WASHINGTON – A federal jury in Miami convicted the owner of a Miami pharmacy for his role in a $3 million Medicare fraud scheme and for money laundering, Assistant Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced today.
After a six day trial in Miami, the jury found Gustavo Smith, 43, guilty of all 17 counts charged against him in the September 2007 indictment, including: conspiracy to defraud the U.S. government, to commit health care fraud, and to submit false claims to the Medicare program; seven counts of health care fraud; seven counts of submitting false claims to the Medicare program; conspiracy to commit money laundering; and one count of money laundering. Sentencing has been scheduled for July 2, 2008. Smith faces a maximum of 130 years in prison.
At trial, the jury heard testimony from patients whose names were used by Smith’s Medstar pharmacy to bill the Medicare program for durable medical equipment. The patients testified that they never received any equipment from Medstar and did not have a medical need for the equipment. The jury also heard testimony from several doctors who allegedly wrote prescriptions for the equipment being billed by Medstar. These doctors testified that they never wrote the prescriptions in question and never prescribed the types of equipment being billed by Medstar.
As part of the scheme, over the course of approximately one year, Smith billed the Medicare program approximately $3 million for negative pressure wound pumps, wound care supplies and pharmaceuticals.
The jury also heard evidence that Smith owned and operated another company, Orthotics Fitters, through which he was billing the Medicare program for the same equipment being billed through Medstar. During 2006, Smith caused Orthotics Fitters to bill approximately $2.9 million in fraudulent claims for negative pressure wound pumps and wound care supplies that were never actually provided to Medicare beneficiaries.
Smith’s co-defendant, Friedhelm Schock, the nominee owner of Medstar, was acquitted on all charged counts.
The case was prosecuted by Trial Attorneys Hank Bond Walther and John K. Neal of the Criminal Division’s Fraud Section, with the investigative assistance of the FBI and U.S. Department of Health and Human Services, Office of the Inspector General. The case was brought as part of the Medicare Fraud Strike Force that has been operating in the Miami area since March 2007. The Medicare Strike Force is led by Deputy Chief Ogrosky of the Criminal Division’s Fraud Section and the office of U.S. Attorney R. Alexander Acosta of the Southern District of Florida. Since March 1, 2007, the Strike Force has brought charges against 120 defendants, resulting in more than 100 convictions to date.