Miami Pharmacy Owner of Convicted of Medicare Fraud, Co-defendant Acquitted

After a six day trial in Miami, a federal jury in Miami convicted Gustavo Smith, 43, the owner of a Miami pharmacy for his role in a $3 million Medicare fraud scheme and for money laundering of all 17 counts charged against him in the September 2007 Indictment.
The charges included: conspiracy to defraud the U.S. government, to commit health care fraud, and to submit false claims to the Medicare program; seven counts of health care fraud; seven counts of submitting false claims to the Medicare program; conspiracy to commit money laundering; and one count of money laundering.
Schock%20verdict-1.jpgSmith’s co-defendant, Friedhelm Schock, the nominee owner of Medstar, was acquitted by the jury on all charged counts.
According to Schock’s defense attorney, Michael Band of Adorno & Yoss, the government argued that Schock was the “nominee” owner of the pharmacy, signed all the Medicare documents, opened all the bank accounts, formed the corporation, received monies far in excess of what reflected the work he performed at the pharmacy and lied to the government to cover up the fraud.
Schock’s defense held together. Schock presented a case that raised a reasonable doubt about the government’s case. While Schock admitted that he was the owner, although held a minority share and performed services to the pharmacy, he delegated work to his co-defendant, and he did not have the requisite intent to defraud the United States.
The government through the introduction of 404 evidence established that Smith had engaged in healthcare fraud in other cases. The jury heard evidence that Smith owned and operated another company, Orthotics Fitters, through which he was billing the Medicare program for the same equipment being billed through Medstar. During 2006, Smith caused Orthotics Fitters to bill approximately $2.9 million in fraudulent claims for negative pressure wound pumps and wound care supplies that were never actually provided to Medicare beneficiaries.
The jury heard testimony from patients whose names were used by Smith’s Medstar pharmacy to bill the Medicare program for durable medical equipment. The patients testified that they never received any equipment from Medstar and did not have a medical need for the equipment. The jury also heard testimony from several doctors who allegedly wrote prescriptions for the equipment being billed by Medstar. These doctors testified that they never wrote the prescriptions in question and never prescribed the types of equipment being billed by Medstar.
Schock argued that he was unaware of Smith’s prior dealings and knew nothing of the false submissions. Schock also argued that although he signed the Medicare forms he was unaware of the consequences and was betrayed by trusted his friend, Smith.