CEO of Lab Testing Company and Marketing Representative Sentenced to Federal Prison in Pain Management Clinic Kickback Scheme
Baltimore, Maryland – Chief U.S. District Judge James K. Bredar sentenced Konstantin Bas, age 41, of Brooklyn, New York, and co-conspirator Mubtagha Shah Syed, age 49, of Jersey City, New Jersey, today to a year and a day, and three months in prison, respectively, each followed by three years of supervised release, for a scheme in which a Maryland pain management practice referred urine specimens to Bas’s testing lab in return for $1.37 million in kickbacks. Chief Judge Bredar also ordered Bas to forfeit $241,600 and to pay a fine of $5,000. Chief Judge Bredar ordered that Syed serve the first three months of his supervised release in home detention with electronic monitoring, and ordered that Syed forfeit $23,400 and pay a fine of $4,000.
The sentences were announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Gordon Johnson of the Federal Bureau of Investigation, Baltimore Field Office; Special Agent in Charge Maureen Dixon, Office of Investigations, Office of Inspector General of the Department of Health and Human Services; Acting Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; Special Agent in Charge Robert E. Craig, Jr. of the Defense Criminal Investigative Service - Mid-Atlantic Field Office; and Special Agent in Charge Bret D. Mastronardi, Investigative Operations, U.S. Office of Personnel Management Office of the Inspector General.
According to their plea agreements and other court documents, Bas was the owner and CEO of Accu Reference, a medical testing laboratory with corporate offices in New Jersey. In late 2010 or early 2011, Bas began using Mubtagha Shah Syed to market Accu Reference’s services. In February 2011, Syed had a meeting with Muhammad Ahmad Khan, the chief administrative officer (CAO) of a group of Maryland-based pain management medical clinics that were incorporated as Advanced Pain Management Services but that operated under the name of American Spine Center (APMS/ASC). The clinics were owned and operated by Drs. Atif Malik and Sandeep Sherlekar. APMS/ASC required patients who were prescribed pain relief medications to submit urine samples for testing in order to monitor the levels of pain medication or other narcotics in their bodies.
During their February 2011 meeting, Syed and Khan discussed the possibility of APMS/ASC referring its patients’ urine toxicology specimens to Accu Reference for testing in return for the payment of kickbacks. Khan discussed the plan with Malik and Sherlekar who assigned Vic Wadhwa, APMS/ASC’s Chief Financial Officer (CFO), to conduct additional discussions concerning the arrangement. Syed arranged for a meeting between Bas and Wadhwa during which they agreed that Accu Reference’s profits from the urine toxicology tests would be equally divided between Accu Reference and APMS/ASC personnel. In addition, Bas agreed to pay Syed a 5% share of the proceeds for his role in putting the transaction together. Unknown to Bas, Wadhwa told Malik and Sherlekar that he and Bas had agreed on a figure of $35 per specimen cup for the kickbacks, which was significantly lower than the amount of the kickbacks Bas would actually be paying under his agreement with Wadhwa. This allowed Wadhwa and Khan to skim off approximately 60% of the kickback payments for themselves. Starting in the spring of 2011, APMS/ASC also referred patients for back braces to another company that Bas operated, in exchange for kickbacks to APMS/ASC.
Each month from April 2011 through July 2012, APMS/ASC referred between 700 and 1,300 patient urine specimens to Accu Reference in return for kickbacks. Accu Reference received approximately $4.4 million in payments from claims submitted to Medicare and private insurers for testing the specimens submitted by APMS. Bas caused his companies to pay kickbacks totaling approximately $1.37 million to Wadhwa and his co-conspirators.
Sandeep Sherlekar, age 52, of Germantown, Maryland, died before his scheduled initial
appearance and arraignment. The charges were dismissed after his death.
Atif Babar Malik, age 48, of Germantown, Maryland, was sentenced to eight years in prison,
followed by three years of supervised release. The sentence was imposed for his trial
conviction on 26 counts arising from the $1.376 million kickbacks scheme and a fraudulent
billing scheme, as well as his guilty plea to a conspiracy to defraud the United States of more
than $2.1 million in taxes. Malik was also ordered to pay a fine of $75,000; to pay restitution
of $175,000; and to forfeit $241,976.
Vic Wadhwa, 41, of Frederick, Maryland, pleaded guilty to violating the Anti-Kickback Act.
Scheduled to be sentenced on September 26, 2018 at 4:00 p.m.
Muhammad Ahmad Khan, age 44, charged with the kickbacks conspiracy and conspiracy to
defraud the United States. He is a fugitive.
United States Attorney Robert K. Hur commended the FBI, the Department of Health and Human Services – OIG, IRS - Criminal Investigation, the Defense Criminal Investigative Service, and the Office of Personnel Management – OIG for their work in the investigation. Mr. Hur also thanked Assistant U.S. Attorneys Jefferson M. Gray and Sean Delaney, who prosecuted the case.