A Medical Device Daily

Miami residents Dilcia Marinez, Juan Carlos Castaneda and Luis Frias each were sentenced to prison this week for their roles in defrauding the Medicare program and laundering the illegal proceeds in connection with a $14 million HIV infusion fraud scheme, according to Matthew Friedrich, acting assistant attorney general of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida.

Marinez, who pleaded guilty Sept. 15 to conspiracy to commit healthcare fraud and conspiracy to commit money laundering, was sentenced to 57 months in prison, three years of probation and payment of a $24,000 fine. Marinez was also ordered to pay $43,000 in forfeiture.

Castaneda, who pleaded guilty to one count of money laundering conspiracy on Aug. 27, was sentenced to 87 months in prison, three years of probation and payment of a $100 special assessment.

Frias, who on Sept. 23 also pleaded guilty to one count of conspiracy to launder money, was sentenced to 27 months in prison, three years of probation and payment of a $100 special assessment. All three defendants pleaded guilty before, and were sentenced by U.S. District Court Judge Federico Moreno in Miami.

In her plea, Marinez admitted she was the president and director of G&S Medical Center, a Miami healthare clinic. G&S purported to provide HIV infusion services to disabled Medicare beneficiaries. Marinez admitted that from May 2003 through January 2004, she conspired with others to defraud the Medicare program by causing G&S to submit fraudulent claims for HIV services that were medically unnecessary or never provided, according to the authorities.

According to information contained in plea documents, Marinez admitted that she entered into an agreement around May 2003 with Carlos Benitez, Luis Benitez, Thomas McKenzie and others to operate G&S as an HIV infusion clinic.

The Benitez brothers allegedly referred HIV-positive Medicare beneficiaries to the clinic and directed McKenzie to instruct clinic physicians how to make it appear that legitimate services were being provided.

Marinez admitted that between June and December 2003, the clinic submitted roughly $14 million in claims to the Medicare program for HIV infusion services that were either never provided or were medically unnecessary. According to information in the plea documents, Medicare paid about $9.6 million on the fraudulent claims.

Marinez further admitted to helping launder nearly $4 million of the fraudulent proceeds by making checks out to sham marketing and management companies owned and controlled by the Benitez brothers.

In connection with his plea, Castaneda admitted that around June 2003, he entered into an agreement with Marinez and others to assist in laundering proceeds of Medicare fraud obtained at G&S. He acknowledged that he knew G&S submitted fraudulent claims to the Medicare program for HIV services purportedly provided to Medicare beneficiaries.

He also admitted that he agreed to assist Marinez and others in concealing their control of G&S's fraudulently-obtained Medicare proceeds by cashing checks written on a G&S account and returning the cash to Marinez.

Castaneda admitted to directing Marinez to write checks drawn on G&S's bank accounts to various companies, many of them sham companies, in amounts less than $10,000. Castaneda was aware that checks made out to corporate entities and cashed in amounts less than $10,000 would not trigger currency transaction reporting requirements. Castaneda would then cash the G&S checks, typically with sham companies listed as the payees, at a Miami check-cashing facility, to whom he would pay a 2% fee.

Castaneda would then charge Marinez a fee of 10% of the laundered funds, enabling him to retain 8% of the value of the checks cashed. In all, Castaneda laundered about $1.8 million in the proceeds of the Medicare fraud at G&S. In his plea, Castaneda also admitted to laundering an additional $2 million for Best Medical, another fraudulent Miami HIV infusion clinic.

In his plea, Frias admitted that he was the registered agent of G&S and was a signatory on the company's bank accounts. Frias said he was aware that G&S submitted fraudulent claims to the Medicare program, and that he agreed to assist Marinez in dispersing and laundering nearly $550,000 in proceeds of the fraud.

Frias acknowledged that he signed checks in amounts of more than $10,000 drawn on the G&S bank account and made out to corporations that he and Marinez controlled, knowing that the funds were derived from G&S's fraudulent claims to Medicare. Frias also confessed to writing several large checks on G&S's bank account to sham marketing and management companies controlled by the Benitez brothers.

In a related case, Carlos, Luis and Jose Benitez, as well as McKenzie, were indicted on June 11 for their role in a $110 million HIV infusion and money-laundering scheme. The indictment alleges that the Benitez brothers were the masterminds of a massive HIV infusion fraud operation throughout South Florida involving at least 11 clinics and that they laundered the proceeds of their crimes.

Also according to the indictment, Carlos and Luis Benitez were the true owners of G&S. All three Benitez brothers remain fugitives, while McKenzie pleaded guilty to conspiracy to commit health care fraud and submitting false claims to the Medicare program. McKenzie's sentencing is scheduled for Dec.11.