Taxpayers Funding the 'Good Life' for Criminals

medicare

"It's faster and easier than selling drugs."

Those are the words of a convict, once a Miami drug dealer, who left the street life to participate in a scheme to make even bigger money: Medicare fraud.

And it worked. In seven years, he estimates he made about $8 million.

"Ferrari, Porsche, Lamborghini, exotic cars -- had a nice, I lived a good life," said the man, who is now serving time in a federal prison for his crimes. The FBI requested that ABC News not use his name or share the details of his case because he is a cooperating witness for the government.

But that good life, paid for with money stolen from Medicare, came at a cost to taxpayers.

"We would make anywhere between a million to $2 million in a short time frame, maybe two, three months," he said.

The scam was simple. He set up phony businesses and billed Medicare for millions of dollars in medical equipment he never sold. His scam was just one example of the many fraudulent schemes criminals have used to bilk Medicare of taxpayer money.

The National Health Care Anti-Fraud Association, a public-private partnership dedicated to fighting such crimes, says that fraudsters are able to take down an estimated $68 billion a year, and the group says that estimate is a conservative one.

ABC News traveled to south Florida, where bogus companies in three counties in that part of the state have taken in more than $1.5 billion in the last three years -- and that figure includes only those operations caught by law enforcement.

Federal agents recently carried out Operation "Wack-A-Mole," in which they made unannounced visits to the 1,581 durable medical equipment businesses in the area. They found that a third of them -- 491 -- were phony, even though they were billing the government.

"My friends were doing it," the informant said. "And I was growing pot at the time and they said, 'stop what you are doing and this is faster money and easier money.'"

Medicare Fraud: 'The Risk Might Be Worth the Reward' for Criminals

Timothy Donovan, the assistant special agent in charge of the FBI's Miami field office, explained that the sentencing guidelines for white collar crime historically have not been as strict or as severe as other crimes, such as drug trafficking. "The risk might be worth the reward" for some criminals, he said.

"We saw a number of people that were making money, certainly back in the '70s and '80s, involved in drug trafficking," Donovan said. "We've seen sort of a shift toward white collar crimes, a shift toward health care fraud."

During a ride along with the FBI, ABC News got to see firsthand what authorities say is a stunning level of fraud.

"Well, the reason we're here today is because in the month of March, they billed over a million dollars for durable medical equipment," FBI special agent Brian Waterman said as he approached one business.

But the agents say all signs indicate that the company is a fraud.

After attempting to call the phone number on the office door, agents discovered that the line is no longer associated with the business. And neighbors across the street tell them that they haven't seen anyone at the office in several months.

Of five medical equipment companies visited, four showed no signs of being in business, even though agents said they were taking in millions of Medicare dollars.

"This is the easy part," said Waterman, noting that one office building didn't even have a door handle. "Fraud here is easy to find."

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