FLORIDA

Florida Attorney General Charlie Crist and U.S. Attorney Alexander Acosta announced four individuals, including two Miami physicians, have been arrested for allegedly participating in an organization that illegally diverted millions of dollars worth of highly valued AIDS drugs from Medicaid recipients and resold them on the black market.

U.S. Marshals arrested Onelio S. Baez, 65, the individual responsible for constructing, funding and directing the operation, and Juan Carlos Mateo, 44, a patient recruiter and runner who was employed by Baez to recruit Medicaid recipients to participate in the scheme. The two Miami doctors, Luis Jacinto Marti, 73, and Jorge Arnaldo Valido, 48, are accused of aiding Baez and Mateo by writing prescriptions for expensive drugs that were neither necessary for nor received by the Medicaid recipients.

An investigation revealed that Baez built a large criminal organization made up of corrupt medical professionals, family members and friends. Together, they ran a scheme that fraudulently used Florida Medicaid funds to obtain millions of dollars in human immune globulin, used to treat patients with AIDS.

Members of the fraud ring recruited and paid Medicaid recipients from the streets to visit Marti and Valido. The doctors allegedly prescribed expensive medications, created bogus medical records to document the “illnesses,” wrote prescriptions and used cooperating pharmacies to fill prescriptions. Medicaid was billed more than $1 million for the drugs, which were diverted and sent to a broker, who sold the medication to buyers. Cash from these sales was funneled back to the ring leaders, who pocketed the proceeds.

Each of those arrested will be prosecuted for one count of conspiracy to defraud the United States and 16 counts of committing healthcare fraud and paying kickbacks.

‘Fraud Fighters’ Pay $16,000 in Rewards

Five individuals who reported fraud perpetrators have received $16,000 in cash rewards from the Florida Financial Services Department after the recipients, including a child, provided information that led fraud detectives to thwart more than $1 million in fraudulent insurance claims.

The biggest reward of $10,000 went to two individuals who testified against a man who falsely claimed to be injured by falling ceiling tiles in his apartment.

The department’s Fraud Fighters program pays up to $25,000 for information that directly leads to the arrest and conviction of individuals committing insurance fraud. The individual rewards are based on the potential dollar loss in each case. Below are summaries of the cases (names are held confidential):

• Eric Reedy claimed he was in bed the evening of Oct. 18, 1996, when heavy rain caused part of the ceiling to fall in at his St. Petersburg apartment. However, he told others of his scheme to falsely claim he was in the bed in order to file a liability claim against Allstate Insurance Co., which insured the complex. In September 1997, an attorney representing Reedy sent a letter to Allstate demanding $1 million, the complex’s policy’s limit for bodily injury liability coverage. On March 5, 2003, Reedy pleaded guilty to perjury and adjudication was withheld. The $10,000 reward was split between two individuals.

• Leslie Galloway was charged with obstruction of a law enforcement officer when she falsely claimed that she was involved in a Tampa crash that her sister Caroline was involved in instead. A witness at the scene of the May 2002 accident said Caroline walked away from the accident and that a man and a different woman returned. That woman identified herself as Leslie Galloway. Caroline, who had no insurance, gave false statements to American Family and State Farm Insurance companies and, posing as Leslie, obtained more than $15,000 in benefits to which she was not entitled. Caroline was convicted of two counts of false and fraudulent insurance claims and grand theft on June 24, 2005. Leslie Galloway was convicted of obstruction of a law enforcement officer on Sept. 19, 2005.

• In July 2004, Joe Patrick Rich reported to State Farm Insurance Company that his 2002 Volvo was stolen from the parking lot of a Hallandale restaurant. After a call from an informant, the car was recovered in September from a Miami warehouse. Rich was charged with insurance fraud. The informant was given a $1,000 reward.

The Department of Financial Services, Division of Insurance Fraud, investigates various forms of fraud in insurance, including health, life, auto, property and workers’ compensation insurance. Anyone with information about these cased or another possible fraud scheme should call the department’s Fraud Fighters Hotline at 1-800-378-0445. A reward of up to $25,000 may be offered for information leading to a conviction.

Fraud Case Records Found in Longwood

A trash bin in Longwood, Fla., near Orlando has revealed boxes of medical records with photographs, names, Social Security numbers and personal information about chiropractic patients in Lawrence, Mass. treated by Prestige Pain Management and Physical Therapy. The discarded records were discovered in an industrial park.

Investigators from the Lawrence Auto Insurance Fraud Task Force inspected the documents at the Longwood Police Department. Until 2003, Prestige operated a clinic in Lawrence. The boxes contain medical files of patients treated at Lawrence and Hyde Park clinics between 2001 and 2003.

After taking the records as potential evidence Oct. 19, Longwood detectives notified Lawrence police and told them it would cost about $800 to ship the documents.

Romero decided it would be cheaper to have investigators fly to Florida to inspect the records.

MISSISSIPPI

Six Indicted for False Katrina Claims

Six Mississippi residents have been indicted by a federal grand jury on charges of making false claims to the Federal Emergency Management Agency in an effort to obtain relief funds from Hurricane Katrina.

The Gulfport Sun Herald reported that Judith Turnage of Gulfport was one of the six indicted.

In a separate case, the newspaper said John Johnston of Carriere has been charged with fraud related to Hurricane Katrina.

Johnston is charged with home-repair fraud and violations of the Consumer Protection Act for allegedly taking money to repair a house and failing to do the work. He was arrested Nov. 16 in Pearl River County.

Johnston’s business, ReRoofing America in Gulfport, entered into a contract with a resident whose home was damaged by Katrina and accepted a $10,000 payment, the state attorney general’s office said Tuesday.

The AG’s office worked with several local agencies, including sheriff’s department investigators in Harrison, Jackson and Pearl River counties. Johnston was released from the Jackson County jail on a $2,500 bond a day after his arrest.

Topics Florida USA Fraud