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Coalition Against Insurance Fraud

Venue change denied in giant health care fraud case

April 22, 2019, Greenville, TN — The federal prosecution of four Florida men charged in what officials describe as the second-largest heath care fraud case in U.S. history will remain in Greeneville, U.S. Magistrate Clifton L. Corker ruled in an order filed on Friday.

It was a balancing act weighing the interest of the four Tampa-area men against the government, and Corker, who considered convenience and expense to the defendants and the prosecution and the location of the conspiracy “nerve center,” and Corker ruled in favor of the government.

Larry Everett Smith, 48; Peter Bolos, 41; Michael Palso, 44; and the only health professional indicted in the case, 33-year-old pharmacist Andrew Assad, are accused of purchasing fraudulently obtained prescriptions from another Tampa-area businessman named Scott Roix, who has pleaded guilty and presumably agreed to testify against the others.

This facet of the alleged conspiracy involved $77.9 million in insurance-company payouts for extremely expensive compounded prescription drugs recipients never wanted in the first place, according to Corker’s order. In all the alleged conspiracy involved $931 million in claims and $174 million payouts, according to court documents.

The four Florida men maintained that most or all of their witnesses are Florida residents. Assistant U.S. Attorney Timothy J. Harker countered that 30 of his witnesses, including one medical doctor and alleged victims, live in East Tennessee, even though the local victims are a small fraction of the total.

“The large number of witnesses in this case and the national scope of this conspiracy renders any location, whether East Tennessee or the Middle District of Florida, to be convenient for some witnesses and inconvenient for others,” Corker wrote in the 17-page order.

“Venue would be proper here in the Eastern District of Tennessee because at least part of the mail fraud involved mailing patients in Tennessee, even in the “fraud’s core” was in Florida … The conclusion is the same for the conspiracy … The same is true for the (drug) misbranding counts,” Corker wrote.

Smith and the others argued that establishing a base of operations would be a financial burden he estimated at nearly $80,000. Corker concluded that Smith never represented he couldn’t afford the expense, and noted that Smith is the only one working at this time.

Corker also noted that federal prosecutors maintain that the companies that Smith argues require his presence in Florida are not engaged in ongoing economic activity, but are shell companies used to launder millions of dollars from other companies managed by Smith, a contention Smith disputes.

The federal magistrate’s order does not hasten the beginning of the trial, which because of the high volume of discovery, isn’t scheduled to start until February 2020.

Source: Citizen Tribune

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