment in Huntley Chevrolet.
Kevin D. Hanson, 43, of Louisville, Kentucky, and formerly of Chicago, who owned and operated Safety First Racing LLC, of Arlington Heights, a professional motorcycle racing team that competed at events throughout the United States between 2003 and 2008. Hanson acted as a straw borrower on seven fraudulent loans totaling more than $2.8 million, and after making certain periodic payments, retained more than $2.4 million, which he used to operate Safety First Racing and for personal expenses.
Owen A. Weichel, 48, of Huntington Beach, California, a former professional motorcycle racer who owned and operated Center of Gravity LLC, which imported motorcycle parts from Japan and resold them in the United States. Weichel acted as a straw borrower on five fraudulent loans totaling more than $2.1 million, and after making certain periodic payments, retained more than $1.9 million, which he used to operate Center of Gravity and for personal expenses, including foreign investments in Costa Rica, Italy, and Canada of approximately $1,261,200.
John Materyn, 50, of Ypsilanti, Michigan, who worked for Ott at Pro Source in 1998 and later at Liberty Cycle. Materyn acted as a straw borrower on seven fraudulent loans totaling more than $2.3 million, and after making certain periodic payments, he used a portion of the funds to operate Pro Source Motorsports in Michigan and for personal expenses.
Jill A. Pluta, 55, of LaPorte, Indiana, Ott’s former sister-in-law who was formerly known as Jill Ott and who worked at Pro Source in 2005. She acted as a straw borrower on five fraudulent loans totaling nearly $1 million, and after making certain periodic payments, retained approximately $680,334, which she used for personal expenses.
Joan M. Quick, 52, of Walworth, Wisconsin, the office manager for Pro Source who was responsible for Pro Source’s day-to-day bookkeeping and accounting. Quick acted as a straw borrower on seven fraudulent loans, and she later wrote checks and directed electronic transfers from Emily Inc. accounts totaling more than $1 million, which she used for personal expenses, including her residence, automobiles for at least three of her children and college tuition for at least two of them, and credit card payments totaling approximately $550,125.
The charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and James C. Lee, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
The government is being represented by Assistant U.S. Attorney William Hogan.
Each count of bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, or an alternative fine totaling twice the gross gain or twice the loss, whichever is greater, and restitution is mandatory. Tax evasion carries a maximum penalty of five years in prison and filing a false tax return carries a maximum of three years in prison, and both carry a maximum fine of $250,000, while failure to file a tax return carries a maximum of a year in prison and a $100,000 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 potential civil fraud penalty of up to 75 percent of the underpayment plus interest. If convicted, the court must determine a reasonable sentence to be imposed 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 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 against each defendant.
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Friday, August 30, 2013
Kathleen Niew, Suburban Attorney, Arrested by FBI for Allegedly Stealing $2.34 Million in Clients’ Funds from Her Escrow Account
A suburban attorney whose law license was suspended in May was arrested on federal fraud charges for allegedly misappropriating approximately $2.34 million from a husband and wife who were her clients. The defendant, Kathleen Niew, was charged with 10 counts of wire fraud in a federal grand jury indictment that was returned on Tuesday and unsealed today following her arrest. FBI agents took Niew into custody without incident at her office in Oak Brook.
Niew, 57, of Burr Ridge, operated Niew Legal Partners LLC in Oak Brook. She was scheduled to be arraigned at 3 p.m. yesterday before U.S. Magistrate Judge Young B. Kim in U.S. District Court.
According to the indictment, Victims A and B, a husband and wife who were Niew’s clients, transferred approximately $2.34 million into Niew’s attorney escrow account to be used for closings on commercial real estate transactions. Between January 2010 and December 2012, Niew allegedly used the funds for her own benefit, contrary to the false representations she made to the couple and others.
Without the couple’s knowledge, Niew used their funds to finance the purchases of various mining operations and not to purchase any commercial property for the victims, the charges allege. As part of the fraud scheme, Niew arranged to receive a 20 percent finder’s fee for herself from a mining operation in exchange for providing it approximately $1.5 million in funds that belonged to her clients. She falsely told the couple that their funds were available in her escrow account and were to be used for closings when they were not. She further concealed her fraudulent conversion of funds by telling her clients that the bank had erroneously sent the funds intended for closings to the wrong bank accounts, even though she had not directed any such wire transfer of the clients’ funds to the title companies to purchase real estate, the indictment alleges.
