Philip Esformes In 2016, Philip Esformes,
the owner of more than 30 nursing homes and assisted living facilities in the Miami area,
was charged with the largest criminal healthcare fraud case in U.S. history. This Medicare fraud
and money laundering scheme made Philip a $1 billion profit between 2009 and 2016.
Along with Philip, a hospital administrator and physician's assistant were also named in the
indictment and charged with conspiracy, money laundering, and healthcare fraud.
Philip, the 47-year-old already-wealthy healthcare businessman, used the scam to fund a lifestyle
full of private jets, meetings with escorts in fancy hotels, personal basketball coaches for
his son, and a $600,000 watch, the same one that hip-hop artist Drake showed off at a Raptors-76ers
game in 2019. The watch, a Patek Philippe, is rose gold, made of sapphire glass, and features 1,343
diamonds on the case, bracelet, and dial. Philip wasn't shy about flashing his wealth.
The Esformes Network The Esformes Network,
his operation of nursing homes and healthcare facilities,
targeted the government-run programs of Medicare and Medicaid, which serve as health insurance
plans for the elderly and impoverished. The indictment claimed that Philip and his associates
billed Medicare and Medicaid for services that the residents at his facilities didn't need.
Philip is responsible for stealing more than $1 billion from government healthcare programs
meant to help people who are genuinely in need.
$221 million of this came from fraudulent claims alone. This fraudulent billing cycle went on for
14 years. Assistant Attorney General of the Justice Department, Leslie Caldwell,
called it the largest single criminal healthcare fraud case brought against individuals.
According to the indictment, he used some money to pay his escorts' travel and transportation
expenses. In 2014, he self-reported a personal income of $78 million. The money allowed him
to withdraw $4.8 million of cash, lease $2.4 million worth of luxury vehicles,
purchase watches for $360,000 and $600,000, and pay $8.9 million in credit card bills.
He paid another $15.4 million to resolve a civil case of healthcare fraud for admitting
two assisted living residents into a Miami hospital for no apparent reason.
But he didn't act alone. Odette Barcha,
the 49-year-old director of outreach programs at Larkin Community Hospital,
and Arnaldo Carmouze, a 56-year-old physician's assistant, were also arrested and charged for
their role in the crime. Philip and Odette were also charged with obstructing justice.
Odette's job was to expand the network of corrupt healthcare providers
willing to partake in Philip's scam. She bribed physicians and hospitals with money
in exchange for patient referrals to the Esformes Network, even though it’s illegal
to refer patients for services billable to Medicare or Medicaid. It’s also illegal to
receive or give out bribes for healthcare referrals... but that one was obvious.
After Odette was subpoenaed by a grand jury in 2016, she created fake medical director
contracts to hide the bribe payments she made in exchange for patient referrals.
She was trying to recruit more patients to the Esformes Network facilities in the Miami area.
Carmouze was the physician's assistant who falsified medical records to explain why the
government had to pay for medication, treatment, visits, and equipment.
Philip was sentenced to 20 years in prison. But
former president Trump commuted his sentence before leaving office.
Presidential Privilege In the United States, a sitting president
has the power to pardon someone for their crimes, which means that their sentence will be completely
eliminated. Donald Trump was known to issue several presidential pardons. In December 2020, he
issued 26 pardons to friends and allies, including Roger Stone, Paul Manafort, and Charles Kushner.
One of the most infamous presidential pardons was new president Gerald Ford's pardon of
Richard Nixon, just weeks after Nixon stepped down amid the Watergate scandal. It was highly
controversial and may have impacted Ford's loss in the next presidential election.
However, Philip wasn't pardoned for his crimes. Instead, he was commuted. This
means that his prison sentence was reduced but not completely eliminated. Unlike pardons,
commutations don't restore a prisoner's civil rights or require the prisoner's consent.
A statement released by Trump's press secretary said that Philip was already
appealing his sentence because of an overly aggressive prosecution that used illegally
gathered evidence. Philip's health was apparently declining in prison. But this
claim was quickly debunked when photos leaked of Philip dancing at his daughter's wedding,
just 20 days after being released from prison.
Philip served only four years out of his 20-year prison sentence.
Federal prosecutor Paul E. Pelletier slammed the presidential pardon of Philip Esformes,
calling it a "kick in the teeth to the agents and prosecutors" who are working
hard to defend justice for people whose livelihoods and money was stolen from
them. Pelletier wanted Philip to serve a long sentence, to try and make an example
of what happens to criminals who steal from government programs like Medicare and Medicaid.
Hot Bed Philp's scam festered
for over a decade before the government finally caught on. Florida has a large elderly population,
making it a hotbed for Medicare billing fraud and Medicaid scams. Health regulators
constantly criticize Florida's inability to keep tabs on ongoing healthcare fraud cases.
As the head honcho of the Esformes Network,
the group of assisted living and nursing home facilities owned and run by Philip,
he made corrupt decisions that endangered his patients to grow his own fortune.
