Justice Department Recovers Fraudulent Transfer of Proceeds Arising from Medical Kickback Scheme
Alex Hart Raley Jr., who received millions from an individual subsequently found liable for violating the False Claims Act by paying kickbacks, has agreed to pay $2.3 million to resolve a civil lawsuit alleging that the transfer violated the Federal Debt Collection Procedures Act. Raley was not involved in the kickback violations.
Floyd Calhoun Dent III, along with two other individuals, was found liable by a South Carolina jury in 2018 for submitting false claims to Medicare and TRICARE, in violation of the Anti-Kickback Statute and the False Claims Act. A judgment was subsequently entered against these defendants jointly for $114 million. Prior to the judgment, but after Dent had been served with a Department of Health and Human Services Inspector General subpoena, Dent transferred several million dollars to Raley. Dent acknowledged that he received nothing in return for this payment, but contended that it was intended to fulfill a childhood promise.
“Individuals who receive the proceeds of fraudulent activity must return them,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Recovering ill-gotten gains that have been transferred to third parties is an important component of the department’s commitment to combat fraudulent schemes involving taxpayer funds.”
“Justice requires that ill-gotten gains – regardless of whose hands ultimately hold them – are restored to their rightful owner, which in this case is the United States of America,” said U.S. Attorney Corey Ellis for the District of South Carolina.
The settlement announced today resolves the United States’ allegations that Dent’s transfer to Raley was a fraudulent transfer. The settlement requires him to surrender any retained funds, as well as gold and silver coins that Raley purchased with a portion of the transferred funds, to the Department of Justice and the Liquidating Trustee for now bankrupt Health Diagnostic Laboratories Inc., which will split these assets pursuant to a bankruptcy court agreement.
The settlement was the result of a coordinated effort between the Civil Division’s Fraud and Corporate/Financial Litigation Sections, and the U.S. Attorney’s Office for the District of South Carolina. The matter was handled by Senior Trial Counsel Alicia J. Bentley and Trial Attorney Andrew Warner of the Civil Division and Assistant U.S. Attorneys James Leventis, Johanna Valenzuela, and Joanna Stroud.
The case is United States v. AROC Enterprises, LLC, et al. (D.S.C. Case No. 9:19-cv-234 RMG).
The claims resolved by the settlement are allegations only and there has been no determination of liability.