U.S. Attorney's Office
Southern District of New York
(212) 637-2600
July 1, 2014

Former Operator of NYC Health Clinics Pleads Guilty in Manhattan Federal Court to $30 Million Medicare Fraud Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, Thomas O’Donnell, the Special Agent-in-Charge of the New York Field Office of the United States Department of Health and Human Services Office of the Inspector General (“HHS-OIG”), Shantelle Kitchen, the Acting Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation Division (“IRS-CID”), and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that OSCAR HUACHILLO, the former operator of multiple HIV/AIDS clinics in New York City, pled guilty to orchestrating a scheme to defraud Medicare out of more than $31 million by billing Medicare for expensive treatments that were administered at a highly diluted dose or never administered at all, and were often medically unnecessary. HUACHILLO also pled guilty to evading more than $3.4 million in federal income taxes by falsely underreporting his income. HUACHILLO pled guilty before U.S. District Judge Katherine Polk Failla.

Manhattan U.S. Attorney Preet Bharara said: “Oscar Huachillo has admitted guilt in defrauding Medicare out of tens of millions of dollars, and then literally compounding the felony by evading millions of dollars in taxes on the illegal windfall. In the process, his schemes put patients at risk, financially burdened the Medicare program, and cheated honest taxpayers. Now he awaits sentencing for his crimes.”

HHS-OIG Special Agent-in-Charge Thomas O’Donnell said: “Mr. Huachillo engaged in an elaborate scheme that resulted in poor patient care and millions defrauded from Federal health care programs. We will not tolerate such greed-fueled fraud, which undermines our health care system and the vulnerable individuals it serves.”

IRS-CI Acting Special Agent-in-Charge Shantelle P. Kitchen said: “IRS Criminal Investigation is pleased to work with our law enforcement partners in the fight against healthcare fraud, ready to follow stolen proceeds back to the orchestrators of schemes. It is clear how Medicare fraud, in particular, takes resources away from citizens with legitimate financial needs. However, money obtained through illegal sources, such as healthcare fraud, forms the backbone of the untaxed, underground economy. Such crimes pose threats to the nation’s tax system and the public’s confidence in it.”

FBI Assistant Director-in-Charge George Venizelos said: “Huachillo treated our American health care system as a vehicle to fuel his greed and line his own pockets when he organized a Medicare fraud of more than $31 million. The FBI, in conjunction with our law enforcement partners, will continue to investigate and bring to justice criminals who bilk the system and defraud the American taxpayer.”

According to the criminal complaint, superseding information, and other documents filed in Manhattan federal court, as well as statements made at related court proceedings:

HUACHILLO set up and operated multiple health care clinics in New York City that purported to provide injection and infusion treatments to Medicare-eligible HIV/AIDS patients, but that were, in reality, health care fraud mills (the “Clinics”) that routinely billed Medicare for medications that were never provided or were provided at highly diluted doses and that were often unnecessary because the person being “treated” did not medically need the treatments.

HUACHILLO and his co-conspirators executed the fraudulent scheme by recruiting HIV/AIDS patients who were eligible for Medicare to come to the Clinics multiple times per week, for multiple months, to undergo expensive “treatments” that were often unnecessary. The purported treatments included drugs costing hundreds of dollars each to administer and typically reserved for cancer and anemia patients. HUACHILLO and his co-conspirators paid the patients cash kickbacks of up to $300 per week in exchange for coming to the Clinics and agreeing to undergo the treatments. Patients were also offered approximately $50 for each additional patient they referred to the Clinics. HUACHILLO and his co-conspirators then used these patients’ status as Medicare beneficiaries to submit claims to Medicare for reimbursement for the treatments purportedly administered to the patients, often receiving tens of thousands of dollars in reimbursements per patient. However, in truth, the treatments typically were provided in highly diluted doses or not provided at all, and were often medically unnecessary. As a result of the scheme, from 2009 through 2013, HUACHILLO and his co-conspirators defrauded the Medicare system out of at least $31 million.

In addition, HUACHILLO willfully evaded over $3.4 million in taxes owed to the IRS during the tax years 2009 through 2011 by falsely underreporting his taxable income, including income he had obtained through fraudulent Medicare claims.

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HUACHILLO, 54, of Manhattan, pled guilty to one count of conspiracy to commit health care fraud, which carries a maximum sentence of 10 years in prison, and one count of tax evasion, which carries a maximum sentence of five years in prison. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge. As part of his plea, HUACHILLO agreed to forfeit more than $31 million in proceeds of his crime, including over $14 million of assets that were seized at or around the time he was arrested, and to pay back taxes of more than $3.4 million. HUACHILLO is scheduled to be sentenced by Judge Failla on October 15, 2014, at 3:00 p.m.

George Juvier, 56, of Manhattan, has been charged separately in connection with the Medicare fraud scheme. The charges against Juvier are merely allegations, and he is presumed innocent unless and until he is proven guilty beyond a reasonable doubt.

Mr. Bharara praised the outstanding efforts of HHS-OIG, IRS-CID, and the FBI in the investigation, which he noted is ongoing. Mr. Bharara also thanked the U.S. Department of Justice’s Tax Division for their assistance in the investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Jonathan Cohen is in charge of the prosecution. Assistant United States Attorney Micah Smith of the Office’s Money Laundering and Asset Forfeiture Unit is responsible for the forfeiture aspects of the case.

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