Owner of telemedicine companies charged with $784 million Medicare fraud, tax evasion, bribery

The owner's co-conspirators have already pled guilty to a prior indictment.
The U.S. Department of Justice

In one of the largest schemes of Medicare fraud that the Department of Justice has ever charged, an owner of several telemedicine companies was indicted on Tuesday for $784 million of healthcare fraud, tax evasion, and illegal kickbacks.

The owner, Creaghan Harry, who is from Highland Beach, Florida, was charged in a superseding indictment by a federal grand jury in Newark, New Jersey, "with one count of conspiracy to commit health care fraud and wire fraud, and four counts of income tax evasion," the Justice Department said in a statement.

Harry was previously charged in another indictment with his co-conspirators, Lester Stockett and Elliot Loewenstern, "with one count of conspiracy to defraud the United States and to pay and receive kickbacks, four counts of receipt of kickbacks, and one count of conspiracy to commit money laundering," according to the DOJ. His co-conspirators have already pleaded guilty.

According to the indictment, along with Stockett and Loewenstern, Harry had "solicited illegal kickbacks and bribes from durable medical equipment (DME) suppliers and marketers in exchange for orders for DME braces and medications. Harry's telemedicine companies then allegedly paid physicians to write medically unnecessary orders for these braces and medications," the DOJ said.

The telemedicine companies "fraudulently billed Medicare over $784 million" through the order to DME suppliers, according to the indictment allegations, the Justice Department said. Over $247 million was paid by Medicare.

Harry had the DME suppliers and marketers pay shell companies in the U.S. and elsewhere that were opened under names of straw owners to hide the healthcare fraud and illegal kickbacks, the indictment alleges. Afterwards, Harry would transfer the money paid to the shell companies over to his telemedicine companies so he could pay the physicians to write unnecessary orders.

Also, Harry allegedly falsely told lawyers, prospective investors, and others that his telemedicine companies were not receiving kickbacks. Instead, he claimed that the revenue from the telemedicine companies, "about $10 million per year," was from patient fees for telemedicine services, according to the DOJ.

From 2015 to 2018, Harry allegedly committed income tax evasion by using the money from the shell companies to live lavishly while he didn't pay income taxes or file an income tax return.

If Harry is found guilty, he "faces a maximum penalty of 20 years' imprisonment for the conspiracy to commit health care fraud and wire fraud, five years' imprisonment on each count of tax evasion, five years' imprisonment for the conspiracy to defraud the United States and pay and receive kickbacks, 10 years' imprisonment for each count of receipt of kickbacks, and 20 years' imprisonment on the conspiracy to commit money laundering," the DOJ said.