Pharmacy owner and accountant indicted in $134 million health care fraud scheme

The government is alleging that two Houston area men, Mohamed Mokbel and Fathy Elsafty, engaged in a $134 million healthcare fraud scheme. The indictment alleges Mokbel is the owner of several Houston area pharmacies, while Elsafty is his accountant. Mokbel was the CEO of 4M Pharmaceuticals Inc., which was the parent company for several retail pharmacies that operated in Texas and Florida. The charges allege Elsafty served as 4M’s accountant and tax preparer as well as nominee owner of the multiple pharmacies. 4M Pharmaceuticals allegedly functioned as an outbound telemarketing call center that solicited Medicare, Medicaid, and commercial insurance patients nationwide – many over the over the age of 55. The indictment alleges call center employees offered patients medically unnecessary diabetic supplies and topical creams, although many refused the solicitations. However, 4M Pharmaceuticals and the pharmacies allegedly billed the patients’ insurance plans anyway. In some cases, 4M pharmacies billed for prescriptions dispensed after a patient’s death, according to the allegations.

The scheme also allegedly targeted doctors. The charges allege 4M Pharmaceuticals sent fax requests for prescriptions that patients often did not authorize. In several cases, the company billed patients for prescription drugs without a valid prescription, according to the allegations. 4M pharmacies also allegedly sent prescription requests to doctors for dead patients. In several instances, audits required 4M to produce paperwork, according to the indictment. Elsafty allegedly participated in fabricating records.

The indictment alleges that, from December 13, 2013, through March 3, 2020, 4M pharmacies collectively received over $134 million in payments from Medicare and other healthcare benefit programs based on fraudulent claims. The funds were allegedly used, in part, to pay for Mokbel’s $1.5 million residence, $15 million in gambling and casino expenses, and purchases and payments for a Ferrari and a Bentley automobile. Mokbel also transferred and controlled over $6 million in health care fraud proceeds in certificate of deposit accounts at banks, according to the allegations.

Mokbel and Elsafty are charged with one count of a conspiracy to commit health care fraud, three counts of health care fraud and four counts of money laundering. All carry a possible prison sentence of 10 years in prison and a $250,000 maximum fine. The use of telemarketing to target people over 55 as a means to commit health care fraud carries an additional penalty of 10 years.

JEFFREY NEWMAN REPRESENTS WHISTLEBLOWERS IN PHARMACY FRAUD CASES AND OTHER WHISTLEBLOWER FRAUD MATTERS. HA CAN BE REACHED AT JEFFREY.NEWMAN1@GMAIL.COM OR AT 978-880-4758