HOUSTON – Two Houston area men have been charged with a nationwide health care fraud scheme targeting older citizens, US attorney Jennifer B. Lowery announced Tuesday.
Mohamed Mokbel, 57, and Fathy Elsafty, 63, are charged with conspiracy to commit postal and health care fraud, two counts of health care fraud and 15 counts of money laundering.
The 18-count indictment, returned on July 20, alleges that Mokbel and ElSafty colluded from 2013 to January 2022 to commit a $150 million mail and health care fraud scheme and engaged in money laundering with the fraud proceeds. Mokbel is also said to have continued the fraud scheme at MK Pharmacy, a pharmacy in the Houston area, from April 2021 to January 2022. During this time, he had been cleared to be released on bail following the return of the original charges in March 2021.
According to the indictment, Mokbel was the CEO of 4M Pharmaceuticals Inc. With the help of ElSafty, he is said to have acquired and controlled more than a dozen pharmacies in Houston and elsewhere. According to the indictment, Elsafty was employed as an accountant and tax advisor for 4M and had ownership interests in several pharmacies in California, Texas and Florida. ElSafty is said to have helped Mokbel by falsifying company records and hiding Mokbel’s involvement with the pharmacies.
The fraud was widespread and, according to the indictment, was carried out using a sophisticated mass marketing program targeting individuals over the age of 55 using telemarketing and mail. Mokbel allegedly purchased patient data and instructed 4M Pharmaceuticals employees to submit test claims to patient insurance plans to determine insurance coverage.
4M would then have sent prescription fax requests to doctors’ offices on behalf of the patients without their knowledge or consent. In some cases, 4M requested prescriptions for patients allegedly dead for months, if not years.
Company employees would then have called patients to inform them that their doctors had approved prescriptions for them and that they would be getting the drugs for free. However, Medicare and other insurance plans often required a co-payment that 4M did not receive, according to the indictment. When checked, 4M would have falsified the proof of the copay direct debit.
If convicted of the conspiracy, they face up to 20 years in prison, while the health care violations face a 10-year term. Money laundering also carries a possible prison sentence of 10 years. The use of telemarketing targeting people over 55 as a means of committing mail and health care fraud carries an additional 10-year sentence. Fines can also be set at $250,000 or no more than double the amount of the criminally acquired property involved in the transaction.
Department of Health and Human Services – Office of Inspector General, Food and Drug Administration – Office of Criminal Investigations, Homeland Security Investigations, FBI, Texas Medicaid Fraud Control Unit of the Attorney General, IRS – Criminal Investigation, Ohio Medicaid Fraud Control Unit, Texas State Board of Pharmacy, US Postal Inspection Service and California Department of Health Care Services conducted the joint investigation.
US Special Assistant Attorney Abdul Farukhi and US Assistant Attorney Zahra Fenelon are pursuing the case. Assistant US Attorney Kristine Rollinson assists with asset forfeiture.
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