On August 10, 2021, a federal grand jury in Newark, New Jersey, returned a superseding indictment charging Creaghan Harry, a Florida owner of multiple telemedicine companies, with orchestrating a health care fraud and illegal kickback scheme that resulted in $784 million in false and fraudulent claims being submitted to Medicare. The superseding indictment also charges Harry with concealing and disguising the proceeds of the scheme to avoid paying income taxes.
According to the allegations, Harry and two co-conspirators – Lester Stockett and Elliot Loewenstern – solicited kickbacks and bribes from durable medical equipment (DME) suppliers and marketers in exchange for orders for DME braces and medications. Harry’s telemedicine company then allegedly paid physicians to write medically unnecessary prescriptions for the braces and medications.
To conceal and disguise the fraud and kickback scheme, Harry allegedly directed DME suppliers and marketers to pay shell companies instead of his telemedicine companies. The shell companies had been opened under names of straw owners in the United States and foreign countries. Harry would then transfer funds from the shell companies to his telemedicine companies to pay physicians to write the medically unnecessary orders.
Harry also allegedly falsely claimed to prospective investors, lawyers, and others, that the telemedicine companies had not received any kickbacks, instead representing that the companies had received revenue of roughly $10 million per year from fees paid by patients to receive telemedicine services.
Finally, Harry allegedly committed income tax evasion from 2015 to 2018 by receiving the proceeds from the scheme in the accounts of shell companies and using those proceeds to fund his lavish lifestyle, failing to file tax returns or pay taxes on the money.
In total, the telemedicine companies provided orders to DME suppliers that resulted in over $784 million in fraudulent bills to Medicare, of which Medicare paid more than $247 million.
In the prior indictment, Harry, Stockett, and Loewenstern were charged with one count of conspiracy to defraud the United States and to pay and receive kickbacks, four counts of receipt of kickbacks, and one count of conspiracy to commit money laundering. Stockett and Loewenstern have already pled guilty.
If convicted, Harry faces a maximum penalty of 20 years’ imprisonment for the conspiracy to commit health care fraud and wire fraud, five years’ imprisonment on each count of tax evasion, five years’ imprisonment for the conspiracy to defraud the United States and pay and receive kickbacks, 10 years’ imprisonment for each count of receipt of kickbacks, and 20 years’ imprisonment on the conspiracy to commit money laundering.
This superseding indictment is part of one of the largest Medicare fraud schemes ever charged by the DOJ, in which charges were initially filed in April 2019 against 24 defendants. The United States Department of Health and Human Services Office of Inspector General, Federal Bureau of Investigation, and Internal Revenue Service – Criminal Investigations are continuing to investigate the case.