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September 4, 2012

ATTORNEY, ACCOUNTANT, AND TWO ADMINISTRATORS ON TRIAL FOR REVENUE AND TAX CHARGES FOR THEIR ROLES IN $154 MILLION MEDICAL INSURANCE FRAUD SCHEME

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 8:52 pm

* Additional felony fraud counts for the defendants will be tried at a later date

SANTA ANA - The trial against attorney, accountant, and two administrators began today on revenue and tax charges for their roles in the largest medical fraud prosecution in the nation for recruiting over 255 healthy patients to undergo unnecessary and dangerous surgeries to fraudulently bill medical insurance companies. The court bifurcated the case due to its size and volume. This trial involves the failure to file tax returns and under-reporting income to state tax authorities.The other fraud charges remain pending and another trial date will be set after the completion of this trial. Opening statements started today in Department C-41, Central Justice Center, Santa Ana.

Roy Chester Dickson, 64, Yorba Linda, Unity’s attorney, is on trial for one felony count of perjury, three felony counts of filing a false personal tax return, and one felony count of failing to file a corporate tax return. If convicted, Dickson faces a maximum sentence of five years in state prison for these counts. Dickson faces 101 additional felony counts which include two counts of conspiracy, eight counts of capping or paying for referrals, 30 counts of grand theft, 30 counts of insurance fraud, 30 counts of making false and fraudulent claims, one count of money laundering, and white collar sentencing enhancements for taking over $2.5 million on the fraud counts. These counts will be tried at a later date.

Andrew Robert Harnen, 58, Rosemead, Unity’s accountant, is on trial for four felony counts of filing a false tax return, nine counts of failing to file tax returns, and four felony counts of aiding and abetting the false reporting of taxable income. If convicted, Harnen faces a maximum sentence of 11 years and eight months in state prison for these counts. Harnen faces 101 additional felony counts which include two counts of conspiracy, eight counts of capping or paying for referrals, 30 counts of grand theft, 30 counts of insurance fraud, 30 counts of making false and fraudulent claims, one count of filing a false tax return, and white collar sentencing enhancements for taking over $2.5 million on the fraud counts. These counts will be tried at a later date.

Dee Francis, 62, a Unity administrator, is on trial for one felony count of perjury, one felony count of filing a false tax return, and nine counts of failing to file tax returns. If convicted, Francis faces a maximum sentence of nine years in state prison for these counts. Francis faces 102 additional felony counts which include two counts of conspiracy, eight counts of capping or paying for referrals, 30 counts of grand theft, 30 counts of insurance fraud, 30 counts of making false and fraudulent claims, one count of filing a false tax return, two counts of failing to file tax returns, and white collar sentencing enhancements for taking over $2.5 million on the fraud counts. These counts will be tried at a later date.

Rosalinda Rodriguez Landon, 66, a Unity administrator, is on trial for eight felony counts of filing false tax returns and two felony counts of failing to file tax returns. If convicted, Landon faces a maximum sentence of nine years in state prison for these counts. Landon faces 101 additional felony counts which include two counts of conspiracy, eight counts of capping or paying for referrals, 30 counts of grand theft, 30 counts of insurance fraud, 30 counts of making false and fraudulent claims, one count of money laundering, and white collar sentencing enhancements for taking over $2.5 million dollars. These counts will be tried at a later date.

Co-Defendants
Doctor William Wilson Hampton, Jr., 56, Seal Beach, pleaded guilty May 8, 2009, to 47 felony counts including conspiracy, insurance fraud, and capping and was sentenced to 16 years in state prison.

Doctor Michael Cheeluen Chan, 66, Cerritos, pleaded guilty Aug. 4, 2011, to the court to 40 felony counts including conspiracy to commit insurance fraud, insurance fraud, aiding and abetting capping with white collar crime sentencing enhancements. He faces a sentence ranging from probation up to 28 years in state prison at his sentencing Oct. 1, 2012, at 9:00 a.m. in Department C-41, Central Justice Center, Santa Ana.

Doctor Mario Rosenberg, 65, is charged with 49 felony counts including two counts of conspiracy, eight counts of capping or paying for referrals, 19 counts of insurance fraud, 19 counts of making false or fraudulent claims, and one count of grand theft. Rosenberg is scheduled for a pre-trial hearing Sept. 17, 2012, at 8:30 a.m. in Department C-41, Central Justice Center.

Capper Sue Nanda, 44, Costa Mesa, pleaded guilty Feb. 20, 2009, to 22 felony counts including conspiracy, capping, grand theft, filing false tax returns, failing to file tax returns, and making false and fraudulent statements. Nanda was sentenced to 10 years in state prison and ordered to pay over $500,000 in restitution for personal and corporate back taxes.

Capper Maria DeJesus Licea Rosales, 45, pleaded guilty Aug. 7, 2009, to 96 felony counts including conspiracy, capping, insurance fraud, grand theft, filing fraudulent tax returns, and sentencing enhancements for white collar crime and loss over $2.5 million. She was sentenced to eight years in state prison.

