Carnival of Fraud

Step right up and be astounded by Miami's bizarre side show of Medicare and Medicaid scammers! After all, you're paying for it!

The money was well spent. For each client promised free milk, Morfa and company collected $650 dollars per month from Medicare ($400 for five cases of milk plus $250 for tubal feeding kits). The same quantity of fortified milk sells in supermarkets for $75. As for the tubal kits, as Leyva told investigators, he and his staff never saw or delivered any.

The perpetrators were careful, though. To limit profits and avoid detection by auditors, they continually shut down older companies and started new ones. At their pinnacle, they were running a dozen companies and delivering milk to some 2000 lucky seniors. Prosecutors say they also set up companies to launder their considerable profits.

Before he was sentenced to 125 months in federal prison, Frank Morfa made a mint in the milk business. But he became better known as the owner of Little Havana's Mambo Club. And he apparently had a third business, as well. According to court documents, he faces federal drug-trafficking charges in Detroit.

Ironically, the 45-year-old Morfa, whose real name is Froilan Delgado, is no stranger to local law enforcement. He has a lengthy criminal record. Back in 1989, the same year he met Francisco Leyva, police busted him at Miami International Airport for carrying a fake passport. He eventually pleaded guilty, and his sentence was cut short after he entered into a cooperation agreement to help federal prosecutors with an unspecified criminal case.

The fake name on the passport? Frank Morfa, the same man Medicare would soon blithely enrich.

Miami's medical fraudsters generally prefer to ply their trade in South Florida, where the authorities are thoroughly overwhelmed. But they are not beyond seeking new horizons.

Take Eugenio Sanchez, who worked for ten years in the financial accounts department of HRS. It was there, he later told investigators, that he acquired his extensive knowledge of the Medicare and Medicaid systems. According to court papers, Sanchez was the brain behind a little-publicized scam that drained Medicare of more than four million dollars.

In 1989 he and his accomplices launched the first of five companies specializing in Medicare-approved respiratory equipment. As with the Morfa milk scam, the lure was a free giveaway. This time it was for a gadget that would help with allergies or sinus problems or even colds. Rather than canvass for patients in Miami, however, Sanchez targeted the quiet neighborhoods of Belle Glade, near Lake keechobee.

Recruiters went door to door, offering a wondrous "breathing machine" to anyone willing to impart their Medicare number and sign a few forms. If people asked, the recruiters identified themselves as respiratory therapists. (The mechanism, called a nebulizer, is used in combination with medications to dilate a patient's bronchial passages.)

Back in Miami, Sanchez took care of the paperwork. He paid three doctors to sign documents stating that they had seen "patients" in Belle Glade, and that it was medically necessary for each to receive a nebulizer. Then it was off to the reimbursement races.

Medicare paid through the nose. About $450 for the breathing machine, and up to $600 for the necessary medications -- per patient each month.

The feds caught on to the plan because one of the doctors helping Sanchez, Frank Ballesteros, was arrested in Miami on a different charge. He was accused of billing Medicare for diagnostic tests that were never done, another common form of fraud.

In his urgency to cooperate with the authorities, Ballasteros mentioned the Belle Glade operation.

Sanchez and two other defendants, Larry Waters and Jose Carlos Perez, maintained their innocence until the eve of the trial this past year. Then they abruptly pleaded guilty. Sanchez was sentenced to 46 months in prison, Waters to 41 months, and Perez to 51 months. Among the exhibits prosecutors were prepared to present at trial was a diagram highlighting the number of homes in Belle Glade where nebulizers had been delivered. "In some areas, practically the whole block had them," notes prosecutor Adrienne Rabinowitz. "They were obviously not medically necessary."

Just as Miami exports fraud, the city has an uncanny knack for attracting scoundrels. A financial prodigy with a degree from the Harvard Business School, Akiyoshi Yamada pleaded guilty to assorted stock frauds in New York and New Jersey. One 1987 arrest left him facing five years behind bars. Instead, Yamada made a deal to help federal authorities with other cases, and then lit out for -- where else? -- Miami, where, according to the FBI, he set up -- what else? -- a Medicare mill.

Yamada is currently the target of a federal grand jury investigation centered on a complex of clinics and medical laboratories on West Flagler Street. The FBI suspects Yamada and his associates charged Medicare at least $20 million for medical treatment and equipment that was either unnecessary or undelivered.

Those who have the unenviable task of catching scalawags in South Florida have, perhaps inevitably, developed their own specialized lingo.

There are, for instance, professional bennies, shorthand for beneficiaries. These are people who accept payment to take part in fraudulent medical services A usually diagnostic tests A that are billed to the Meds. Sometimes the pay is a free lunch; other times it's a small amount of cash. In Miami FBI agents report instances in which professional bennies have attempted to sell their services to the highest bidder.

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