India- and New Jersey-Based Jeweler Charged with Multimillion-Dollar International Trade Fraud Scheme and Unlicensed Money Transmitting
CAMDEN, N.J. – A Michigan man today admitted defrauding victims of more than $5 million in connection with the sale of medical-related business opportunities, Acting U.S. Attorney Rachael A. Honig announced.
Vijay Reddy, 45, of Milan, Michigan, pleaded guilty before U.S. District Judge Robert B. Kugler to an information charging him with one count of conspiracy to commit wire fraud and one count of wire fraud.
According to documents filed in this case and statements made in court:
From December 2015 through November 2020, Reddy and his conspirators, David Weinstein and Kevin Brown, advertised business opportunities for sale on various websites. They purported to sell “blocks” of contracts with medical providers who allegedly wanted to outsource their medical billing, collections, appeals, answering, credentialing, or transcription functions. The buyers would then provide the contracted services to the medical providers and earn a profit. The conspirators promised to deliver a specified number of providers and pledged that their proprietary marketing efforts would provide a guaranteed client base to the buyers.
To induce buyers to purchase the business opportunities, the conspirators created fake references purporting to be buyers who vouched for their prior business purchases from the conspirators. In fact, the references were Reddy, Weinstein, and their friends and family members, and they used aliases and disguised phone numbers to speak with potential buyers.
After agreeing to purchase the blocks of medical providers, victims entered contracts with companies represented by Weinstein or Reddy and wired down payments ranging from $15,000 to $240,000 to accounts controlled by Weinstein or Brown. The remainder of each purchase price was payable when the conspirators fulfilled the contract by delivering the agreed-upon number of providers.
After receiving the down payments, Weinstein and Reddy typically delivered to each victim only a small number of medical providers. Despite not fulfilling the contracts of any of the buyers identified by law enforcement, the conspirators continued to sell blocks of medical providers to new buyers and refused to provide refunds for their failures to satisfy the terms of the contracts. The conspirators also periodically sold batches of previously signed contracts and disclaimed further responsibility for those contracts to insulate themselves from complaints or legal action from disgruntled buyers.
Brown acted as the business broker for most of the transactions and received a commission for the sales he brokered. Reddy or Weinstein acted as the seller and signed the contracts with the victims. At least 77 victims sent more than $5 million to accounts controlled by the conspirators. The conspirators spent the victims’ money on personal expenses, including a travel, jewelry, real estate, a wedding and a college education, and other business investments.
The wire fraud and wire fraud conspiracy counts are each punishable by a maximum of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater. As part of his plea agreement, Reddy agreed to make restitution $5 million. Sentencing is scheduled for Oct. 20, 2021.
Acting U.S. Attorney Honig credited special agents of the FBI’s South Jersey Resident Agency, under the direction of Special Agent in Charge Michael J. Driscoll in Philadelphia; special agents of IRS - Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Damon Wood in Philadelphia, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorneys Daniel A. Friedman and Diana V. Carrig of the U.S. Attorney’s Office in Camden.
The charges and allegations in the criminal complaints against Weinstein and Brown are merely accusations, and they are presumed innocent unless and until proven guilty.