Wednesday, August 6, 2008

"...masters of Medicare fraud, prosecutors say"

A Rolls-Royce valued at $200,000 once belonged to Eduardo Moreno, a fugitive wanted in connection with Medicare fraud.
Gallery | Fugitives suspected of fraud

The Benitez brothers were masters of Medicare fraud, prosecutors say.

They spent their Medicare millions on Mediterranean-style homes, apartments, hotels, boats, a helicopter, even a water park — all in the resort area of Bavaro, Dominican Republic, court records show.

After they were indicted on fraud charges in late May, Carlos, Jose and Luis Benitez used their Cuban passports to travel from Miami to the Dominican Republic, then to Cuba.

The three brothers are accused of defrauding the U.S. government’s health insurance program by billing $110 million in false claims for HIV drug-infusion treatments at their dozen Miami-Dade clinics. Medicare paid their companies about $84 million in reimbursements between 2001 and 2004, according to federal authorities and court records.

The Benitezes — who came to this country in 1995 and became U.S. citizens five years later — have a lot of company. They are among 56 fugitives charged since 2004 with filing at least $272 million in phony Medicare claims before disappearing from Miami-Dade. Collectively, the fugitives absconded with at least $142 million in taxpayer funds.

Thirty-three of the 36 fugitives whose names have been released by authorities are Cuban immigrants, most of whom came to the United States during the past 15 years, according to FBI, immigration and court records obtained by The Miami Herald. Half of those fugitives have fled to Cuba, according to the FBI, which based its information on travel, customs, passports, bank and computer records.

The majority of some 700 Medicare fraud defendants charged since 2004 are immigrants who share an implicit trust when they join small criminal enterprises in South Florida to defraud the government program, according to perpetrators, prosecutors and investigators.

Timothy Delaney, assistant special agent in charge of the FBI’s office in Miami, said Medicare fraud has spread over the past decade in certain pockets of South Florida’s population of 750,000 Cuban Americans — just as it has in heavily populated immigrant communities in other major cities.

Medicare is seen as an easy mark for fraud because it is built on an honor system that pays claims quickly with scant review. Also, the odds of getting caught are low and the odds of making millions are high.

Delaney said certain segments of Cuban immigrants in Miami and Hialeah — just like Armenians in Los Angeles, West Africans in Houston and Russians in New York — trust one another to form mini-rackets.

‘’We have unscrupulous providers, willing doctors and willing practitioners,'’ said Delaney. “They don’t think they’ve committed a crime.'’


Among the known Medicare fugitives who fled to Cuba: Eduardo Moreno, who came to the United States in 1997.

Moreno, 39, used a network of offices to operate medical equipment and HIV drug-infusion scams totaling $7.2 million in false Medicare claims, according to federal court records. He bought himself a $445,000 southwest Miami-Dade home and a $200,000 Rolls-Royce Phantom.

When the FBI arrested him last year on fraud charges, he made a $250,000 bond, then skipped the country — back to Havana, according to the FBI. Agents tracked him through his travel records and his relatives.

Moreno is among at least 18 identified fugitives suspected of fleeing to Cuba — with another 18 escaping to other parts of Latin America, Europe, Canada, Florida or unknown locations, according to the FBI’s account of travel records and other information.

In addition, there are 20 unidentified fugitives whose names remain under seal until their arrests.

‘’A good number of them are Cuban and they will return to Cuba, where, as you know, there is no extradition policy and we have no way to get them back at this point,'’ said Delaney, who headed the FBI’s national healthcare fraud program before transferring to Miami in 2005.

U.S. Sen. Mel Martinez, R-Florida, a Pedro Pan Cuban exile who benefited like thousands of others from the Cuban Adjustment Act, is pushing legislation in Congress to double the criminal and civil penalties for Medicare fraud offenders. While Martinez said he didn’t think Medicare fraud was strictly a ‘’Cuban issue,'’ he also condemned the Cuban government for harboring the fugitives.

