Local businesswoman pleads guilty to criminal healthcare and tax fraud charges and agrees to $20.3 million civil settlement

 

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Date: February 4, 2021

Contact: newsroom@ci.irs.gov

Tampa, FL — Kelly Wolfe (Indian Rocks Beach) has pleaded guilty to conspiracy to commit health care fraud and filing a false tax return. She faces a maximum penalty of 13 years in federal prison. A sentencing date has not yet been set.

In addition to her criminal charges, Wolfe and her company, Regency, Inc. ("Regency") have agreed to pay up to $20,332,516, to resolve allegations that Wolfe and Regency violated the False Claims Act in a number of ways, including falsifying documentation in order to fraudulently establish durable medical equipment ("DME") corporations to bill for medically unnecessary DME equipment, and engaging in improper marketing practices that violate the Anti-Kickback Statute. The civil settlement amount is based on Wolfe and Regency's ability to pay.

According to court documents, Wolfe and her conspirators used Regency to establish dozens of DME supply companies—or, rather, DME fronts—using trickery and deception. The scheme involved placing the DME fronts in the names of straw owners. By concealing the true ownership of the fronts, Wolfe's conspirators secretly gained control of multiple companies. With such control, they collectively submitted well over $400 million in illegal DME claims to Medicare and CHAMPVA (i.e., the Civilian Health and Medical Program of the Department of Veterans). The conspirators relied on the guise of "telemedicine" to explain the unusually high volume of claims, when, in fact, they had simply bribed doctors to approve them. Almost always, the doctors had no interaction, including telehealth interaction, with the beneficiaries. Wolfe further admitted that, for tax year 2017, she had purchased numerous personal items and services using Regency's funds. Rather than properly report this as income to the Internal Revenue Service, Wolfe falsely classified her personal spending as purported business expenditures.

This prosecution, arising out of the nationwide "Operation Brace Yourself" takedown, involves one of the largest health care fraud schemes in United States history. The Middle District of Florida is playing a significant role in these historic and nationwide enforcement actions. Collaborative efforts among federal, state, and local partners have resulted in criminal charges against 12 defendants in the MDFL.

"Honest and law-abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets," stated Special Agent in Charge Brian Payne of IRS Criminal Investigation. "Fleecing the health care industry effectively robs us all, and tax fraud undermines the integrity of our nation's tax system. Those who engage in these swindles should know they will not go undetected and will be held accountable."

"The Department is committed to ensuring that federal health care program providers do not place their own financial gain over patients' clinical needs," said Deputy Assistant Attorney General John V. Coghlan of the Justice Department's Civil Division. "When medical professionals and companies knowingly commit fraud to maximize their profits, we will hold them accountable for their unlawful conduct."

"Fraud and deceit in our nation's healthcare system is not only unacceptable, it is illegal," said U.S. Attorney Maria Chapa Lopez for the Middle District of Florida. "The U.S. Attorney's Office will continue to aggressively work with our investigative partners in rooting out these illicit practices to ensure that patients receive the optimum care they deserve."

"This pernicious telefraud scheme's ambitions were cut short by the exceptional partnership of our law enforcement partners" said Special Agent in Charge Omar Pérez Aybar of the U.S. Department of Health and Human Services Office of Inspector General. "This guilty plea and the forfeiture of tens of millions of dollars back to the U.S. Treasury show our determination to stop such damaging fraud schemes and to bring fraudsters to justice."

"The FBI is laser-focused on exposing those who cheat our government healthcare programs," said Special Agent in Charge of the FBI Tampa Division Michael McPherson. "American taxpayers can be assured the FBI and its law enforcement partners are working vigorously to protect federally funded healthcare programs from deception and greed."

"The VA OIG's continued oversight of CHAMPVA, which provides community care to family members of disabled veterans, is one of the agency's highest priorities because it safeguards the integrity of VA's health care programs," stated David Spilker, Special Agent in Charge at the Department of Veterans Affairs Office of Inspector General (VA OIG). "As detailed in the charging documents, the defendant's criminal actions resulted in a massive fraud being committed against both CHAMPVA and Medicare, ultimately impacting the beneficiaries of those programs. The VA OIG commends the extensive cooperation between our law enforcement partners in this important investigation."

This case is being prosecuted criminally by Assistant United States Attorneys Kristen Fiore and James Muench, and pursued civilly by Assistant United States Attorney Carolyn B. Tapie and Department of Justice, Civil Division, Commercial Litigation Branch Trial Attorney Daniel A. Schiffer, with assistance from the Internal Revenue Service – Criminal Investigation, the Department of Health and Human Services – Office of Inspector General, the FBI, and the Department of Veterans Affairs – Office of Inspector General. The United States previously obtained an emergency temporary restraining order and preliminary injunction enjoining the conduct and assets of Wolfe, Regency, and several of their co-conspirators, in a civil injunctive action prosecuted by Assistant United States Attorneys Carolyn B. Tapie and Sean P. Keefe. The injunctive action is captioned United States v. Regency, Inc., et al., No. 8:19-cv-803-T-33AEP.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act against Wolfe and Regency by Condra Albright, a former Regency employee. As a result of the settlement, Albright will receive 23% of the civil recovery as her statutory reward. Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the settlement if the government takes over the case and reaches a monetary agreement with the defendant. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The qui tam case is captioned United States and the State of Florida ex rel. Albright v. Regency, Inc., et al., No. 8:19-cv-686-T-30AEP.