The arrest and charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent in Charge of the Chicago office of the Federal Bureau of Investigation.
The government is being represented by Assistant U.S. Attorney Sunil Harjani.
Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or an alternative fine totaling twice the gross gain or twice the loss, whichever is greater, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
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.
Niew, 57, of Burr Ridge, operated Niew Legal Partners LLC in Oak Brook. She was scheduled to be arraigned at 3 p.m. yesterday before U.S. Magistrate Judge Young B. Kim in U.S. District Court.
According to the indictment, Victims A and B, a husband and wife who were Niew’s clients, transferred approximately $2.34 million into Niew’s attorney escrow account to be used for closings on commercial real estate transactions. Between January 2010 and December 2012, Niew allegedly used the funds for her own benefit, contrary to the false representations she made to the couple and others.
Without the couple’s knowledge, Niew used their funds to finance the purchases of various mining operations and not to purchase any commercial property for the victims, the charges allege. As part of the fraud scheme, Niew arranged to receive a 20 percent finder’s fee for herself from a mining operation in exchange for providing it approximately $1.5 million in funds that belonged to her clients. She falsely told the couple that their funds were available in her escrow account and were to be used for closings when they were not. She further concealed her fraudulent conversion of funds by telling her clients that the bank had erroneously sent the funds intended for closings to the wrong bank accounts, even though she had not directed any such wire transfer of the clients’ funds to the title companies to purchase real estate, the indictment alleges.
The arrest and charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert J. Shields, Jr., Acting Special Agent in Charge of the Chicago office of the Federal Bureau of Investigation.
The government is being represented by Assistant U.S. Attorney Sunil Harjani.
Each count of wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or an alternative fine totaling twice the gross gain or twice the loss, whichever is greater, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
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.
Thursday, August 29, 2013
David Wilder, Former Chicago White Sox Executive, Sentenced to Federal Prison for Taking Kickbacks from Latin American Players’ Signing Bonuses
A former Chicago White Sox scouting executive was sentenced to two years in federal prison for accepting approximately $440,000 in kickbacks from the signing bonuses and contract buyouts that two of the team’s Latin American scouts paid to secure 23 prospective players between December 2004 and February 2008. The defendant, David S. Wilder, the White Sox farm system director from late 2003 to 2006 when he became the team’s senior director of player personnel until May 2008, had pleaded guilty to mail fraud in February 2011.
Wilder, 52, of San Francisco, was ordered to begin serving his sentence on October 31 by U.S. District Judge Charles Norgle. Wilder was also ordered to pay $440,781 in restitution to the White Sox.
Wilder admitted that he defrauded the White Sox of money and his honest services while concealing the kickbacks from the team and its more senior executives. He later cooperated with the investigation, leading the government to ask for a reduced sentence.
Two former White Sox scouts, Jorge L. Oquendo Rivera, 52, of Puerto Rico, the team’s Latin American scout between November 2004 and October 2007, and Victor Mateo, 42, of the Dominican Republic, a Sox scout in the Dominican Republic between November 2006 and May 2008, were also charged and pleaded guilty to mail fraud. Oquendo Rivera is scheduled to report to prison this Friday to begin serving a sentence of a year and a day that Judge Norgle imposed in June. Mateo is scheduled to be sentenced on September 18.
According to court documents, the White Sox relied on Wilder, as well as Oquendo Rivera and Mateo, to recommend and approve signing bonus and related payments, depending on a player’s talent, necessary to induce a player to sign with the White Sox or to induce another team to release the player to the White Sox, without being inflated for kickbacks. Instead, Wilder and the other defendants facilitated, solicited, or obtained more than $440,000 in kickbacks from at least 23 Latin American players signed by the White Sox.
The White Sox reported findings of an internal investigation to Major League Baseball and baseball officials referred the matter to federal authorities. Both the team and Major League Baseball were instrumental in launching the investigation and provided continuing cooperation.
