The ringleader in a $160 million Medicare fraud scheme was convicted of 15 counts of criminal conduct following a multiagency investigation conducted by Homeland Security Investigations (HSI) Houston, the FBI, IRS Criminal Investigation, the U.S. Department of Health and Human Services, the U.S. Food and Drug Administration, and the Texas Attorney General’s Medicaid Fraud Control Unit.
Mohamad Mokbel, a 59-year-old Houston resident, was convicted in the U.S. District Court for the Southern District of Texas of conspiracy to commit mail fraud, conspiracy to violate the anti-kickback statute, bribery concerning programs receiving federal funds, conspiracy to commit bribery, five counts of healthcare fraud, and six counts of money laundering.
From 2014 through 2021, Mokbel — who was founder and CEO of a company called 4M Pharmaceuticals which operated 14 pharmacies through straw owners at the time — illegally purchased medical information of thousands of Medicare beneficiaries for approximately $16 to $40 each, including their identification numbers, medical information and physician information.
Mokbel and his co-conspirators then used the information to target elderly diabetic patients who were dependent on diabetic testing supplies to manage their blood sugar levels.
To maximize reimbursements and without regard for medical necessity, Mokbel then directed 4M employees to use the Medicare beneficiaries’ patient data to run insurance claims to determine if Medicare or other insurance plans would cover and reimburse at a high rate for the topical creams, omega-3 pills and other medications that Mokbel intended to sell through 4M pharmacies.
At Mokbel’s direction, 4M employees faxed pre-filled prescription requests appearing to be for diabetic testing supplies with topical creams added at the bottom to the patients’ doctors. They also included false representations that the patient was requesting a 4M Pharmacy fill their medications. In reality, Mokbel had previously purchased the patient’s personal information, the patient had not selected a 4M Pharmacy, and the patient was often unaware the request was being made on their behalf.
Many doctors apparently took the representations in the fax at face value and did sign and send back the prefilled prescription requests to 4M. Mokbel’s call center in Houston and later in Egypt then contacted the patients and made false and misleading statements about the topical cream and their doctor’s order. Mokbel’s pharmacies then shipped out numerous topical creams, often on auto-refill, and excessively billed Medicare, Medicaid and private insurance plans.
Mokbel made over $200 million as a result of the scheme.
From 2015 through 2020, Mokbel corruptly gave a series of bribe payments, ranging from $2,000 to $5,000 and totaling over $188,000 to an employee of a pharmacy benefits manager — OptumRx — in exchange for favorable treatment for 4M pharmacies.
They were credentialed and recredentialed with OptumRx, which allowed them to enter into retail network agreements with OptumRx, participate in the Medicare Part D program and submit claims for prescriptions for Medicare beneficiaries. Mokbel also received information and advice about responding to audits and preventing and delaying OptumRx termination of many 4M pharmacies.
Mokbel is scheduled to be sentenced on January 7, 2025. At that time, he faces up to 20 years for conspiracy to commit mail fraud and health care fraud, 10 years for each of count of healthcare fraud, 10 years for each count of money laundering, 10 years for bribery concerning programs receiving federal funds, five years for conspiracy to violate the anti-kickback statute, and five years for conspiracy to commit bribery. He could also be ordered to pay up to $4 million in fines and possible restitution in excess of $160 million.
Previously released on bond, Mokbel was taken into custody pending sentencing.
