HOUSTON – Homeland Security Investigations (HSI), with assistance from local law enforcement, arrested a pharmacist and his accountant Tuesday for allegedly conspiring to commit $134 million in health care fraud, targeting insurance companies and doctors.
Mohamed Mokbel, 56, and Fathy Elsafty, 62, both of Houston, were arrested at their Houston-area homes early Tuesday morning.
According to the 8 count indictment, Mokbel is the CEO of 4M Pharmaceuticals Inc., the parent company for several retail pharmacies that operated in Houston, Fort Worth, South Florida and elsewhere. Mokbel allegedly had ownership interests in subsidiary pharmacies. The charges allege Elsafty served as 4M’s accountant and tax preparer as well as nominee owner of 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, 4M Pharmaceuticals and pharmacies allegedly billed the patient’s insurance plan anyway. In some cases, 4M pharmacies billed for prescriptions dispensed after a patient’s death, according to the allegations.
The scheme also 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. 4M pharmacies also allegedly sent prescription requests to doctors for dead patients.
According to the indictment, audits required 4M to produce records that Elsafty allegedly participated in fabricating.
The indictment claims from Dec. 13, 2013, through March 3, 2020, 4M pharmacies collectively received over $134 million in payments from Medicare and other health care 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.
HSI Houston, Department of Health and Human Services – Office of Inspector General, Food and Drug Administration – Office of Criminal Investigations, FBI, Texas Attorney General’s Medicaid Fraud Control Unit, IRS – Criminal Investigation, Ohio Medicaid Fraud Control Unit and Texas State Board of Pharmacy conducted the joint investigation.