Philip Esformes, Odette Barcha, and Arnaldo Carmouze were arrested last Friday for alleged involvement in a money laundering and Medicare fraud scheme believed to have cost the U.S. government $1 billion since 2009. Assistant Attorney General Leslie Caldwell is calling the case the “largest single criminal health-care fraud case to ever be brought against individuals” by the U.S. Justice Department.
Esformes, 47, is the owner of 30 nursing facilities in Miami. He, 49-year-old Odette Barcha, and 56-year-old Arnaldo Carmouze are were all arrested in connection to the case. Esformes and Barcha are being charged with money laundering, conspiracy, health care fraud, and obstructing justice, while Carmouze is facing the first three charges. Esformes appeared in federal court last Friday afternoon where he was ordered to be held without bond pending a detention hearing.
Medicare and Medicaid are government-run health programs that primarily cover the elderly and the poor, and according to court documents, Esformes worked with his co-conspirators to give unnecessary medical services to patients in his facilities that were fraudulently billed to Medicare and Medicaid. Esformes also allegedly “preyed” on his patients by hooking them on narcotics so they would remain in his facilities, allowing the alleged fraud to continue.
This isn’t the first time Esformes has been accused of health care fraud: in 2006, he was forced to pay a $15.4 million fine to settle a similar case involving unnecessarily admitting patients from his facilities to a hospital in Miami in exchange for cash kickbacks.
The U.S. attorney’s office released a statement last Friday saying it appeared Esformes and his co-conspirators purportedly continued committing fraud after the civil settlement and that they adapted their scheme to prevent detection by federal authorities.
Esformes has been running his assisted-living facilities for 14 years, and prosecutors believe his alleged scheme to enrich himself through fraudulent billings has cost the government in excess of $1 billion. A financial analysis of Esformes’ accounts reportedly revealed that a significant amount of his personal fortune was gained from his fraudulent Medicare scheme.
The prosecution claims to have traced funds that Esformes drew from Medicare accounts and that he allegedly spent $2.4 million to lease luxury vehicles, $2.1 million to lease private jets, $8.9 million to pay credit card bills, $960,000 to purchase watches, and $4.8 million for unspecified uses. His network of facilities alone earned $221 million in false claims, and his own savings and assets are reportedly worth $78 million, which he self-reported in August 2014.
Federal health regulators tend to give South Florida special scrutiny because the region is a hotbed for health care billing fraud schemes that target the government’s Medicaid program. If convicted, Esformes faces life imprisonment under federal sentencing guidelines. Esformes and Barch are scheduled to appear for a detention hearing on August 1, while Carmouze is scheduled for August 3.