Top Ten Federal Financial and Healthcare Fraud Prison Sentences of 2022
Financial and healthcare fraud often can carry stiff monetary penalties for entities facing government enforcement, as shown on our other Top Ten Lists. Whistleblowers reporting wrongful conduct under one of the federal whistleblower reward laws sometimes find that criminal authorities are as interested in their allegations as civil enforcement agencies and authorities. Fraud can also result in criminal charges and prison sentences for the individual perpetrators of the fraud.
The justification for criminal charges against individuals can range from actual patient harm where physicians perform excessive or unnecessary medical procedures on patients, to financial crimes that target investors, the public fisc, and others. In October, 2021, Deputy Attorney General Lisa Monaco gave a speech making clear that DOJ planned to take action to strengthen the federal response to corporate crime. Monaco stated that “accountability starts with the individuals responsible for criminal conduct” and that the DOJ’s “first priority” in corporate criminal matters would be the prosecution of “individuals who commit and profit from corporate malfeasance.”
The financial/healthcare prison sentences on our Top Ten list below represent the most significant sentences seen in 2022 based on length of time and impact. For whistleblowers who often overcome significant retaliation and challenges to report improper conduct, criminal charges against the most egregious wrongdoers can often provide a modicum of justice for the whistleblowers who stick their neck out to do the right thing.
Our Top Ten Federal Financial and Healthcare Prison Sentences of 2022 are:
- Elizabeth Holmes and Sunny Balwani – 11.25 years and 12.83 years respectively. While not the longest sentence by any stretch on our list, the Theranos saga dominated the news at various points from its inception through the federal criminal charges in 2018 and culminated in 2022 with the sentencing of Elizabeth Holmes, founder and CEO of Theranos, and Sunny Balwani, former President and COO of Theranos. The issues at Theranos, including securities fraud, were first identified by whistleblowers including Tyler Shultz (who was represented by Constantine Cannon) and, as we have previously written, the verdicts against the individuals are “a ringing vindication of Shultz’s whistleblower efforts, which likely saved many patients who might have suffered serious harm by relying on Theranos’ questionable blood tests.”
- James Clark Nix – 48 years. Nix of Texas was sentenced in September 2022 to 48 years in federal prison after being found guilty for his role in defrauding individuals of at least $6 million in a Ponzi scheme spanning decades. Nix, an accountant, targeted his own clients, promising them high returns exceeding 10% and caused many investors to lose their life savings from his scheme.
- Christopher Parris and Perry Santillo – 20.3 years and 17.5 years respectively. Parris and Santillo were both sentenced for their roles in a Ponzi scheme dating back to 2018 where the pair obtained at minimum $115.5 million from 1,000 investors. The pair claimed they were investing in a diversified portfolio when in reality only a small fraction of the investor money was used for productive investment. Parris was also separately convicted in a scheme to defraud the VA during the pandemic by falsely representing he was able to obtain N95 masks from authorized sources leading to him receiving upfront payments of $7.4 million from eight clients.
- Ruixue “Serena” Shi – 20 years. Shi was sentenced to 20 years in prison for defrauding investors out of tens of millions of dollars. Shi solicited investments from primarily Chinese investors using their lack of understanding of English and leading them to believe investment in her real estate company would help them obtain America visas. The government noted in its sentencing memorandum: “Largely targeting her fellow Chinese nationals … Shi preyed on her victims’ hopes for a better life. She exploited her victims’ ignorance of English and trust in the soundness of the American economy. And while her victims suffered financial ruin and psychological torment, [Shi] was living large off their investments.”
- Michael Dexter Little – 19.5 years. Little was sentenced to 19.5 years in prison for his role in a fraudulent tax scheme. Little and his co-conspirators filed various false tax returns in their own names and the names of victims of identity theft. For his part Little claimed nonexistent fuel tax credits. The scheme involved taking the proceeds of these fraudulent tax returns and laundering them through real estate ventures and other assets.
- Jonathan and Daniel Markovich – 15 years and 8 years respectively. The Markovich brothers were sentenced to 15 and 8 years respectively in prison for running a $112 million healthcare fraud scheme. The brothers paid illegal kickbacks including cash, airline tickets, and drugs to entice them to visit the brothers’ inpatient detox and residential facilities and their outpatient treatment programs. The brothers then billed for therapy sessions that were not regularly attended and urine tests that were not medically necessary.
- Steve Monaco – 14 years. Monaco was sentenced to 14 years in prison for two healthcare fraud schemes. The first involved having a doctor’s medical assistant placed on the payroll of a diagnostic lab in exchange for all of the doctor’s labwork going to that specific lab. The second scheme involved doctors signing medically unnecessary prescriptions for expensive compound medication for patients the doctors never evaluated. These schemes caused over $4.6 million in losses to insurance plans and benefitted Monaco to the tune of $386,000.
- Peter Bolos – 14 years. Bolos was an owner of Synergy Pharmacy, which defrauded public and private insurers by defrauding pharmacy benefit managers into authorizing millions of dollars in claims paid to pharmacies controlled by the defendant and co-conspirators. The conspiracy involved cold-calling patients and deceiving them into accepting certain drugs (i.e., pain creams, scar creams, and vitamins) and providing their personal insurance information.
- Marc Sporn – 14 years. Florida man Sporn owned and operated several telemarketing and telemedicine companies, which he used to market medically unnecessary genetic tests to Medicare beneficiaries, and to sell prescriptions (i.e., doctors’ orders) for medically unnecessary genetic tests to laboratories in exchange for kickbacks and bribes. Sporn knew these laboratories would use these doctors’ orders to bill Medicare for medically unnecessary goods and services. Genetic testing fraud has previously been identified as an enforcement priority by both DOJ and HHS.
- Cody Easterday – 11 years. Washington rancher Easterday pleaded guilty to charges arising from a “ghost cattle” scam that also involved fraud on the commodities markets. Easterday defrauded Tyson Foods Inc. and another company out of more than $244 million by charging them for approximately 265,000 head of cattle that did not exist. While the victim companies advanced funds to Easterday to purchase and raise the cattle for later sale to them, over the four years that the scheme operated, Easterday and Easterday Ranches never purchased, raised, or fed more than a quarter million cattle as promised. The government alleged that Easterday hatched the scheme after he lost more than $200 million on Easterday Ranche’s commodity futures trading. In connection with these losses, Easterday also defrauded derivatives exchange the CME Group Inc., by submitting false paperwork, thereby exempting Easterday Ranches from certain position limits in live cattle futures contracts.
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