The government is being represented by Assistant U.S. Attorneys Christopher K. Veatch and Michelle Nasser.
The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert G. Shields, Jr., Acting Special Agent in Charge of the Federal Bureau of Investigation.
Wilder, 52, of San Francisco, was ordered to begin serving his sentence on October 31 by U.S. District Judge Charles Norgle. Wilder was also ordered to pay $440,781 in restitution to the White Sox.
Wilder admitted that he defrauded the White Sox of money and his honest services while concealing the kickbacks from the team and its more senior executives. He later cooperated with the investigation, leading the government to ask for a reduced sentence.
Two former White Sox scouts, Jorge L. Oquendo Rivera, 52, of Puerto Rico, the team’s Latin American scout between November 2004 and October 2007, and Victor Mateo, 42, of the Dominican Republic, a Sox scout in the Dominican Republic between November 2006 and May 2008, were also charged and pleaded guilty to mail fraud. Oquendo Rivera is scheduled to report to prison this Friday to begin serving a sentence of a year and a day that Judge Norgle imposed in June. Mateo is scheduled to be sentenced on September 18.
According to court documents, the White Sox relied on Wilder, as well as Oquendo Rivera and Mateo, to recommend and approve signing bonus and related payments, depending on a player’s talent, necessary to induce a player to sign with the White Sox or to induce another team to release the player to the White Sox, without being inflated for kickbacks. Instead, Wilder and the other defendants facilitated, solicited, or obtained more than $440,000 in kickbacks from at least 23 Latin American players signed by the White Sox.
The White Sox reported findings of an internal investigation to Major League Baseball and baseball officials referred the matter to federal authorities. Both the team and Major League Baseball were instrumental in launching the investigation and provided continuing cooperation.
The government is being represented by Assistant U.S. Attorneys Christopher K. Veatch and Michelle Nasser.
The sentence was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Robert G. Shields, Jr., Acting Special Agent in Charge of the Federal Bureau of Investigation.
Wednesday, August 28, 2013
Dike Ajiri, Mobile Doctors’ Chicago CEO, and Doctor Banio Koroma Arrested on Federal Health Care Fraud Charges
The chief executive officer of Chicago-based Mobile Doctors, which manages physicians who make house calls in six states, and one of its physicians in Chicago were arrested on federal health care fraud charges. At the same time, federal agents executed search warrants at Mobile Doctors’ offices in Chicago, Detroit, and Indianapolis, as well as warrants to seize up to $2.568 million in alleged fraud proceeds from various bank accounts. The charges allege a scheme to fraudulently increase (also known as “upcoding”) Medicare bills for in-home patient visits that Mobile Doctors falsely claimed were more complicated and longer than they actually were. The charges also allege that Mobile Doctors’ physicians falsely certified that patients were confined to their homes, enabling home health care agencies to claim fees for additional services for patients who were not actually qualified to receive them.
Agents from the FBI, the U.S. Department of Health and Human Services Office of Inspector General, and other law enforcement agencies executed the arrest, search, and seizure warrants in connection with the charges and also a broader ongoing investigation that includes allegedly illegal billing practices for medically unnecessary tests and services not performed by a physician.
Arrested were Dike Ajiri, 42, of Wilmette, CEO of Mobile Doctors, which he has effectively owned since 1996, and Banio Koroma, 63, of Tinley Park, a physician who has worked for Mobile Doctors since approximately 2007. Mobile Doctors, located at 3319 N. Elston Ave., in Chicago, arranges patient home visits and contracts with doctors who perform the visits. The physicians assign their rights to bill and collect payment to Mobile Doctors in return for being paid directly by the company. Mobile Doctors’ website claims that its associated physicians have made more than 500,000 house calls since its inception. In addition to Chicago, the company has branches in Detroit and Flint, Michigan; San Antonio and Austin, Texas; Indianapolis; Kansas City; Phoenix; and St. Louis.
Ajiri was charged with health care fraud, and Koroma was charged with making false statements relating to health care benefits in a criminal complaint that was filed yesterday and unsealed today after the arrests. Both were scheduled to appear at 3 p.m. today before U.S. Magistrate Judge Mary Rowland in U.S. District Court.