For example, some of the residents at his facilities didn't qualify for some
aspects of care because they weren’t ill or injured enough to need it. However,
the Esformes Network insisted on "treating" them anyway so that they could bill Medicare
and Medicaid for the procedures and treatments. In some cases, this meant prescribing drugs to
the point of addiction. Some patients became addicted to narcotics and felt they couldn't
leave the Esformes Network because they wouldn't be able to fill their prescriptions. This way,
Philip could keep patients in his system to grow and maintain a cycle of fraud.
According to Medicare and Medicaid guidelines, a patient can stay up to 100 days at a nursing
facility after a hospital stay. Patients are allowed an additional 100 days if
they spend six days outside a facility or are readmitted to a hospital for three more days.
When patients reached the maximum number of days in a facility allowed by Medicare and Medicaid,
the Esformes Network would just send them to another of their
many healthcare locations. This was done by a corrupt physician who would see the
patients and coordinate readmission to the same or a different facility.
Not only did they falsify patient treatment records,
but they also inflated the price of the equipment and medication used.
Philip and the Esformes Network accepted kickbacks and bribes to gain business and fill his facility.
But his friends insist Philip wasn't motivated by greed. Instead, success drove him over the edge.
Philip's indictment also states he sold Medicare patient names to a corrupt pharmacist,
which resulted in the arrest of Guillermo and Gabriel Delgado.
At the trial, some Esformes Network staff took the stand as witnesses to testify against Philip. They
said Philip would tell them to pay doctors in cash, using the code word "fettuccine."
As the scam grew, staff were directed to inflate invoices to account for huge kickbacks and bribes.
Sentencing At his sentencing, Philip
sobbed for 16 minutes about how sorry he was for the embarrassment he caused friends and family and
the crimes he committed against his patients and the federal government. He called himself arrogant
and admitted to cutting corners in healthcare. There was no one else to blame but himself.
By the time he was sentenced in 2019, Philip had already spent three years in
jail. He was convicted of 20 counts of money laundering, receiving healthcare kickbacks,
bribery conspiracy, and obstruction of justice. Prosecutors also sought $38.5 million in assets.
The jury, however, didn’t reach a verdict on the main charge of Philip's attempt to defraud
Medicare. Prosecutors vowed to retry him on this in addition to five other counts.
Meanwhile, Philip immediately appealed his sentence. But, lucky for him, he spent only
one more year in prison before he was commuted by President Trump in 2020. The commutation allowed
him to escape prison but required supervised release and a $43 million restitution. As of April
2021, he still owed $5.3 million of restitution and was ordered to forfeit $38 million.
Benefactors Philip was far
from the only one to benefit from the scam. He paid former Ivy League basketball coach,
Jerome Allen, $300,000 in bribes to admit his son to the University of Pennsylvania. At the trial,
Allen testified that he wouldn't have recruited Philip's son if not for the bribes. Allen
pleaded guilty and was sentenced to probation in exchange for his testimony. He was fined $200,000.
Philip was also in contact with Rick Singer, the college admissions consultant whose name
was at the center of the college admissions scandal. He discussed his son's SAT scores
with Singer and how he could improve his child's chances of getting into college.
His daughter also benefited from the scam, with a lavish wedding held at her parents' luxurious
multi-million dollar beachfront mansion on New Year's Eve. The wedding was so loud and obnoxious
that it angered several neighbors, who received a champagne gift basket in advance as an apology for
the noise. One of his neighbors took to Twitter to say that after Philip was released from prison,
he had his home landscaped, reroofed, and deep-cleaned—all in over two weeks. To many,
this wedding felt like a slap in the face to the American people whose tax money pays
for Medicare and Medicaid, which went right into his wallet. It also offended many of the
patients he endangered and the legal team who tried to restore justice against him.
Not to mention, part of the reason for Trump's commutation of Philip's sentence was Philip's
supposed poor health. His lawyers told a federal judge that Philip was suffering from pulmonary and
upper respiratory problems, which could be lethal in the face of coronavirus. Philip's health didn't
seem that poor when he was seen dancing wildly and binge drinking at his daughter's wedding.
Connections Philip's sudden clemency
showed the American people how you can get the "justice" you're willing to pay for. In Philip's
case, he had the money and connections to get himself out of prison. As a longtime supporter
of Jewish synagogues and organizations, Philip had links with the Aleph Institute. This Jewish
humanitarian nonprofit group works on prisoners' rights and collaborates with the White House on
criminal justice issues. Philip's family donated $65,000 to the group after his indictment.
The Esformes name is seen on a Chicago school associated with Hasidic Jews whose previous
leader helped found the Aleph Institute in the 1980s. Trump's son-in-law had close
ties to this particular Hasidic group. Not to mention, Philip's father was a rabbi.
Alan M. Dershowitz volunteered with the Aleph Institute and said that the group
played a prominent role in petitioning for Philip's clemency. But Dershowitz
denied that Philip's donations had anything to do with their efforts for
clemency on his behalf. Dershowitz had strong ties to the Trump white house.
The Aleph Institute was also involved in at least
five other commutations set forth by President Trump.
Aftermath In April of 2021,
Justice Department prosecutors vowed to a federal judge to stop at nothing to retry
Esformes for his role in Medicare and Medicaid fraud. After Philip exhausts
his appeals process to reduce his restitution payments, the prosecution plans to do a retrial.
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