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September 19, 2011

"Judge sends therapist to prison for 35 years in massive Medicare-fraud case"

The title of this post is the headline of this new piece in the Miami Herald reporting on the "other shoe" dropping in a record-setting white-collar federal sentencing.  Here are the basics from the article:

A federal judge Monday issued another astonishing prison sentence in the nation’s biggest mental-health fraud case, sending a Miami therapist to prison for 35 years. Marianella Valera, 40, a naturalized U.S. citizen from Peru who ran Miami-based American Therapeutic Corp. with her boyfriend, received less time in prison than he did.

On Friday, Lawrence Duran, 49, a New York transplant, got 50 years as the mastermind of the massive Medicare-fraud scheme — accounting for more than $200 million in bogus billing to the taxpayer-funded program. [Previous blog coverage here.]

But in both instances, U.S. District Judge James Lawrence King gave out the longest prison sentences ever for a Medicare-fraud offender.  Previously, the longest sentence was a 30-year term imposed in 2008 on a Miami physician convicted in an HIV-therapy scam. This year, Duran and Valera pleaded guilty to a variety of conspiracy, fraud and money-laundering charges after they failed to reach plea deals with the Justice Department.

Prosecutors had pushed for a 40-year sentencing, but Valera’s lawyer, Arthur Tifford, sought considerably less time. Justice Department lawyer Jennifer Saulino argued that Valera abused her “position of trust” as the licensed owner of American Therapeutic. Duran had registered the company in her name to disguise his past ownership of a similar mental-health company, which had carried a $2 million debt....

The couple’s company, with clinics stretching from Miami to Fort Lauderdale to Orlando, collected $87 million in Medicare payments after submitting $205 million in false claims. The couple paid kickbacks to recruiters to supply patients suffering from dementia, Alzheimer’s and addictions, but they could not have benefited from the company’s purported group therapy sessions....

A total of 34 people, including American Therapeutic employees, doctors, therapists, nurses and recruiters, have been charged in the ongoing fraud case, which is being investigated by the FBI and Health and Human Services-Office of Inspector General. This year, about a dozen defendants have pleaded guilty.

The underlying offense facts certainly suggest that American Therapeutic was involved in record-sized frauds.  Still given that the loss amounts involved here are far below the losses in cases of mass financial fraud in which defendants have often received sentences of 25 years or far less — I am thinking of some of the usual suspects here (e.g., Bernie Ebbers, Jeff Skilling, Marc Dreier) — I find both notable and remarkable that these defendants (who pleaded guilty, unlike say Ebbers and Skilling) are now to due to spend decades more in prison for their offenses.

Especially in light of the Eleventh Circuit's apparent willingness to sometimes find sentences substantively unreasonable as too short (as evidenced by today's Padilla ruling), I wonder if there might still be some hope for these defendants if they appeal their sentences as unreasonably long.

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September 19, 2011 at 03:29 PM | Permalink


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It makes sense that medicare fraud would garner longer sentences that private frauds. Frauds against government programs rip off the entire country and not just people who choose to do business with the offender.

Posted by: Soronel Haetir | Sep 19, 2011 4:47:53 PM

And then there are the likes of Angelo Mozilo, given a free pass by Eric Holder and allowed to keep his $500 million in ill-gotten gains, to name one of dozens of like examples from the mortgage and forgery frauds. The S&L crisis resulted in well over 1,000 criminal prosecutions, but the mortgage and forgery frauds have resulted in none.

So I suppose that the most disparate sentences result when investigation is prevented from the outset. However I don't suppose that will be useful to Duran and Valera because our courts must presume that an undermining of the rule of law on the scale of what has occurred under Obama and Holder is impossible. In reality criminals like Angelo Mozilo were given sentences of "zero" for massive crimes that everyone knows they committed.

Posted by: James | Sep 19, 2011 4:54:34 PM

Judge King did not have much choice in the sentencing. Does it matter if you murder someone with 3 shots or 10 shots? The matter is curious as to whether Duran and Valera knew when they paid , what I am sure was a handsome cash fee, that they would get some representation, perhaps even a trial, but a straight up guilty, They probably would have received less time if they didn't have such high priced attorneys. Of course a straight up guilty is NOT what you hire a HIGH PRICED attorney to do. So justice has been done and Tifford has probably added another room to his mansion in R.I.

Posted by: Janet | Nov 22, 2011 6:36:34 PM

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