Hitler, Elvis memorabilia seized from Mission clinic in $2 million Medicaid fraud case

1 week ago 59

A Nazi officer’s uniform adorned with medals. Letters signed by Adolf Hitler, Charles Dickens and Elvis Presley. An ancient Roman coin. And Pokémon cards.

What do all of these have in common?

They make up just a tiny portion of the assets the federal government wants to seize in an expansive, $2 million Medicaid fraud case here in the Rio Grande Valley, one which allegedly embroiled a local official and led federal authorities to the discovery of memorabilia of untold worth.

Authorities are investigating Mission businessmen Dr. Francisco Javier Zarzar, the only physician at Zarzar Pediatric Clinic; and Jose Alberto Vela, owner of the TLC Pharmacy and Medical Equipment No. 2; for engaging in a kickback scheme where the former was compensated for each prescription sent to the latter’s pharmacy.

“Zarzar agreed with the owner of a pharmacy to write specific prescriptions to be filled at the pharmacy and provide testing services,” a civil asset forfeiture petition. “In return, Zarzar received monetary compensation from the pharmacy owner for the business Zarzar generated for the pharmacy.”

The Mission doctor is also being investigated for his alleged attempts to defraud Medicaid by billing for services authorities found unjustifiable based on the level of care Zarzar provided to patients, including the time spent with each patient and the detail of care provided.

Authorities are also investigating Zarzar and Vela as well as others who participated in a money laundering scheme in attempts to cover up kickback payments made to Zarzar.

Vela, currently a Mission city councilman, and other entities would send payments to Zarzar from multiple bank accounts that he would then deposit to various accounts, authorities said in the petition.

THE KICKBACKS

In four years, the petition said Vela’s pharmacy had submitted over $1.5 million in billing claims to Medicaid for prescriptions written by Zarzar.

The deal between Zarzar and Vela began in 2018 where Zarzar agreed to send “specific prescriptions to be filled at the pharmacy,” according to the petition.

Zarzar also agreed to provide COVID-19 testing services at the pharmacy.

Throughout the course of the alleged scheme, Vela and others involved would pay Zarzar for each prescription written through checks and payments “… sourced from multiple bank accounts related to multiple business and other entities …” that he would deposit into multiple accounts, the petition stated.

Zarzar received payments of over $10,000.

Employees at Zarzar Pediatric Clinic told authorities that during that time Zarzar would insist that each of his patients obtain their medications from Vela’s pharmacy.

He would often use various tactics to drive patients toward the pharmacy such as claiming the pharmacy offered free delivery services, it covered prescriptions other pharmacies would not or that it was more convenient.

Zarzar would even tell his patients that unlike other pharmacies, Vela’s pharmacy could actually understand his handwriting.

Employees even recalled Zarzar having them only hand out business cards for Vela’s pharmacy to patients.

Through statements from representatives of Medicaid beneficiaries authorities found that Zarzar would prescribe multiple medications to more than one patient even when it was not necessary.

“(The representative) believed that Zarzar “always prescribe[d] a lot of medication,” even after the (representative) informed him that the previous month’s prescription had not run out and did not need more of the same medication,” the petition stated.

After collecting medicaid claims from January 2018 to December 2024 for prescriptions written by Zarzar, investigators found that Vela’s pharmacy had filed the second-most prescriptions and total amounts billed to Medicaid from 2018 to 2019.

The pharmacy was second to “Queen pharmacy” which has since closed, the petition read.

In 2020, Zarzar began to only refer prescriptions to Vela’s pharmacy which submitted a total of $1,525,412.15 in billing claims to Medicaid. This represents 22,816 claims for 1,007 unique beneficiaries from Jan. 1, 2020 to Dec. 4, 2024.

Although a CVS pharmacy was the second-highest recipient of prescriptions written by Zarzar, it amounted to a “small fraction” of the claims submitted by Vela’s pharmacy with a total of $225,227.07 in billing claims during the same time. That totals 3,838 claims for 315 unique beneficiaries.

“Investigators also totaled the top 10 pharmacies which filled prescriptions written by Zarzar for the stated time period, finding the claims submitted by TLC #2 (Vela’s pharmacy) to Medicaid ($1,525,412.18) surpassed the total claims submitted by the other nine pharmacies combined ($869,390.18) during the same period,” stated the petition.

