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Friday, August 29, 2008
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Convicted Medicare Fraud Defendant Pleads Guilty to Laundering More Than $3 Million in Fraudulent Proceeds

WASHINGTON – Miami resident Juan Carlos Castaneda, 47, pleaded guilty today to participating in a conspiracy to launder approximately $3.8 million in proceeds from several Medicare fraud schemes, Acting Assistant Attorney General Matthew Friedrich of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced. Castaneda pleaded guilty to one count of conspiracy to commit money laundering before U.S. District Judge Federico Moreno in Miami. Sentencing is scheduled for Nov. 7, 2008.

In connection with his plea, Castaneda admitted that in approximately June 2003, he agreed to assist co-defendant Dilcia Marinez and others in laundering the proceeds of Medicare fraud obtained through G&S Medical Center Inc. (G&S), a Miami medical clinic purporting to specialize in the treatment of HIV patients. Castaneda admitted he knew G&S submitted fraudulent claims to the Medicare program for HIV services purportedly provided to Medicare beneficiaries and admitted that he agreed to assist Marinez and others in concealing their control of G&S’s fraudulently-obtained Medicare funds. Castaneda was indicted on May 22, 2008.

According to plea documents, Castaneda admitted he directed Marinez to write checks drawn from G&S’s bank accounts to various companies, many of them sham companies, in amounts under $10,000. Castaneda admitted he was aware that checks made out to corporate entities and cashed in amounts under $10,000 would not trigger currency transaction reporting requirements. Castaneda admitted he would then cash the G&S checks, typically with sham companies listed as the payees, at a Miami check-cashing facility to which he would pay a two percent fee. Castaneda would then charge Marinez a fee totaling 10 percent of the laundered funds, enabling Castaneda to retain eight percent of the value of the checks cashed. Castaneda admitted that he would also deposit G&S checks made out to corporations he controlled – including Proline Investments Inc., New Millennium Investments Inc. and Waterfront Vacation Rental Inc. – and that he later withdrew the cash, less a 10 percent fee, and returned the cash to Marinez. In all, Castaneda laundered approximately $1.8 million of the Medicare fraud proceeds at G&S.

Following G&S’s closure in January 2004, Castaneda admitted he conspired with others to launder additional funds for another HIV clinic, Best Medical Inc. (Best Medical). Best Medical, like G&S, submitted fraudulent bills to the Medicare program for HIV infusion services that were medically unnecessary and services that were never provided. Castaneda admitted that he was actively involved in the management and control of Best Medical, and that he laundered funds to conceal his control and the control of his co-conspirators over the illicitly obtained funds. From approximately March 2004 through approximately December 2004, Castaneda admitted he cashed Best Medical checks at various Miami check cashing facilities using the same method he employed at G&S. Castaneda then distributed the cash to himself and to his co-conspirators at Best Medical in order to conceal the ownership and control of the funds. From approximately March 2004 through approximately December 2004, Castaneda laundered approximately $2 million in proceeds of Medicare fraud at Best Medical.

In a related case, brothers Carlos, Luis and Jose Benitez were indicted on June 11, 2008, for their role in a $110 million HIV infusion fraud and money laundering scheme. The indictment alleges the Benitez brothers were the masterminds of a massive HIV infusion fraud operation throughout south Florida involving at least 11 clinics and that they laundered the proceeds of their crimes. All three Benitez brothers remain fugitives. According to the indictment, Carlos and Luis Benitez were the true owners of G&S.

In July 2007, Castaneda pleaded guilty, without a plea agreement, to all counts in a separate indictment that charged him with conspiring to pay cash kickbacks to 72 owners of durable medical equipment (DME) companies in exchange for compounded aerosol medication prescriptions. Castaneda billed Medicare for these drugs through International Surgical-Med Pharmaceuticals Corporation, a Miami pharmacy he owned and operated, and then kicked back 50 percent of the Medicare payments to the DME owners. At sentencing, the court found that Castaneda received more than $4.5 million from Medicare and paid $2,040,500 in twice-monthly cash kickbacks to DME company owners as part of the scheme. Castaneda is currently serving the 63 month prison sentence he received on March 28, 2008, in connection with these crimes.

This case is being prosecuted by Hank Bond Walther and John K. Neal of the Criminal Division’s Fraud Section. The case was investigated by the FBI and the Department of Health and Human Services, Office of Inspector General.

The cases were brought as part of the Medicare Fraud Strike Force, supervised by Deputy Chief Kirk Ogrosky of the Criminal Division’s Fraud Section and U.S. Attorney Acosta of the Southern District of Florida. Federal prosecutors have indicted 82 cases with 142 defendants in south Florida since investigations opened during the period of strike force operations between March and October 2007. Collectively, these defendants fraudulently billed the Medicare program for more than $492 million.