Headlines that Matter for Companies and Executives in Regulated Industries
Disgraced Crypto Mogul Bankman-Fried Sentenced to 25 Years in Prison
On March 28, Judge Lewis Kaplan of the United States District Court for the Southern District of New York handed down a substantial term of imprisonment and associated penalties to Sam Bankman-Fried, the founder and former CEO of the FTX cryptocurrency exchange. Imposing a sentence of 25 years in prison and tacking on a money judgment of $11.2 billion, Judge Kaplan referenced a number of factors, including that Bankman-Fried showed an “apparent lack of any real remorse” and that his testimony displayed an “exceptional flexibility with the truth.”
Judge Kaplan also cited testimony from Caroline Ellison, the former head of FTX’s affiliated company Alameda Research, concerning Bankman-Fried’s penchant for taking extreme risks. Specifically, Ellison testified at trial that Bankman-Fried once said he would gladly flip a coin if heads would make the world better but tails would cause an apocalypse. Rejecting the defense’s argument that the statement showed Bankman-Fried’s altruism and interest in charity, Judge Kaplan instead concluded that Bankman-Fried “view[ed] the cost of getting caught discounted against the gain of getting away without getting caught.”
Bankman-Fried’s sentencing guidelines recommended an astronomical 110 years in prison, and the Probation Office suggested that 100 years was appropriate. The prosecutors argued for between 40 and 50 years, contrasting the defense’s six and a half years.
Bankman-Fried, who is expected to appeal and continues to assert his innocence, is already in custody as a result of his bond revocation in August 2023.
The case is USA v. Bankman-Fried, case number 1:22-cr-00673, in the US District Court for the Southern District of New York.
Illinois Pharmacy Owner Sentenced to 42 Months for Medicare Fraud Scheme
A federal judge in Illinois sentenced Mark Sorensen, the owner of Symed Inc., a medical equipment pharmacy, to 42 months’ imprisonment for his role in a $25 million kickback scheme. A federal jury previously found Sorensen guilty of violating the Anti-Kickback Statute based upon allegations that he paid a broker to obtain leads on patients and then misled their physicians into ordering unnecessary medical equipment.
More specifically, Sorensen registered Symed as a provider for both the federal Medicare program and the Office of Workers’ Compensation Programs.He and co-conspirators then developed a scheme that ultimately billed the programs for approximately $87 million, of which $25 million was paid out. The participants in the scheme agreed upon how the fraudulent proceeds would be split between them and later created false invoices to make the payouts appear legitimate.
Under the sentencing guidelines, Sorensen faced at least seven years in prison. However, Judge Frank Valderrama deviated downward from that minimum, in part because he found that Sorenson overcame adversity as a child to become a pillar for his family and community, and that he posed a low risk of recidivism. Three of Sorensen’s co-conspirators each pled guilty and have yet to be sentenced.
The case is USA v. Sorensen et al., case number 1:19-cr-00745, in the US District Court for the Northern District of Illinois.
Former Chief of Georgia Insurance Commission Pleads Guilty to Kickback Scheme
John Oxendine, who served as Georgia Insurance Commissioner from 1994 to 2020, pled guilty last week to conspiracy to commit health care fraud based upon allegations that he and an Atlanta-based doctor schemed to order millions of dollars in unnecessary medical testing.
The government alleged that Oxendine and Dr. Jeffrey Gallups, an ear, nose, and throat physician, operated a two-year-long scheme through which they received $560,000 in payouts from insurance companies and falsely charged patients with bills as high as $18,000. When colleagues and employees of Dr. Gallups questioned the necessity of the testing, he booked a company retreat at an Atlanta Ritz-Carlton, where Oxendine then attempted to pressure other doctors in Dr. Gallups’ practice into ordering the unnecessary tests. Eventually, another physician at Dr. Gallups’ practice initiated a whistleblower suit under the False Claims Act.
In 2022, Dr. Gallups was sentenced to three years’ imprisonment and a $5.4 million fine. He has yet to begin his sentence.
Oxendine’s sentencing is set for July 12.
The US Department of Justice’s (DOJ) press release can be found here.
Pennsylvania Couple Plead Guilty to Defrauding Federal Government
John and Paula Johnson, a married couple from Hollidaysburg, Pennsylvania, pled guilty to conspiracy to defraud the United States. This stems from allegations that they fraudulently billed insurance programs for expensive “urine drug tests,” which are reimbursed at high rates by Medicare and private insurance plans. John Johnson also pled guilty to a single count of conspiracy to commit health care fraud.
The government alleged that John Johnson encouraged a business partner to acquire a chain of pain management practices in Pennsylvania called Lighthouse Medical, which operated drug testing labs on site. In March 2016, John Johnson and his business partner contracted to sell the labs’ urine testing services to a small, local facility, which agreed to pay a kickback of $900 per test. The facility was registered as a “Critical Access Hospital,” which receives favorable reimbursements from Medicare and private insurance plans. The scheme ultimately netted over $2.3 million for Lighthouse Medical. Johnson, his wife Paula, and their business partner then conceived of various methods to disburse the funds to use them for personal benefit, including paying off personal loans, purchasing an Audi Q5, and contributing to their son’s college savings fund.
Johnson had previously pled guilty to another health care fraud scheme as well as various tax offenses and was sentenced to an 84-month term of imprisonment in June 2017. While serving his sentence, Johnson was frequently in contact with his wife and business partner, who continued operating the fraudulent scheme until November 2019, when federal agents raided the Lighthouse Medical facilities and shut them down.
The DOJ press release can be found here.
[View source.]