Not only was Zarzar mainly sending prescriptions to Vela’s pharmacy but he was also prescribing medications that were in his best interest rather than that of his patients, authorities allege.

In fact, throughout their investigation, investigators found text chains between Zarzar and Vela in which they discussed a list of specific medications to prescribe.

“Zarzar also reminded Vela that he would prescribe anything Vela requested, saying ‘Anything you prefer let me know and I just document in the chart,’” the petition read.

After reviewing the text chains between the two, authorities determined that Vela would tell Zarzar to prescribe “medications with desirable profit margins,” rather than Zarzar prescribing medications specific to patient needs and independent review and examination.

Investigators also probed both Zarzar and Vela’s bank records and identified 85 checks issued by Moron Vela Inc., the company that owns Vela’s pharmacy, as well as other business entities owned by or associated with Vela.

For his part, Zarzar negotiated the checks for $174,873 between January 2018 and September 2024.

“The signature on 83 of the 85 checks appeared to be Vela’s,” the petition stated.

Each of the checks ranged in value from $215 to $10,000, which were written in increments of $5 or $10. This is something authorities deemed “unusual for a pharmacy or pharmacist to provide recurring payments in round dollar amounts with no legitimate business purpose indicated on the check.”

The petition goes on to state that the employees at Zarzar’s clinic were not aware of any legitimate business relationship between the two and Vela’s entities, consistent with the bank records obtained by authorities which did not depict a legitimate business relationship.

THE PANDEMIC

The global pandemic of 2020 also proved to be an enriching opportunity for Zarzar, according to the petition.

He and Vela had made an arrangement to set up a COVID-19 testing program at Vela’s pharmacy.

Text chains between Zarzar and Vela on Oct. 12, 2020, showed them discussing how Zarzar will be compensated for his role as lab director of the program.

In order for the program to be operational it must be overseen by a laboratory director, who is in charge of the operations and administration of the lab, such as a medical doctor or one who possesses other qualifications under the statute.

“Zarzar possessed the requisite qualifications to serve as laboratory director, but Vela did not,” the petition stated.

Although Zarzar understood his responsibilities as lab director, the petition says text messages between the two revealed that they were working under an arrangement in which Vela would pay Zarzar $5 for every COVID-19 test performed at the pharmacy.

Though he didn’t perform in that function, the $5 were payments for Zarzar’s name to be used as lab director for the testing program, which amounted to about $5,000 per month that Vela paid to Zarzar on a weekly basis through checks from Moron Vela Inc.

In another text chain Vela had sent Zarzar a photo of a sticky note containing a list of 256 numbers written by each day of the week for one week. That amounted to a total of $1,280 which Vela had paid to Zarzar via check a few days after he sent the photo.

Vela also attempted to end the arrangement on Nov. 14, 2020, but Zarzar convinced him to continue the partnership.

Throughout the investigation authorities never found text messages in which the two discussed the lab work such as positive test rates, the safety of the personnel performing the tests, quality control measures or even the qualifications of the people employed by the program.

“Thus, Vela likely paid Zarzar kickbacks while Zarzar served as the laboratory director for (the pharmacy) testing but performed none of the duties he was obligated to perform under the (Clinical Laboratory Improvements Amendments) program,” according to the petition.

THE CASH

Throughout the six-year alleged scheme, Zarzar deposited over $1 million in cash — money authorities determined did not coincide with payments from patients.

Authorities reviewed bank activity for both Zarzar’s personal and business accounts from 2018 to 2024.

During that time, Zarzar had deposited more than $1.71 million in cash in addition to the check and electronic payments he was receiving from Medicaid reimbursements, which amounted to $2.39 million during that time.

“The cash deposits are far more than could be explained by cash payments from clinic patients,” the petition stated.

Zarzar’s employees told authorities that a majority of clinic patients were Medicaid recipients who rarely had to pay a copay for an office visit or other services at the clinic. Those who would have a copay would often pay with a credit or debit card.

They added that cash payments were so rare that at the end of a typical work day their cash box had less than $200, or even less than $50.

Zarzar would use a Clover Point of Sale device for employees to accept card payments as well as enter cash payments even though there was no electronic transaction.

After reviewing records from Fiserv Inc., the parent company of Clover, between mid-2022 and 2023 the clinic had taken in about $5,220 in cash.

