What a Sham

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A sham is something that is not what it appears to be. It’s usually required to commit fraud. The Courier-Journal reports on the owners of two bogus medical supply companies who tried to bilk Medicare of approximately $4 million in fraudulent claims.

The story states that the two owners from Florida operated the sham Louisville companies. Over a two-year period, they submitted false claims for patients who were supposedly treated by Kentucky physicians. (Court records show that some of the patients were actually deceased.) In reality, the patients had never seen the doctors. (That’s kind of hard to do if you are dead.) The claims also showed that products, including surgical dressings, were billed to Medicare even though they were never provided.

It gets more interesting. Investigators searched the two company locations and found them to be virtually empty. They discovered that the owners had recruited men to serve as fronts, but later transported them to Mexico to avoid prosecution. One woman, who had previously worked for the owners, testified that the fraudsters had chosen to set up shop in Kentucky because it was ”virgin territory.” (I suppose that’s like being fraud pioneers on the Kentucky frontier.) She also stated her life had been threatened if she cooperated with authorities. Another woman’s job had been to serve as a ”receptionist” during a Medicare inspection. (Sounds like smoke and mirrors to me.)

The 36-year-old and 42-year-old company owners were each sentenced to four-and-a-half years in prison and are required to pay more than $1.9 million in restitution. They also pleaded guilty to misprision (that means to hide a crime) of a felony for taking the two former ”front men” to Mexico.

The two fraudsters will be paying the price for their criminal activities. As they will soon find out, jail is definitely not a sham, it’s real. (What a shame.)

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Medical Supply Companies Must Pay $1.9 Million for Medicare Fraud,” written by Andrew Wolfson and published by the Courier-Journal on January 23, 2014.

The two medical supply companies in Louisville were shams, billing Medicare for providing equipment that was never delivered to patients in Florida — some of whom were deceased.

Now the owners of the two defunct companies will pay the price for a scheme in which they submitted about $4 million in fraudulent claims.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.