Capper Olga Lilia Toscano, 44, pleaded guilty Aug. 11, 2009, to the court to 98 felony counts including conspiracy, capping, insurance fraud, grand theft, tax evasion, and sentencing enhancements for aggravated white collar crime and loss exceeding $2.5 million. She was sentenced to eight years in state prison.

Capper Ngoc Trang Huynh, 52, pleaded guilty Aug. 19, 2011, to 56 felony counts including conspiracy, capping, insurance fraud, grand theft, tax evasion, filing a false income tax return, and sentencing enhancements for aggravated white collar crime and loss exceeding $2.5 million. He faces a maximum of 45 years and eight months in state prison at his sentencing Sept. 24, 2012, at 9:00 a.m. in Department C-41, Central Justice Center.

Capper Pancha Keophimphone, 61, pleaded guilty to a court offer Aug. 19, 2011, to 56 felony counts including conspiracy, capping, insurance fraud, grand theft, tax evasion, and sentencing enhancements for aggravated white collar crime and loss exceeding $2.5 million. Keophimphone was sentenced to 12 years in state prison stayed pending completion of five years formal probation. She was ordered to serve one year in jail and will be ordered to pay restitution at a hearing on Dec. 7, 2012.

Capper Thuy Thu Huynh, 54, pleaded guilty Aug. 25, 2011, to 58 felony counts including conspiracy, capping, insurance fraud, grand theft, tax evasion, and sentencing enhancements for aggravated white collar crime and loss exceeding $2.5 million. Huynh is scheduled to be sentenced Sept. 24, 2012, at 9:00 a.m. in Department C-41, Central Justice Center.

Capper Henry Truong, 44, pleaded guilty April 7, 2006, to 13 felony counts including conspiracy, capping, insurance fraud, grand theft, tax evasion, and sentencing enhancements for aggravated white collar crime and loss exceeding $2.5 million. Truong was sentenced to 12 years in state prison and ordered to pay restitution. (Case # 04CF2197)

Cappers Amanda Phuc Tran, 53, and Nicholas Vu, 54, pleaded guilty Nov. 21, 2005, to two felony counts each of insurance fraud and making false or fraudulent claims with sentencing enhancements for loss exceeding $2.5 million. Tran and Vu were sentenced to five years in prison stayed pending 10 years formal probation and ordered to pay restitution. (Case # 05CF1869)

Administrator Tam Vu Pham, 48, pleaded guilty Dec. 27, 2005, to one felony count each of conspiracy and money laundering, eight felony counts of capping or paying for referrals, three felony counts of making false or fraudulent claims, and two felony counts of insurance fraud, with sentencing enhancements for aggravated white collar crime, loss exceeding $2.5 million, and laundering over $150,000, Pham was sentenced to 12 years in prison and ordered to pay restitution. (Case # 04CF2197)

Administrator Huong Thien Ngo, 46, pleaded guilty Dec. 27, 2005, to one felony count each of conspiracy, making false or fraudulent claims, tax evasion, and money laundering, with sentencing enhancements for aggravated white collar crime, loss exceeding $2.5 million, and laundering over $150,000. Ngo was sentenced to seven years in prison suspended pending six years of formal probation and ordered to pay restitution. (Case # 04CF2197)

Administrator Lan Thi Ngoc Nguyen, 56, pleaded guilty Dec. 27, 2005, to one felony count each of conspiracy, making false or fraudulent claims, and filing a false tax return, with sentencing enhancements for aggravated white collar crime and loss exceeding 42.5 million. Nguyen was sentenced to five years in state prison suspended pending six years of formal probation and ordered to pay restitution. (Case # 04CF2197)

Case Overview
The defendants in the Unity case are accused of participating in a $154 million medical insurance fraud scheme that recruited 2,841 healthy people from all over the country to receive unnecessary surgeries in exchange for money or low cost cosmetic surgery. Insurance companies paid out more than $20 million over a 9-month period.

Of the 19 defendants charged in the Unity case, 13 were indicted by a criminal grand jury on June 13, 2008. Six other defendants in the Unity case pleaded guilty prior to the indictment and have been sentenced.

The Orange County Grand Jury examined 1,054 exhibits and heard testimony from 56 witnesses over 28 days, resulting in a 70-page indictment. The indicted defendants include an attorney, accountant, three doctors, and patient recruiters known as “cappers.” The recruitment of patients, or “capping,” is illegal in California.

Unity was jointly investigated by the California Department of Insurance and Orange County District Attorney’s Office with assistance from the California Franchise Tax Board.

Cappers
Keophimphone, Ngoc Huynh, Thuy Thu Huynh, Toscano, Nanda, Rosales, Truong, Tran, and Vu, have pleaded guilty to multiple felony counts of capping.