The arrests and charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., 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 Railroad Retirement Board Office of Inspector General is also participating in the investigation.
According to a 75-page affidavit in support of the arrest, search, and seizure warrants, agents have interviewed several current and more than 25 former employees of Mobile Doctors, including some who reported allegedly fraudulent billing practices to Medicare before they were contacted by agents. Investigators have also reviewed e-mails and documents, claims data and patient files and have conducted interviews with patients of Mobile Doctors and their primary care physicians, whose statements contradict Mobile Doctors’ billing and patient records.
Mobile Doctors physicians do not perform tests such as echocardiograms but do order such tests, which are done on Mobile Doctors’ patients by employees of In Home Diagnostics, doing business as Ultrasound2You. According to Medicare records, Ajiri is a minority partner in In Home Diagnostics, which is located in the same building as Mobile Doctors, and Mobile Doctors bills the echocardiograms so that they appear to have been done by Mobile Doctors’ physicians.
The complaint affidavit states that Ajiri signed a personal financial statement on December 31, 2012, stating that he received $1.5 million in annual partnership income from a corporate entity, Mobile Doctors LLC, which has a complex ownership structure involving Ajiri and, over time, one or both of his parents. Between 2008 and January 2013, bank records show that approximately $4.365 million was transferred from Mobile Doctors to an account in the name of Ajiri and his wife.
Upcoding Patient Visits
According to interviews with former and current Mobile Doctors physicians, branch managers, clinical coordinators, employees, and patients, a typical visit that a Mobile Doctors physician has with an established patient lasts 10 to 30 minutes and is routine in nature. In contrast to those interviews, claims data shows that from 2006 through February 2013, approximately 99 percent of all established-patient visits by Mobile Doctors physicians were billed to Medicare using either of the two highest codes indicating the visits involved medical decision-making of moderate to high complexity, detailed or comprehensive interval histories or medical examinations, and/or visits that typically last at least 40 minutes.
In 2009 in Chicago, the local Medicare fee for a visit using the second-highest home visit code was approximately $122.82, while the fee for the highest code was approximately $171.25. According to a review of claims data for Railroad Retirement Board patients, every single established-patient visit Mobile Doctors billed to Medicare between January 2007 and June 2008 used the highest fee code. Between January 2007 and November 2012, approximately 93 percent of such visits were billed using the highest fee code.
The former manager of Mobile Doctors’ Chicago branch until she was terminated in 2008 told agents that Ajiri told her that the second-highest fee code was the default code for a patient visit so that it would be worth the gas and time spent. The manager said Ajiri told physicians, “I don’t pay for ones or twos,” referring to the two lower of the four applicable fee codes. At the end of one day, she said she saw Ajiri in his office “automatically” altering the billing codes and marking visits at the highest fee level on patient records submitted by physicians and assistants who accompanied them on home visits. A physician told agents that in late 2007, Ajiri did not respond to his concerns about Mobile Doctors’ billing practices and instead told the doctor that he could earn more money if he would order more tests such as electrocardiograms, according to the affidavit.
The complaint alleges that the vast majority of payments made on established-patient visit claims using the highest fee code were the result of fraudulent upcoding. From 2006 through 2012, Mobile Doctors received approximately $21.4 million in payments on claims using the second-highest code and approximately $12.6 million in Medicare payments on claims using the highest fee code.
Falsely Certifying Patients as Confined to Their Homes
The charges further allege that Mobile Doctors physicians, including Koroma, falsely certified patients as confined to their homes and requiring home health services when they were not home-bound and did not require such care. By referring patients to home health agencies that did not warrant Medicare payments, Mobile Doctors received more referrals from those agencies for services provided by its physicians. According to Medicare data, from August 2010 through July 2013, more than 200 home health agencies submitted Medicare claims for services allegedly rendered to patients for whom Koroma was identified as the referring physician. These home health agencies have been paid more than $10 million for services listing Koroma as the referring physician.
