Federal authorities on Thursday announced criminal charges against 21 defendants in eight states for their alleged participation in various “healthcare-related fraud schemes that exploited the COVID-19 pandemic.”
In announcing the charges, which include a man and a woman in Santa Cruz County and three others in California, the Department of Justice said the cases resulted in over $149 million in COVID-19-related false billings to federal programs and theft from federally-funded pandemic assistance programs. In connection with the enforcement action, the department seized over $8 million in cash and other fraud proceeds.
Prosecutors said this week’s announcement involved “some of the largest and most wide-ranging pandemic frauds detected to date.”
“Today’s announcement … demonstrates our continued resolve to protect the integrity of the government efforts to combat the COVID 19 pandemic,” said U.S. Attorney Stephanie M. Hinds for the Northern District of California. “We will pursue anyone seeking to profit from this health care crisis by committing crimes that endanger the health and well-being of the public at a time when confidence in our public health system is of critical importance. Every day, the multi-agency partnership formed to combat pandemic-related fraud is holding fraudsters to account for their crimes.”
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division said, “Today’s enforcement action reinforces our commitment to using all available tools to hold accountable medical professionals, corporate executives, and others who have placed greed above care during an unprecedented public health emergency.”
The announcement also includes charges against manufacturers and distributors of fake COVID-19 vaccination record cards who, according to the allegations, intentionally sought to obstruct the Health and Human Services office and Centers for Disease Control and Prevention in their efforts to administer the nationwide vaccination program and provide accurate proof of vaccination.
For example, in the Northern District of California, three defendants were charged in a scheme to sell homeoprophylaxis immunizations for COVID-19 and falsify COVID-19 vaccination record cards to make it appear that customers received government-authorized vaccines. One defendant allegedly misused her position as the Director of Pharmacy at a northern California hospital to obtain real lot numbers for the Moderna vaccine that were then used to falsify COVID-19 vaccination record cards, according to Thursday’s announcement.
Jaimi Jansen, 40, of Santa Cruz, was charged with making false statements related to health care matters in connection with an alleged scheme to offer fake cures for COVID-19 and distribute fake COVID-19 vaccination record cards.
Jansen was the owner of an integrative health and wellness center in Santa Cruz, California. According to the charges, Jansen functioned as a distributor for Juli Mazi, a naturopathic doctor who offered and sold products known as “homeoprophylaxis immunizations” that she claimed would provide a complete cure for COVID-19, and provided customers with fraudulent CDC COVID-19 vaccination record cards to falsely make it appear that customers received FDA-approved COVID-19 vaccines.
Jansen allegedly purchased and repackaged for distribution Mazi’s homeoprophylaxis immunization pellets and fake CDC COVID-19 vaccination record cards, providing them to approximately 170 recipients.
Jason Nielsen, 53, of Scotts Valley, was charged with securities fraud in connection with an alleged scheme to defraud investors and potential investors in Arrayit, a publicly traded medical technology company.
Nielsen was a large Arrayit shareholder, and deceived Arrayit investors by communicating materially false and misleading information the existence of genuine supply and demand for Arrayit securities and the nature of his personal financial stake in Arrayit securities, all in order to fraudulently induce other investors to purchase Arrayit securities and thereby drive up the stock’s price. At the same time, Nielsen was secretly selling his own previously acquired shares at an artificially inflated price.
Another defendant in the Northern District of California pleaded guilty to the scheme in April 2022. U.S. Attorney Hinds described additional schemes being prosecuted in the Northern District of California in a video.
Prosecutors said the enforcement action announced this week builds on the success of a May 2021 COVID-19 enforcement action and involves the prosecution of various COVID-19 health care fraud schemes.
For example, several cases announced today involve defendants who allegedly offered COVID-19 testing to induce patients to provide their personal identifying information and a saliva or blood sample. The defendants are alleged to have then used the information and samples to submit false and fraudulent claims to Medicare for unrelated, medically unnecessary, and far more expensive tests or services.
In one such scheme in the Central District of California, two owners of a clinical laboratory were charged with a health care fraud, kickback, and money laundering scheme that involved the fraudulent billing of over $214 million for laboratory tests, over $125 million of which allegedly involved fraudulent claims during the pandemic for COVID-19 and respiratory pathogen tests.
“Throughout the pandemic, we have seen trusted medical professionals orchestrate and carry out egregious crimes against their patients all for financial gain,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “These health care fraud abuses erode the integrity and trust patients have with those in the health care industry, particularly during a vulnerable and worrisome time for many individuals. The actions of these criminals are unacceptable, and the FBI, working in coordination with our law enforcement partners, will continue to investigate and pursue those who exploit the integrity of the health care industry for profit.”
In another type of COVID-19 health care fraud scheme announced today, defendants allegedly exploited policies that the Centers for Medicare and Medicaid Services (CMS) put in place to enable increased access to care during the COVID-19 pandemic. For example, in the Southern District of Florida, one medical professional was charged with a health care fraud, wire fraud, and kickback scheme that allegedly involved billing for sham telemedicine encounters that did not occur and agreeing to order unnecessary genetic testing in exchange for access to telehealth patients. Late last year, one defendant was sentenced to 82 months in prison in connection with this scheme.
Today’s announcement includes charges against two additional defendants for schemes targeting the Provider Relief Fund (PRF). The PRF is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted in March 2020 that provided financial assistance to medical providers to provide needed medical care to Americans suffering from COVID-19. In total, 10 defendants have been charged with crimes related to misappropriating PRF monies intended for frontline medical providers and three have pleaded guilty.
Further, the Center for Program Integrity, Centers for Medicare & Medicaid Services (CPI/CMS) separately announced today that it has taken an additional 28 administrative actions against providers for their alleged involvement in fraud, waste, and abuse schemes related to the delivery of care for COVID-19, as well as schemes that capitalize upon the public health emergency.