During the course of the alleged scheme, Zarzar had made a total of 14 cash deposits — 12 of which went into his personal account and two that went into a separate account belonging to Princess Mili Investments, a business registered to Zarzar — which amounted to approximately $356,000.

A review of bank records for accounts controlled by or associated with Vela and text messages from his cellphone show that Vela deals extensively in cash.

Texts between Vela and some of his employees showed that they would leave envelopes filled with cash inside his personal office at the pharmacy. The envelopes would sometimes have notes such as “Boss 2000” indicating how much cash was being left.

Investigators also reviewed Zarzar’s tax records

In tax year 2019, for instance, he reported $672,731 in gross receipts for his two businesses combined. He had deposited about $219,508 in cash, and coupled with revenue paid by insurance providers and clinic employees indicating that incoming cash was limited, investigators believe it is “unlikely” the cash he deposited that year was included in the receipts he reported for the clinic.

There were similar instances for tax years 2020 through 2023.

Investigators believe Zarzar was attempting to “disguise” these significant cash withdrawals as well as any cash received from Vela. They also believe that Zarzar failed to report cash proceeds while the kickback scheme was ongoing.

During this time, investigators found that Zarzar also purchased and sold a “large number of rare and collectible coins and banknotes,” in addition to other collectible items such as vintage posters and military regalia.

Investigators determined that the sale of coins and collectibles likely does not account for the cash deposits at the time due to the volume of transactions and records they reviewed.

“The investigation also uncovered no known legitimate source for Zarzar’s cash deposits,” the petition stated.

THE OVERBILLING

During their investigation authorities found that Zarzar would submit Medicaid claims that did not meet the claim requirement, the petition read.

His claims were based on the amount of time spent with each patient which are categorized into American Medical Association codes. One such code requires a physician to spend 10-19 minutes with a patient, and others require more time.

Between Jan. 1, 2020 to Dec. 4, 2024, Zarzar submitted a total of 15,122 billing claims under three codes which totaled $1,969,935.

Although Zarzar made these claims, his employees told authorities that Zarzar’s office visits often didn’t meet the necessary time limit or decision making complexity in order to bill for the services.

In fact, the employees told investigators that Zarzar would often spend no more than 10 to 15 minutes with each patient and would usually only perform a cursory check and in some instances would not even enter a patient’s exam room.

Based on 27 patient records, authorities found that Zarzar would also keep insufficient progress notes, often leaving sections blank but still prescribing medications.

In one instance, records showed that Zarzar had diagnosed a patient with constipation and other conditions and had prescribed a laxative but had failed to record any examination of their abdomen.

“… The assessment and treatment plan sections of the progress notes were generally simplistic and insufficient to justify the associated billing codes. In most cases, the assessment consisted solely of the diagnosis or diagnoses,” the petition stated.

Based on the billing claims made by Zarzar, authorities determined that the hours claimed did not match the operating hours of the clinic from 10 a.m. to 5 p.m.

The clinic which employees told authorities would close for at least an hour and oftentimes about two to three hours around midday. They also told authorities that Zarzar would often close the clinic in the early afternoon causing them to reschedule any patients still there.

THE ASSETS

Two-hundred and twenty-seven coins, 72 banknotes, 51 Pokémon cards, 42 posters and historical documents, and three pieces of military memorabilia — these 395 items were seized from the clinic in a search warrant conducted June 28.

The items were purchased at auctions using money generated from the scheme, according to the petition.

Investigators found through bank records and speaking with auction companies that he spent thousands of dollars on the coins, which ranged from a Roman Empire Tiberius AD 14-37 item to coins dating back to 1700s France; and tens of thousands on the banknotes.

He also spent thousands for World War II memorabilia which included German military items such as daggers, swords, insignia, medals, uniforms and helmets. Among them was a Nazi officer’s uniform and hat.

Other items he purchased with the money included a Marilyn Monroe print, high-rated Pokémon cards including Giratina Lost Origin and Arezu Lost Origin cards — all graded in PSA (Professional Sports Authenticated) 10 condition.

As of Friday, no hearings have been scheduled and a search of federal court records didn’t immediately return any federal complaints or indictments for Zarzar or Vela.

The post Hitler, Elvis memorabilia seized from Mission clinic in $2 million Medicaid fraud case appeared first on MyRGV.com.

Read Entire Article