Between January 2006 and March 2013, Mobile Doctors physicians have certified or recertified for 60-day periods approximately 15,598 patients as confined to their homes and requiring home health services a total of approximately 83,133 times, many of which were allegedly false. Approximately 6,057 of these certifications were attributed since August 2007 to Koroma, with Mobile Doctors billing Medicare for approximately 17,439 patient visits he made during that time, more than any other Mobile Doctors physician.
The health care fraud count against Ajiri carries a maximum penalty of 10 years in prison and a $250,000 fine and restitution is mandatory. The false statements count against Koroma carries a maximum 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. Attorney Stephen C. Lee and Catherine Dick, assistant chief in the Fraud Section of the Justice Department’s Criminal Division. The U.S. Attorney’s Offices in Detroit, Indianapolis, and Phoenix also have assisted in the investigation.
The public is reminded that a complaint 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.
The Medicare Fraud Strike Force began operating in Chicago in February 2011 and consists of agents from the FBI and HHS-OIG working together with prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is part of the Health Care Fraud Prevention and 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. Scores of defendants have been charged locally in health care fraud cases since the strike force began operating in Chicago.
To report health care fraud to learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Agents from the FBI, the U.S. Department of Health and Human Services Office of Inspector General, and other law enforcement agencies executed the arrest, search, and seizure warrants in connection with the charges and also a broader ongoing investigation that includes allegedly illegal billing practices for medically unnecessary tests and services not performed by a physician.
Arrested were Dike Ajiri, 42, of Wilmette, CEO of Mobile Doctors, which he has effectively owned since 1996, and Banio Koroma, 63, of Tinley Park, a physician who has worked for Mobile Doctors since approximately 2007. Mobile Doctors, located at 3319 N. Elston Ave., in Chicago, arranges patient home visits and contracts with doctors who perform the visits. The physicians assign their rights to bill and collect payment to Mobile Doctors in return for being paid directly by the company. Mobile Doctors’ website claims that its associated physicians have made more than 500,000 house calls since its inception. In addition to Chicago, the company has branches in Detroit and Flint, Michigan; San Antonio and Austin, Texas; Indianapolis; Kansas City; Phoenix; and St. Louis.
Ajiri was charged with health care fraud, and Koroma was charged with making false statements relating to health care benefits in a criminal complaint that was filed yesterday and unsealed today after the arrests. Both were scheduled to appear at 3 p.m. today before U.S. Magistrate Judge Mary Rowland in U.S. District Court.
The arrests and charges were announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., 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 Railroad Retirement Board Office of Inspector General is also participating in the investigation.
According to a 75-page affidavit in support of the arrest, search, and seizure warrants, agents have interviewed several current and more than 25 former employees of Mobile Doctors, including some who reported allegedly fraudulent billing practices to Medicare before they were contacted by agents. Investigators have also reviewed e-mails and documents, claims data and patient files and have conducted interviews with patients of Mobile Doctors and their primary care physicians, whose statements contradict Mobile Doctors’ billing and patient records.
Mobile Doctors physicians do not perform tests such as echocardiograms but do order such tests, which are done on Mobile Doctors’ patients by employees of In Home Diagnostics, doing business as Ultrasound2You. According to Medicare records, Ajiri is a minority partner in In Home Diagnostics, which is located in the same building as Mobile Doctors, and Mobile Doctors bills the echocardiograms so that they appear to have been done by Mobile Doctors’ physicians.
The complaint affidavit states that Ajiri signed a personal financial statement on December 31, 2012, stating that he received $1.5 million in annual partnership income from a corporate entity, Mobile Doctors LLC, which has a complex ownership structure involving Ajiri and, over time, one or both of his parents. Between 2008 and January 2013, bank records show that approximately $4.365 million was transferred from Mobile Doctors to an account in the name of Ajiri and his wife.
Upcoding Patient Visits
According to interviews with former and current Mobile Doctors physicians, branch managers, clinical coordinators, employees, and patients, a typical visit that a Mobile Doctors physician has with an established patient lasts 10 to 30 minutes and is routine in nature. In contrast to those interviews, claims data shows that from 2006 through February 2013, approximately 99 percent of all established-patient visits by Mobile Doctors physicians were billed to Medicare using either of the two highest codes indicating the visits involved medical decision-making of moderate to high complexity, detailed or comprehensive interval histories or medical examinations, and/or visits that typically last at least 40 minutes.