‘’My first thought is, it’s one more reason why the Cuban government is an outlaw state because it allows fugitives of justice to find refuge there,'’ Martinez said.

Cuban leaders Fidel Castro and his brother Raul Castro have rarely turned over fugitives of any kind.

Tracking down Medicare fugitives in countries such as the Dominican Republic, however, can be successful because they have extradition agreements with the United States. Federal authorities are working with the Dominican Republic to pursue the Benitez brothers and seize their extensive assets in Bavaro — including a hotel called Cabañas Singapur.

Other assets include more tourist hotels, a Robinson R44 Raven helicopter, apartment complexes, luxury homes, supermarkets and a rental car agency — registered under shell companies or straw names. Dominican officials started seizing properties and freezing their bank accounts in July in cooperation with the U.S. government, which plans to return the proceeds to Medicare.

On Friday, Justice Department prosecutors filed a proposed restraining order in federal court in Miami to ensure the Benitez brothers’ assets are not sold or transferred to other parties.

The Benitez brothers’ fugitive case has made headlines in the Dominican Republic not only because of the U.S. government’s pursuit of their ill-gotten gains. Over the Fourth of July weekend, Carlos Benitez’s daughter and son-in-law — Yanelkis Benitez Ramirez and Lenin Linares Guerrero — were kidnapped. Days later, Dominican authorities rescued the couple.

Meanwhile, FBI agents have traced the Benitez brothers to Havana, according to federal authorities.

In general, the FBI has had little luck capturing Medicare fugitives abroad in recent years. ‘’We’ve had no one returned on a healthcare fraud warrant that I’m aware of,'’ Delaney said.

The one exception: In June 2004, authorities in the Dominican turned over three Medicare fugitives — Ruben Martinez; his daughter, Adriana Ramos, and her husband, Daniel Ramos — who had fled to that country months before their indictment on fraud charges.

They were part of a Miami-Dade family racket headed by Martinez, 57, that was eventually convicted of bilking $14.5 million from Medicare by charging for bogus medical equipment orders such as hospital beds, oxygen tanks and foot arch supports in 2000-02. Federal authorities recovered $1 million from Dominican bank accounts, $900,000 from U.S. banks, real estate, jewelry and a Porsche Boxster.

‘’It was a classic case of international cooperation,'’ said former federal prosecutor Wifredo Ferrer, the lead attorney in the prosecution of Martinez and 11 others. “The three fugitives were Cuban nationals, not citizens of the Dominican Republic. The Dominican authorities deemed them persona non grata and expelled them to the United States.'’


Still, one Medicare fugitive in that case is still at large: Emilio R. Seijo, who is in Cuba, according to the FBI.

The escalating problem of Medicare fraud defendants who flee has become a sore point for federal judges in South Florida.

This spring, the chief judge of the U.S. District Court in Miami raised the issue in a memo to magistrate judges, cautioning them about flight risks. U.S. District Judge Federico Moreno also reviewed Medicare defendants’ bonds in cases before him, citing the unusual pattern of defendants fleeing after they were charged with Medicare fraud and granted bail.

In June, Moreno said in court that “it seems to me that our thinking has to change — that someone from Cuba can flee back to Cuba just like someone from Mexico.'’

Moreno questioned whether the Cuban Adjustment Act — passed by Congress in 1966 to grant asylum and residency to the first wave of Cuban political refugees — was being abused by a new generation of Medicare fraud suspects. The judge wondered aloud “whether someone can be categorized as a political refugee when you can pick up and go back.'’

Moreno raised the point after learning that a former secretary charged in an $11 million Medicare healthcare scheme fled to Cuba with her son and father.

The judge had given Carmen González a $50,000 bond. Her father, Enrique González, who co-signed it, was indicted in May on separate Medicare fraud charges in a $26.2 million HIV-drug scam at other Miami-Dade clinics.

‘’I don’t know what your client’s situation is, but money goes a lot farther in Cuba,'’ the judge told Gonzalez’s attorney, Joel DeFabio. “Dollars do. And the government’s allegation is that dollars are the result of Medicare fraud.'’