The Unity cappers targeted employees from businesses in 39 states who were covered by PPO insurance plans, affecting more than 1,000 employers whose employees became involved in this scheme. They arranged transportation for the patients, scheduled the surgeries, and coached the healthy “patients” on what to say. In exchange for undergoing surgery, the patients received a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery.

Keophimphone personally recruited 118 patients from 17 different states for 297 surgical procedures. These so-called patients, who were mostly coming from other states besides California, resulted in over $8 million in billings to insurance companies for unnecessary surgical procedures. Ngoc Huynh personally recruited 67 so-called patients, most coming from outside California. These so-called patients received 151 unnecessary medical procedures resulting in over $4 million in billings to insurance companies.

Rosales recruited over 90 so-called patients, all of whom were from California. Nanda recruited over 170 so-called patients from 16 different states for unnecessary surgical procedures. They had no medical training, yet recruited patients with PPO insurance, scheduled surgical procedures, and coached patients to correctly describe symptoms for the unnecessary surgical procedures. They assisted patients in filling out surgery center paperwork, including having them sign a false affidavit stating that they had not been offered compensation and had not received any compensation in exchange for using Unity’s services. For Unity capping, Nanda was paid directly and through corporations she had set up.

Doctors
The three doctors charged in this case are accused of participating in medical insurance fraud for performing unnecessary medical procedures on healthy people with the knowledge that the patients were being recruited. Doctors Chan, Hampton, and Rosenberg are accused of performing a total of 1,037 procedures, resulting in insurance billings exceeding $30 million for the facilities fees alone. Unity received over $5.1 million in payment as a result of the surgeries performed by these doctors.

The doctors performed many of the surgeries on Saturdays and Sundays and often performed the same procedures on co-workers or members of the same household on the same day. The doctors are accused of ignoring basic medical protocols such as: 1) Patients receiving surgeries on consecutive days instead of under one anesthesia; 2) Doctors not meeting the patients prior to operating; 3) Doctors not following up with patients after the procedure was completed; and 4) Doctors not obtaining necessary medical information.

Chan worked as the Medical Director at Unity and specialized in invasive gynecological procedures. He performed unnecessary surgeries on 161 patients including include laproscopy, tubaligation, colporrhaphy, and hysterectomy procedures. Not a single one of Chan’s patients were referred by a doctor or were medically necessary. Every patient Chan operated on was referred by a capper, 88 percent being referred by cappers charged in this case. Of Chan’s patients, 60 percent were flown in for the unnecessary surgeries from 18 states outside of California.

Hampton, a general surgeon, performed 180 procedures on 178 patients. He primarily performed thoracic sympathectomies, also known as sweaty palm surgeries, a highly unusual and dangerous medical procedure that can often be treated with topical creams, medication, and botox. Of the patients that underwent surgery by Hampton, 97 percent were referred by Unity cappers. Hampton was also indicted and convicted by the federal government for his involvement in a scheme similar to the Unity case.

Attorney
Attorney Dickson is accused of coming to Unity after having previously managed and represented another surgery center involved in similar illegal activities. He was sanctioned by the federal bankruptcy court for filing a fraudulent bankruptcy claim for a doctor at that surgery center. Dickson was hired by Unity to collect payments from insurance companies and patients. He is accused of helping the surgery scheme by creating fraudulent documents to disguise illegal capping activities.

Immediately after the OCDA searched Unity in April 2003, Dickson is accused of using his attorney client trust account to keep Unity open and operating and furthering the criminal activity by funneling over $1 million in surgery center cash assets into his account to prevent it from being seized. In the three months following the search of Unity, he is accused of laundering as much as $3 million into the attorney client trust account using fraudulently billed payments from insurance companies to keep the surgery center operating.

Accountant
Accountant Harnen, a Unity bookkeeper and profit shareholder, is accused of signing 10 checks to doctors totaling over $50,000 and 157 checks to cappers totaling almost $1 million for their participation in the Unity scheme. He is accused of acting as an official representative for several of the corporations used by Unity to hide their illegal scheme from insurance companies, and of being one of the bank signatories for multiple bank accounts used in the fraud.

Harnen is accused of assisting cappers and administrators in hiding their illegal activities by helping them funnel money to corporations that he helped them to create with the intention of hiding income and avoiding detection of their crimes. Harnen is accused of helping Unity continue to illegally recruit “patients” and defraud insurance companies using his own corporation to pay cappers and distribute profits to shareholders. Harnen is also accused of assisting four co-defendants in filing fraudulent tax returns. Harnen is accused of failing to report more than $6 million in income over a 3-year period by failing to file tax returns and filing false tax returns.

Administrators
Landon and Francis are accused of being clinic administrators and recruiting doctors and cappers. They are accused of running the Unity facility, coordinating the fraudulent surgeries, sending all facility billings, receiving payments from insurance companies on fraudulent billings, and receiving and paying capper invoices for patient procedures.

Administrators Pham, Ngo, and Nguyen pleaded guilty to performing the same roles in the scheme.

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