In 2009 in Chicago, the local Medicare fee for a visit using the second-highest home visit code was approximately $122.82, while the fee for the highest code was approximately $171.25. According to a review of claims data for Railroad Retirement Board patients, every single established-patient visit Mobile Doctors billed to Medicare between January 2007 and June 2008 used the highest fee code. Between January 2007 and November 2012, approximately 93 percent of such visits were billed using the highest fee code.
The former manager of Mobile Doctors’ Chicago branch until she was terminated in 2008 told agents that Ajiri told her that the second-highest fee code was the default code for a patient visit so that it would be worth the gas and time spent. The manager said Ajiri told physicians, “I don’t pay for ones or twos,” referring to the two lower of the four applicable fee codes. At the end of one day, she said she saw Ajiri in his office “automatically” altering the billing codes and marking visits at the highest fee level on patient records submitted by physicians and assistants who accompanied them on home visits. A physician told agents that in late 2007, Ajiri did not respond to his concerns about Mobile Doctors’ billing practices and instead told the doctor that he could earn more money if he would order more tests such as electrocardiograms, according to the affidavit.
The complaint alleges that the vast majority of payments made on established-patient visit claims using the highest fee code were the result of fraudulent upcoding. From 2006 through 2012, Mobile Doctors received approximately $21.4 million in payments on claims using the second-highest code and approximately $12.6 million in Medicare payments on claims using the highest fee code.
Falsely Certifying Patients as Confined to Their Homes
The charges further allege that Mobile Doctors physicians, including Koroma, falsely certified patients as confined to their homes and requiring home health services when they were not home-bound and did not require such care. By referring patients to home health agencies that did not warrant Medicare payments, Mobile Doctors received more referrals from those agencies for services provided by its physicians. According to Medicare data, from August 2010 through July 2013, more than 200 home health agencies submitted Medicare claims for services allegedly rendered to patients for whom Koroma was identified as the referring physician. These home health agencies have been paid more than $10 million for services listing Koroma as the referring physician.
Between January 2006 and March 2013, Mobile Doctors physicians have certified or recertified for 60-day periods approximately 15,598 patients as confined to their homes and requiring home health services a total of approximately 83,133 times, many of which were allegedly false. Approximately 6,057 of these certifications were attributed since August 2007 to Koroma, with Mobile Doctors billing Medicare for approximately 17,439 patient visits he made during that time, more than any other Mobile Doctors physician.
The health care fraud count against Ajiri carries a maximum penalty of 10 years in prison and a $250,000 fine and restitution is mandatory. The false statements count against Koroma carries a maximum 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. Attorney Stephen C. Lee and Catherine Dick, assistant chief in the Fraud Section of the Justice Department’s Criminal Division. The U.S. Attorney’s Offices in Detroit, Indianapolis, and Phoenix also have assisted in the investigation.
The public is reminded that a complaint 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.
The Medicare Fraud Strike Force began operating in Chicago in February 2011 and consists of agents from the FBI and HHS-OIG working together with prosecutors from the U.S. Attorney’s Office and the Justice Department’s Fraud Section. The strike force is part of the Health Care Fraud Prevention and 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. Scores of defendants have been charged locally in health care fraud cases since the strike force began operating in Chicago.
To report health care fraud to learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
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- John Favara, Former Neighbor of John Gotti, Murdered and Dumped into Acid According to Federal Informant
- Mob Murder Suggests Link to International Drug Ring
- Chicago Mob Infamous Locations Map
- No Egg McMuffin Results in Arrest of Mob Associates
- Mafia Princess Challenges Coco Giancana to Take a DNA Test to Prove She's Granddaughter of Sam Giancana
- Mobsters at the Apalachin Mob Meeting
- Little Joe Perna, Reputed Lucchese Mafia Crime Family Member, Charged with Running Multimillion Sports Betting Ring Involving College Athletes #NewJersey #MafiaNews #Gambling