A fugitive Miami businessman has been sentenced to 130 months in prison for his role in defrauding the Medicare program of millions of dollars through his two businesses.
Gustavo Smith, 43, owner of Medstar Services and Orthotics Fitters of Miami, was sentenced in U.S. District Court for the Southern District of Florida, according to Acting Assistant Attorney General Matthew Friedrich of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida. In addition to the 130-month prison sentence, Smith has been ordered to serve three years of supervised release following his release from prison, forfeit $287,000 and pay $1,988,969 in restitution to the U.S. Department of Health and Human Services.
Smith had been allowed to remain free on bond after his April 23 conviction, with the requirement that he be placed on home confinement with electronic monitoring. On June 14, he violated the terms of his release and fled the country. A warrant has been issued for his arrest.
Smith used his two durable medical equipment (DME) companies to submit more than $4.6 million in fraudulent claims to the Medicare program. The items billed by Medstar Services and Orthotics Fitters to the Medicare program were primarily negative pressure pumps and related wound care supplies. The doctors and patients whose Medicare billing numbers Smith used testified that they had never heard of him or his companies.
Several of Smith's associates testified at trial that Smith opened companies in the names of nominee owners, who would be listed as owners in official corporate documents, bank accounts and official Medicare documents. Once Medicare made payments on the fraudulent claims submitted by Smith's companies, Smith employed a money launderer to cash the proceeds and transfer the cash to Smith.
Officials said Smith also brokered the purchase and sale of DME companies for the purpose of "burning Medicare," or submitting more than $1 million in fraudulent claims within a window of two to three weeks. He accepted payments from approximately 180 DME companies.
Smith was convicted on April 23 of 17 charges, including conspiracy to defraud the United States, commit health care fraud, and cause the submission of false claims; seven counts of health care fraud; seven counts of false claims; one count of conspiracy to launder the proceeds of his crimes; and money laundering.
Smith's case was brought as part of the Medicare Fraud Strike Force, supervised by the Fraud Section of the Criminal Division and U.S. Attorney Acosta of the Southern District of Florida.
From investigations opened during the period of Strike Force operations between March and October of 2007, federal prosecutors have indicted 82 cases involving 142 defendants in South Florida. Collectively, these defendants billed the Medicare program for more than $492 million.