Nevada Man Sentenced to 51 Months Imprisonment for Prize-Notification Fraud Scheme
Friday, November 10, 2023
Headlines that Matter for Companies and Executives in Regulated Industries

Nevada Man Sentenced to 51 Months Imprisonment for Prize-Notification Fraud Scheme

Earlier this week, a Nevada man was sentenced to 51 months in prison for perpetrating a prize-notification scheme that defrauded thousands of elderly and vulnerable victims.

According to prosecutors, Edgar Del Rio and his co-conspirators operated a mail fraud scheme from 2010 to February 2018. Under this scheme, Del Rio and his co-conspirators printed and mailed millions of fraudulent prize notices, which led recipients to believe that they could claim a large cash prize if they paid a fee of $20 to $25. Recipients who paid the fees never received anything of value in return. Once a recipient paid the fee, Del Rio and his co-conspirators would continue to send them more fraudulent mail. Over the course of the scheme, Del Rio and his co-conspirators received millions of dollars from thousands of victims.

Three other individuals previously pleaded guilty to conspiracy to commit mail fraud in connection with this scheme, and three more were convicted after a jury trial, receiving sentences ranging from 14 to 20 years in prison.

The US Department of Justice’s (DOJ) press release is available here.


Florida Lab Agrees to Pay $1.2 Million to Settle Kickback Allegations

Last week, Genesis Reference Laboratories LLC agreed to pay $1,195,845.82 to settle allegations that it paid unlawful kickbacks to health care providers in violation of the False Claims Act (FCA) and Anti-Kickback Statute (AKS). As part of the settlement, Genesis has agreed to cooperate with the DOJ’s investigations of and litigation against other participants in the alleged scheme.

Prosecutors alleged that from 2019 to 2021, Genesis, which operated a clinical laboratory in Florida, paid marketing companies Corum Group LLC, Provisional Medical Consultants LLC, and RMC Medical LLC to encourage health care providers to order Genesis’ laboratory tests. In return, the marketing companies paid a portion of those payments to the referring health care providers.

According to prosecutors, the health care providers were paid purported investment returns through management services organizations to conceal that they were receiving payments as inducements for laboratory testing referrals to Genesis. Despite knowledge of the kickbacks, Genesis nonetheless submitted claims to Medicare for the testing ordered by the providers receiving the kickbacks. The settlement that resolves these allegations made no determination of liability.

DOJ’s press release is available here, and the settlement agreement is available here.


NBA Health Fraud Trial Is Underway

Trial is now underway in USA v. Williams, 1:21-cr-00603 (S.D.N.Y. Oct. 4, 2021), in which federal prosecutors allege that two former National Basketball Association (NBA) players conspired to defraud the league’s health care plan. While 22 defendants have already pleaded guilty, former Boston Celtics player Glen Davis and former Detroit Pistons player William Bynum elected to proceed to trial.

Prosecutors allege that the players claimed to have undergone numerous medical procedures, including root canals and chiropractic treatments, that they never actually received. This was allegedly part of a greater scheme involving more than 15 former basketball pros, orchestrated by ex-player Terrence Williams. Under the scheme, the players submitted fraudulent invoices and paid kickbacks to Williams.

According to Bynum’s defense counsel, he had no reason to believe that the relevant invoices were fraudulent at the time they were submitted. Davis’ defense counsel similarly argued that Davis relied on Williams in believing that his acts were lawful.

Trial remains ongoing.

 

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