Four Convicted in $24 Million Medicare Scheme

LOS ANGELES–A provider who used money from a Medicare scheme to
purchase a yacht, mansion and luxury cars, and who spent more than
$100,000 gambling, was convicted this month of health care fraud
and money laundering, federal officials said.

Phu Luong, 51, of Huntington Beach, and three others were
convicted on federal charges for billing Medicare more than $24
million for nutrition products and power wheelchairs that were not
medically necessary and, in many cases, were never provided,
according to the United States Attorney, Central District of
California.

After a three-week trial in U.S. District Court in Santa Ana, a
federal jury found each defendant guilty of 35 counts of health
care fraud. According to a statement from the attorney’s office,
those convicted include:

• Luong, who operated United Medical Supply, and also was
  convicted of five counts of money laundering;
• Sareth Tath, 56, of Long Beach, Luong’s partner, who recruited
  physicians to provide fraudulent prescriptions to United;
• Mo Thi Pham, 50, of Westminster, a Tath employee who recruited
  Medicare beneficiaries to receive DME that was not medically
  necessary; and
• Peter Kim, 82, of Los Angeles, another Tath employee who
  recruited and drove Medicare beneficiaries to the doctors.

The money laundering charges against Luong were based on his
purchases of luxury items with the proceeds of the scheme,
including a $185,575 yacht, a $118,000 Rolls-Royce, a $1.7 million
down payment on a mansion in Huntington Beach; a $170,395
Lamborghini, and $120,000 in gambling bills at the Bellagio Hotel
& Casino in Las Vegas, the statement said.

The four convicted were among 10 defendants indicted in March
2005. Four have pleaded guilty to health care fraud, and two are
medical doctors who operated offices in Fountain Valley: Derrick
Hubbard, 46, formerly of Los Angeles and Atlanta, and Matthew
Khatibloo, 72, of Fullerton.

After the indictment was issued, Hubbard fled to South Africa
and Khatibloo fled to Iran. Hubbard was later captured and is
scheduled for trial on July 11. Khatibloo is still a fugitive.

According to the indictment and the evidence presented at trial,
Tath recruited physicians–allegedly Hubbard and Khatibloo–to
prescribe enteral nutrition and power wheelchairs that were not
medically necessary. Pham helped Tath in running the doctors’
offices and also acted as a marketer, recruiting Medicare
beneficiaries to see Hubbard and Khatibloo by promising the
beneficiaries free enteral nutrition and other medical supplies.
Kim also recruited beneficiaries and drove them from Los Angeles
County to Orange County to see Hubbard and Khatibloo.

Hubbard and Khatibloo allegedly would perform only cursory
examinations of the recruited beneficiaries and invariably
prescribe enteral nutrition and sometimes power wheelchairs.

United not only billed for supplies that were not medically
necessary but also routinely overbilled Medicare for the amount of
supplies that were delivered, and would frequently bill for
supplies that were never delivered, according to the statement.

Medicare, which received 363 complaints against United, paid
about $15 million of $24 million in fraudulent claims submitted,
officials said. The case was investigated by the HHS Office of
Inspector General, the FBI and IRS-Criminal Investigation
Division.

The four defendants are scheduled to be sentenced July 10. The
health care fraud and money laundering counts each carry a
statutory maximum sentence of 10 years in federal prison.