A Medical Device Daily
The Securities and Exchange Commission has filed an action against Raymond Chop and Nicholas Chop, residents of Florida, for engaging in insider trading in the securities of Serologicals (Norcross, Georgia). The SEC complaint, filed on May 23 in the U.S. District Court for the Northern District of Georgia, alleges that the defendants purchased securities of Serologicals while in possession of non-public information in connection with the impending purchase of Serologicals by Millipore (Billerica, Massachusetts), which it reported in April 2006 (Medical Device Daily, April 26, 2006).
In a consent filed with the complaint, the two men agreed, without admitting or denying the allegations, to a final judgment enjoining them from future violations.
The complaint says that on April 23, 2006, the defendants met with a Serologicals employee who informed the defendants that Serologicals was in the process of being sold, and that the morning after learning of the impending merger and based upon that knowledge, Raymond Chop purchased 500 shares of Serologicals stock, and Nicholas Chop purchased 400 shares of the company's stock.
On April 25, before the market opened, Millipore announced its agreement to acquire Serologicals, with Serologicals' stock subsequently closing up $7.83 from the previous day to $31.55 a share (a more than 34% increase). Raymond Chop made a profit of $3,785, Nicholas Chop, $2,897.
Raymond Chop consented to a disgorgement of $3,785.12, plus prejudgment interest of $172.83, and a civil penalty of $3,785.12. Nicholas Chop consented to a disgorgement of $2,897.61, prejudgment interest of $132.31, and a civil penalty of $2,897.61.
In other court news:
Alexander Acosta, U.S. Attorney for the Southern District of Florida (Miami), joined by others, including the FDA and the Department of Health and Human Services, filed criminal charges against 16 defendants for fraudulently billing Medicare about $101 million.
On May 22, a Miami federal grand jury returned a 46-count indictment against eight defendants, charging Mabel and Abner Diaz with operating All-Med Billing (Miami) and executing a scheme to submit tens of millions of dollars in fraudulent claims to Medicare from 1998 to 2004 for reimbursement for durable medical equipment (DME) and related services.
The indictment alleges that All-Med submitted about $80 million in false claims on behalf of 29 DME companies — fraudulent in that the equipment had not been ordered by a physician and/or had never been delivered to a patient. As a result, Medicare paid the DME companies about $56 million.
The Diazes were additionally charged with conspiracy to launder the proceeds of the alleged All-Med billing fraud scheme. Also charged in the All-Med billing fraud scheme was All-Med employee Suleidy Cano.
Other defendants charged are Amry Garcia, Davel Hernandez, and Rene Raimundo Hernandez. They are charged with conspiring to defraud Medicare in their operation of A-1 Durable Medical Equipment and Supplies (A-1; Miamia). According to the indictment, A-1 received about $2.1 million in response to fraudulent claims that were submitted to Medicare by All-Med.
The indictment also charges defendants Jose Luis Palma Jr. and Luis Gonzalez with conspiracy and Medicare fraud in connection with the operation of Simply Medical Services (Simply Medical; Miami), a DME company. Gonzalez also was charged with Medicare fraud in relation to another DME company, Premier Medical Service (Premier). As a result of fraudulent claims submitted by All-Med on behalf of Simply Medical and Premier, Medicare paid over $3.7 million.
On May 22, another indictment charged defendants Jose Tomas Iglesias, Marco Antonio Marrero, and Leslie Gonzalez with conspiring to defraud Medicare in connection with the fraudulent submission of $6.8 million in DME-related claims during 2006.
The claims concerned a Miami DME company named Bridge Medical Equipment.
Iglesias also was charged separately with several counts of illegally laundering the fraud proceeds through the cashing or depositing of various checks and with aggravated identity theft by using another's Florida driver's license in connection with the healthcare fraud scheme.
On May 22, Alejandro De La Victoria, the owner of Precise Medical Services (Miami), a DME company, was indicted on fraud charges for submitting about $3 million in fraudulent DME claims to Medicare during several months in 2006, and receiving about $1.4 million.
On May 15, Maria Oliveros-Garay was indicted on four counts of healthccare fraud in connection with a Medicare billing fraud involving Abue Medical Equipment (Miami), a DME company. According to the indictment, Oliveros-Garay submitted about $3.8 million in fraudulent DME-related claims to Medicare in 2006, of which Medicare paid about $1.5 million.
Also, the U.S. Attorney's Office filed two separate informations against two individuals in separate DME-related fraud cases. In one case, defendant Mario Mira was charged with one count of healthcare fraud in connection with Mario & Clara Medical Supply (Miami), a DME company that submitted at least $2.5 million in fraudulent DME claims to Medicare in 2006. In the second case, Eduardo Ruiz was charged with one count of healthcare fraud in connection with EZ Medical (Tampa), also a DME company. Ruiz allegedly caused the submission of about $5.3 million in fraudulent DME claims in 2005 by misappropriating and using the Medicare identification numbers of Miami-Dade beneficiaries. Medicare paid about $1.38 million on these claims. Ruiz faces a maximum prison term of 10 years.
On May 24, defendant Eredio Prieto pled guilty to one count of money laundering. The charge arose out of Prieto's use of a shell corporation, Royalty Group Investment (Royalty Group). According to court records, Prieto deposited proceeds of healthcare fraud, involving south Florida healthcare companies, into Royalty Group bank accounts and then engaged in financial transactions to launder about $147,000 in Medicare funds in 2006. Prieto faces a maximum of 20 years imprisonment. Sentencing is scheduled for Aug. 22.