Moreno isn’t the only federal judge to be blindsided.

The case of Medicare fraud felon Gustavo Smith illustrates how easy it is for fugitives to leave the United States.

After Smith was convicted on healthcare fraud charges at trial in April, U.S. District Judge Marcia Cooke allowed him to remain free on a $300,000 bond while he awaited sentencing. Prosecutors insisted that Smith be detained. Cooke placed him on home confinement.

On June 11, Smith, who had surrendered his U.S. passport, took an American Airlines flight to Santo Domingo with his girlfriend. How? Smith used his Cuban passport under the name Gustavo Smith Wong. The FBI and Dominican authorities are tracking him down. In early July, Cooke sentenced him in absentia to 10 years and 10 months in prison.


One of the obvious reasons that Medicare defendants can evade prosecution is because they’re routinely allowed to post bond before trial. But most of the Medicare defendants who fled since 2004 left South Florida before federal agents could arrest them, according to the FBI and prosecutors. In some cases, suspects get nervous when a colleague is arrested and flee before they can be implicated.

A typical example: Fermin Rey, 49, who emigrated from Cuba in 1995 and was indicted last year on charges of using a series of healthcare corporations to bill Medicare for $5.2 million in bogus medical equipment claims. Rey, described by authorities as a Santeria high priest who used associates as straw owners of his illegal businesses, failed to appear in court and is believed to be in Mexico.

Why do so many Cuban immigrants become Medicare fraud perpetrators? Andy Gomez, a senior fellow at the University of Miami’s Institute for Cuban and Cuban-American Studies, has a theory.

Gomez said some immigrants came with survival instincts cultivated under the totalitarian regime of Fidel Castro. They distrusted and cheated his communist government as a way of getting around the system, but they did not shed that behavior when they came to Miami simply because they were living in a free country.

‘’They are a product of their element,'’ Gomez said. “It’s a very difficult habit to break.'’

FBI agents not only have a hard time tracking down Medicare fugitives, but also their money.

Law enforcement officials suspect that most Medicare defendants who flee — such as the Benitezes — launder their money offshore.

Prosecutor Eric Bustillo, chief of the economic crimes section at the U.S. attorney’s office in Miami, said that once Medicare money is withdrawn from local banks it’s difficult for federal authorities to follow it.

‘’It’s the opposite of drug trafficking,'’ Bustillo said. “The drug traffickers get paid in cash, so they have to find businesses and other ways to launder it. The Medicare providers must receive all of their payments in checks or wire transfers to a designated bank account. So the money can be tracked down to that bank. But they immediately cash it out. And once they do that, who knows where it goes?'’

Federal authorities and money-laundering experts know some of the Medicare fugitives’ money ends up outside the United States. Case in point: the Benitezes’ assets in the Dominican Republic.

But unless authorities can identify the laundered Medicare millions — bank accounts, real estate, cars, boats — they can’t take legal action to go after the assets.

According to money-laundering experts, it’s easy to move dirty money to certain countries.

For a pittance, Medicare violators can hire lawyers offshore to set up shell companies and assist in the opening of related bank accounts, said Brett Wolf, a U.S. money-laundering analyst with Complinet, a London-based firm that helps financial institutions meet their compliance obligations.

‘’Cash smuggling is almost certainly playing a role,'’ Wolf said. “Considering the heavily state-controlled nature of Cuba’s financial network, it’s very unlikely that these Medicare funds are being moved through the formal banking system.'’

Fugitives, based in a country such as the Bahamas or Mexico where there is regular travel to Cuba, can go back and forth to the island, carrying thousands in cash that can be exchanged for a currency called CUCs (pronounced “kooks'’).

But it would be risky business for fugitives carrying a lot of cash, say $50,000, to attempt to bribe communist government officials unless they have connections.

Still, a Medicare fugitive with hundreds of thousands or even millions of dollars stashed in offshore accounts could live like a tycoon in Cuba, where the monthly salary averages $17.


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