Two New York Doctors Admit Taking Bribes in Test Referrals Scheme with New Jersey Clinical Lab

NEWARK, NJ—Two doctors with a practice in New York admitted today to accepting bribes in exchange for test referrals as part of a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey; its president; and numerous associates, New Jersey U.S. Attorney Paul J. Fishman announced.

Richard Goldberg, 60, of Weston, Connecticut, and Gary Leeds, 60, of Greenwich, Connecticut, each pleaded guilty today before U.S. District Judge Stanley R. Chesler in Newark federal court to one count of accepting bribes.

Including Goldberg and Leeds, 20 people have now pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.

According to documents filed in this and related cases and statements made in court:

During today’s guilty plea proceedings, Goldberg and Leeds admitted to accepting thousands of dollars per month in cash between September 2010 and April 2013 in return for referring patient blood specimens to BLS. The pair acknowledged they each accepted more than $100,000 in cash from BLS in exchange for referring at least a combined $1.8 million in lab business from their joint practice, Family Medical Group of Manhattan.

As part of their guilty pleas, Goldberg and Leeds each agreed to forfeit $108,000.

On April 9, 2013, federal agents arrested David Nicoll, 39, of Mountain Lakes, New Jersey; Scott Nicoll, 33, of Wayne, New Jersey; a senior BLS employee and David Nicoll’s brother; and Craig Nordman, 35, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC—one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 44, of Boonton, New Jersey. In June 2013, David and Scott Nicoll, Nordman, and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme.

So far, 11 employees or associates of BLS and nine physicians have pleaded guilty to their roles in the bribery scheme. The investigation has recovered more than $6.5 million to date through forfeiture.

The bribery count to which Goldberg and Leeds pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing for both defendants is scheduled for April 1, 2014.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty pleas.

The government is represented by Assistant U.S. Attorney Joseph Minish, Senior Litigation Counsel Andrew Leven and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, and as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $500 million in health care fraud and government fraud settlements, judgments, fines, restitution, and forfeiture under the False Claims Act; the Food, Drug and Cosmetic Act; and other statutes.