HOUSTON – Two Houston area men are now in custody on charges of conspiracy to commit health care fraud relating to a pharmacy fraud scheme, U.S. Attorney Jennifer Lowery announced Tuesday.
Authorities arrested Mohamed Mokbel, 56, and Fathy Elsafty, 62. The suspects are expected to make their first appearances in court at 2 p.m. According to the eight-count indictment, Mokbel is the owner of several Houston area pharmacies, while Elsafty is his accountant.
Investigators said 4M Pharmaceuticals Inc. was the parent company for several retail pharmacies that operated in locations that included Houston, Fort Worth, and South Florida. Mokbel was 4M’s CEO, and allegedly had ownership interests in the subsidiary pharmacies. The charges allege Elsafty served as 4M’s accountant and tax preparer as well as nominee owner of the multiple pharmacies.
4M Pharmaceuticals allegedly functioned as an outbound telemarketing call center that solicited Medicare, Medicaid and commercial insurance patients nationwide – many over the over the age of 55, investigators said. The indictment alleges call center employees offered patients medically, unnecessary diabetic supplies and topical creams, although many refused the solicitations. However, 4M Pharmaceuticals and pharmacies allegedly billed the patient’s insurance plan anyway. In some cases, 4M pharmacies billed for prescriptions dispensed after a patient’s death, according to investigators.
The scheme also allegedly targeted doctors. The charges allege 4M Pharmaceuticals sent fax requests for prescriptions that patients often did not authorize. In several cases, the company billed patients for prescription drugs without a valid prescription, investigators said. Court documents said 4M pharmacies also reportedly sent prescription requests to doctors for dead patients.
In several instances, audits required 4M to produce paperwork, according to the indictment. Investigators said ElSafty participated in fabricating records.
The indictment alleges that from Dec. 13, 2013, through March 3, 2020, 4M pharmacies collectively received over $134 million in payments from Medicare and other healthcare benefit programs based on fraudulent claims. The funds were used, in part, to pay for Mokbel’s $1.5 million residence, $15 million in gambling and casino expenses and purchases, and payments for a Ferrari and a Bentley automobile, investigators said. Mokbel also transferred and controlled over $6 million in health care fraud proceeds in certificate of deposit accounts at banks, according to the allegations.
Mokbel and ElSafty have been charged with one count of a conspiracy to commit health care fraud, three counts of health care fraud and four counts of money laundering. All carry a possible prison sentence of 10 years in prison and a $250,000 maximum fine. The use of telemarketing to target people over 55 as a means to commit health care fraud has an additional penalty of 10 years.