Passaic County Man Convicted Of Health Care Fraud And Other Charges For Operating Ambulance Company Despite Ban
NEWARK, N.J. – A Passaic County, New Jersey, man was convicted in federal court today of illegally operating a Clifton, New Jersey, ambulance company despite having been banned from participating in federal health care programs due to a prior conviction, U.S. Attorney Paul J. Fishman announced.
Imadeldin Awad Khair, a/k/a “Nadr Awad,” 56, of Clifton, was convicted of all 17 counts of an indictment charging him with health care fraud, obstructing a federal audit, tax evasion, and money laundering. He was convicted following a nine-day bench trial before U.S. District Judge Susan D. Wigenton in Newark federal court.
According to documents filed in this case and the evidence presented at trial:
In 2004, as a result of his conviction on a New Jersey state health care fraud charge, Khair was excluded from participating in any capacity in Medicare, Medicaid, or other federal health care programs for a minimum of 11 years. After realizing that he would be excluded from federal health care programs, Khair began operating a business named K&S Invalid Coach in his brother’s name. Since the date of his exclusion, Medicare and Medicaid paid over $9 million in claims submitted by K&S, none of which would have been paid had Medicare and Medicaid known that Khair was operating the business.
Khair’s plan to defraud Medicare and Medicaid began almost immediately after he was excluded by authorities from participating in federal health care programs. In 2004 and 2005, Khair recruited a business associate to tell authorities that Khair was his full-time employee so that Khair could continue running K&S in violation of his exclusion. Khair also used fraudulent paystubs provided by his business associate to convince authorities that he was not violating the terms of his exclusion.
In 2014, when special agents with the FBI and the U.S. Department of Health and Human Services, Office of Inspector General, executed a search warrant at K&S’s offices, Khair’s top managers directed employees via group text message to tell the agents that Khair’s brother was really in charge at K&S. In addition, on the first day of trial, Khair tried to influence a government witness just outside of the courtroom by claiming that he had over two dozen employees who were going to testify that his brother had really been in charge at K&S.
Khair also paid numerous K&S employees, including nearly all of the employees’ overtime wages, “off the books” and without withholding the necessary payroll taxes. To carry out the tax evasion scheme, Khair paid the wages in cash or handwritten check and directed K&S employees to keep two separate sets of books. Khair then directed company employees to send only the fraudulent set of books to the company’s payroll accountant.
In response to a U.S. Department of Labor audit of K&S in 2014, Khair held an employee meeting in which he directed K&S employees to lie to the Department of Labor by stating that they never worked more than 80 hours in a biweekly pay period. Khair also directed K&S employees to alter and falsify K&S timekeeping records to match the false amounts previously reported to the company’s payroll accountant.
The money laundering counts arose from K&S checks that were written and endorsed by Khair and made payable to “cash” or Khair himself, which were used to pay the undisclosed wages and enrich Khair personally.
Khair faces a maximum penalty of 10 years in prison on the health care fraud count, a maximum of five years for the obstruction of a federal audit and tax evasion counts, and a maximum of 20 years in prison for the money laundering counts. All the counts also carry a $250,000 fine, or twice the gross gain or loss from the offense. Following the verdict, Khair was detained pending sentencing, which is set for Nov. 9, 2016.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; special agents of the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation.
The trial was conducted by Assistant U.S. Attorneys Danielle M. Corcione and Osmar J. Benvenuto of the U.S. Attorney’s Office Criminal Division in Newark.
U.S. Attorney Fishman reorganized the health care fraud practice shortly after taking office, creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $1.3 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
Defense counsel: Harvey R. Poe, Roseland, New Jersey