Top Ten Financial and Healthcare Fraud Prison Sentences of 2019

Financial and healthcare fraud schemes can result not just in civil investigations and liability, but also in prison time for the individuals involved.  In 2019, the Department of Justice obtained substantial prison sentences in numerous cases involving healthcare and financial frauds, helping to bring justice to the patients, investors, or individuals harmed by criminal fraudsters.  Many of the fraudulent schemes involved in these convictions are of the type that whistleblowers report, and whistleblowers can play an important role in bringing information to the government that leads to criminal investigations and charges.

The top financial and healthcare fraud prison sentences that we found interesting in 2019, based on the length of the sentence given, are listed below, with links to more information about each of the cases.

1. 1. Following his November 2018 conviction, Edwin Fujinaga was sentenced in 2019 to 50 years in prison for his role in leading a $1.5 billion Ponzi scheme.  Fujinaga was also ordered to pay restitution of over $1 billion and forfeit more than $813 million.  Fujinaga solicited more than $1 billion in investments from residents of Japan, misrepresenting how the funds would be used.
   2. Stephen Condon Peters of Raleigh, North Carolina, was sentenced to 40 years in prison for securities fraud, including investment advisor fraud, fraud in the sale of unregistered securities, and related charges.  Peters, a registered investment advisor, defrauded clients by steering them to investments in which he had a personal financial interest, stole clients’ funds, and made misstatements to the SEC.  In addition to his prison sentence, the court ordered Peters to pay restitution of more than $15 million.
   3. Kenneth C. Coleman of Houston, Texas, who owned Acacia Pharma Distributors, Inc. and Four Corners Suppliers, Inc., has been sentenced to 30 years in prison following his conviction at trial for money laundering, tax evasion, and other charges arising from his second-hand drug scheme.  Coleman and his companies purchased second-hand prescription medications from various illegitimate sources and sold them to a third party, Green Valley Medical Distributors, LLC, which then sold the medications to pharmacies as if they were brand new.  In arranging the sales, Coleman created fraudulent documents that misrepresented the sources of the medications and their prior sales.  After being paid by Green Valley, Coleman and others would pay the suppliers of the drugs, often in cash, and failed to report income or file corporate income taxes.  Coleman was also ordered to forfeit $20.3 million and pay $717,000 in restitution to the IRS.
   4. Two doctors and a health clinic owner in the Houston area have each been sentenced to decades in prison following their convictions for Medicare fraud. In one case involving three defendants – clinic owner Ann Shepherd, doctor John Ramirez, and Yvette Nwoko – Medicare paid over $17 million in fraudulent claims resulting from false certifications related to services not medically necessary or properly provided. Defendants Shepherd was sentenced to 30 years in prison, and ordered to pay $20 million; Ramirez was sentenced to 25 years in priosn and ordered to pay $26 million; Nwoko awaits sentencing.
   5. A Florida man convicted in February of financial fraud by causing the collapse of one of the largest banks in Puerto Rico has been sentenced to 30 years in prison and ordered to pay $103 million in restitution to the FDIC.  Jack Kachkar had fraudulently secured $142 million in loans from Westernbank of Puerto Rico by presenting fake invoices from his company, Inyx Inc.  When he failed to repay the loans, the bank suffered a catastrophic loss that forced it to close.
   6. Lee Elbaz, the former CEO of Yukom Communications, Ltd., was sentenced to 22 years in prison following his conviction for fraud in offering and marketing a binary options scheme to U.S. investors.
   7. Following a guilty plea, Treyton Lee Thomas was sentenced to over 21 years in prison and ordered to pay $14.6 million in restitution and forfeiture to the U.S. and victims of his investment fraud ponzi scheme.  Thomas’s victims included his own father, his father’s company, his wife, and his father-in-law. Thomas also pleaded guilty to income tax evasion, having failed to file returns for two decades, while using sham offshore entities to conceal his income.
   8. Philip Esformes of Miami Beach, Florida, was sentenced to 20 years in prison for his role in a decades-long $1.3 billion fraud scheme to submit fraudulent claims to Medicare and Medicaid both for services deemed medically unnecessary and services that were medically necessary but that he did not provide.  Esformes personally pocketed $37 million from this scheme to fund his lavish lifestyle, while leaving elderly and mental health patients with poor or non-existent care.
   9. Gary Frank was sentenced to 17.5 years in prison following a guilty plea on charges related to his fraudulent business scheme.  Frank claimed to run a multi-million dollar company, Legal Coverage, Ltd., through which employers could offer legal services as part of their employee benefits package.  Based on these misrepresentations – in fact, the company had very little revenue – Frank obtained over $30 million in loans from financial institutions, which he used to fund his own extravagant lifestyle.  Frank was also ordered to pay restitution of $33.7 million.
   10. Houston-based patient recruiter and home health clinic owner Egondu “Kate” Koko has been sentenced to over 15 years in prison and ordered to pay $14 million for participating in a $20 million kickback scheme involving Medicare beneficiaries.  Koko had plead guilty in October to paying bribes to both physicians and patients in order to earn between $9.5 and $25 million in ill-gotten gains, as well as to laundering money under another person’s identity and using proceeds from the fraud to buy a home.

Read More:

• All of our Top Ten Lists
• Financial & Investment Fraud
• Healthcare & Pharmaceutical Fraud
• Ponzi & Pyramid Schemes

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