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Jan. 30, 2012

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Houston Concert Promoter Gets Federal Prison for Defrauding Medicare of Almost $10 Million

HOUSTON - Aghaegbuna “Ike” Odelugo, 39, of Sugarland, Texas, has been sentenced to 72 months in federal prison for engaging in a conspiracy to commit health care fraud, committing health care fraud and money laundering, United States Attorney Kenneth Magidson announced today. U.S. District Judge Vanessa Gilmore handed down the prison sentence this morning and further ordered him to pay $9.9 million to Medicare in restitution and to forfeit $7.45 million in illegal proceeds. 

Odelugo previously pleaded guilty in April 2010, at which time he admitted that from July 2005 through March 2008, he entered into illegal agreements with 14 durable medical equipment (DME) company owners to fraudulently bill Medicare for millions of dollars and split the proceeds. The DME company owners were located in Texas, Louisiana, Arkansas, Georgia, North Carolina, West Virginia, Delaware, Massachusetts, New Hampshire and Michigan.

Odelugo was responsible for having marketers recruit the patients, for preparing the paperwork, for billing Medicare and for delivering some of the equipment. The DME company owner’s role solely was to accept delivery of the patient files from Odelugo and to send him his percentage of the proceeds. In every instance, Odelugo was given control of the DME's Medicare provider number. Odelugo bought Medicare beneficiary information from recruiters and created paperwork and patient files to give the appearance of a valid claim. He then filed the claim electronically with Medicare and sent the patient files to the DME company owners. The proceeds from the false claims were deposited into the DME company's bank account and approximately 75% of the fraud proceeds then were transferred to Odelugo.

Odelugo had the DME owners provide him with blank signed checks from the DME bank accounts into which the Medicare proceeds were deposited. Odelugo used his medical billing persons to monitor when the Medicare payments were deposited into those accounts and, once deposited, he used the blank signed checks to move his share of the illegal proceeds to his own bank account.

The DME items billed to Medicare either were not delivered, not medically necessary, not prescribed by a doctor or up-coded from what was actually delivered.  Nearly 89% of the items billed were orthotics and lymph edema pumps. Power wheelchairs and accessories accounted for the other 10%.  The total amount paid by Medicare as a result of Odelugo’s scheme was approximately $9.9 million.  The defendant received 75% of the illegal proceeds or approximately $7.45 million.

Odelugo, currently a concert promoter, ran the fraudulent scheme from his now closed cellular phone store in Houston.

Previously released on bond, Odelugo was taken into custody following the hearing today and awaits transfer to a U.S. Bureau of Prisons facility to be determined in the near future.

The criminal charges are the result of a joint investigation conducted by agents of the U.S. Department of Health and Human Services - Office of Inspector General and Internal Revenue Service - Criminal Investigations. The case was prosecuted by Assistant United States Attorney Al Balboni.