MIAMI BEACH — It was New Year’s Eve, and dance music was pulsating from the backyard of a multimillion-dollar home here co-owned by Philip Esformes, a former nursing home executive who orchestrated one of the biggest Medicare frauds in United States history.
Just days after being granted clemency by President Donald J. Trump and released after serving four years of his 20-year sentence, Mr. Esformes was under a disco ball celebrating his daughter’s wedding.
Not far away, in Hialeah, Fla., Judith Negron, 49, who had been convicted in a separate scheme to siphon off hundreds of millions of dollars in fraudulent Medicare payments, was also at home for the holidays instead of in federal prison. Thanks to a commutation by Mr. Trump, she had been released after serving eight years of a 35-year sentence and was relieved of any remaining obligation to pay her share of $87 million in court-ordered restitution.
This was hardly the outcome that Paul E. Pelletier expected when he and a team of other top Justice Department prosecutors and federal investigators set out to expose what Mr. Esformes and Ms. Negron had done.
After years of painstaking work and millions of dollars spent to investigate and prosecute the cases, the remainders of the sentences being served by the two convicted felons — participants in a type of fraud that costs taxpayers billions of dollars — had been wiped away by the stroke of a presidential pen.
In explaining his decisions, Mr. Trump said that Ms. Negron was a “wife and mother” and had dedicated her time in prison to “improving her life and the lives of her fellow inmates.” Mr. Esformes, he said, spent his time in prison “devoted to prayer and repentance and is in declining health,” and others had raised claims of misconduct by prosecutors in his case.
The presidential rationales did not hold much weight with those who had sought to hold Mr. Esformes and Ms. Negron accountable.
“It is an incredible kick in the teeth to the agents and prosecutors who toil away every day under very difficult circumstances to achieve justice and some restitution to the taxpayers from the billions of dollars that has literally been stolen from them,” Mr. Pelletier said.
His frustration is shared by many current and former Justice Department officials who spent years working on these cases, considered two of the most important taken up in the nationwide effort to combat widespread Medicare fraud.
“It is disheartening, demoralizing,” said Wifredo A. Ferrer, a former United States attorney for the Southern District of Florida, speaking generally about presidential commutations in Medicare fraud cases. “We are doing these cases to control health care costs and save lives and make sure legitimate health care centers don’t have to compete with the crooks.”
The wave of pardons and commutations issued by Mr. Trump in his final months in office has drawn criticism from prosecutors and federal agents involved in other types of cases as well. Most notably, his decision to pardon four Blackwater guards convicted in the killing of Iraqi civilians infuriated many involved in those complex, long-running and contentious prosecutions.
But Mr. Trump’s willingness to grant clemency in a string of Medicare cases has elicited particular outrage in Florida, a hotbed of this type of case and a focus of Justice Department efforts to combat fraud.
Mr. Trump added to the anger on Tuesday, when he commuted what was left of the prison sentence for Dr. Salomon E. Melgen, 66, who ran clinics in Florida that fraudulently diagnosed Medicare patients with eye diseases and then performed medically unnecessary tests and procedures, falsely billing the federal government at least $42 million, according to prosecutors.
He was sentenced in 2018 to 17 years in prison and was not scheduled to be released from prison until 2031, according to Bureau of Prisons records.
Roger H. Stefin, the lead prosecutor on the Melgen case, said that he considered it to be the most important conviction of his nearly 32-year career at the Justice Department — and that he was outraged at what Mr. Trump did.
“It is an insult and slap in the face to everybody,” said Mr. Stefin, 67, who retired last month, including “the patients who are getting needles stuck in their eyes and lasers blasting their retinas for treatments they did not even need.”
He remains baffled at why Mr. Trump acted in this case. “Why do these rich and well-connected people — really bad people — get this special treatment?” he said. “Why do they deserve it when other people are languishing in the jails?”
Ms. Negron, and lawyers for Dr. Melgen and Mr. Esformes, 52, argue that the commutations were justified. They said the Justice Department was overzealous in its prosecutions, either by using unethical practices during the investigation or by pushing for excessively long prison sentences and unrealistic restitution orders.
“I was sentenced based on numbers that were not relevant to me,” Ms. Negron said this month in an interview, referring to her 35-year sentence and multimillion-dollar restitution requirement. She argued that her earnings from the scheme were not more than her salary of about $250,000 a year. Prosecutors said during the trial that much of the stolen money was still missing.
Dr. Melgen’s case had become particularly high-profile because of his friendship with Senator Bob Menendez, Democrat of New Jersey, who was accused of bribery and corruption for accepting gifts from Dr. Melgen while intervening in his case with federal officials. Mr. Menendez’s trial ended with a deadlocked jury; a judge subsequently dismissed some of the charges and the Justice Department decided not to retry him.
“Throughout this ordeal, I have come to realize the very deep flaws in our justice system and how people are at the complete mercy of prosecutors and judges,” Dr. Melgen said in a statement issued by his lawyer.
Some lawyers have argued that Mr. Trump’s actions on the Medicare cases were justified.
“There are a lot of health care cases that are very questionable, very questionable, and I think that’s been brought to the attention of the White House,” said Alan M. Dershowitz, a member of Mr. Trump’s legal team during his first impeachment and a supporter of clemency for Mr. Esformes.
The cases involving Mr. Esformes and Ms. Negron were investigated by a special unit created in Miami in 2007 and led by Mr. Pelletier that targeted Medicare fraud.
Mr. Pelletier and his colleagues said they were amazed at the depth of corruption they found.
“We were ground zero for Medicare fraud,” Mr. Ferrer said.
There were so many schemes unfolding in South Florida that prosecutors set up an office with two football fields’ worth of space to store documents seized during raids and house the dozens of prosecutors, F.B.I. agents, and personnel from the inspector general’s office at the Department of Health and Human Services assigned to the team.
The team also included a nurse who could help them reverse-engineer falsified billing codes and data experts who could examine billing trends to help them identify surges in reimbursements that might merit further investigation.
In Ms. Negron’s case, investigators found that the network of mental-health clinics she helped run, known as American Therapeutic Corporation, paid bribes and kickbacks to owners of nursing homes and halfway houses and to so-called patient brokers to deliver clients to their clinics. In many cases, those clients were not eligible for the services that the company then billed Medicare to supposedly provide.
Ms. Negron and others made sure that patient files and therapist notes were altered to make it falsely appear that patients were being treated, with Ms. Negron at times signing files as if she was in two places at once.
In total, at least $83 million in improper Medicare payments were made to the companies over eight years. Only a tiny share of the money was located after arrests were made.
The case involving Mr. Esformes was even bigger, as the network of clinics he owned collected an estimated $1.3 billion in fraudulent Medicare claims, with Mr. Esformes extracting $38.7 million in payments from 2010 to 2016, according to prosecutors.
President Trump has discussed potential pardons that could test the boundaries of his constitutional power to nullify criminal liability. Here’s some clarity on his ability to pardon.
- May a president issue prospective pardons before any charges or conviction? Yes. In Ex parte Garland, an 1866 case involving a former Confederate senator who had been pardoned by President Andrew Johnson, the Supreme Court said the pardon power “extends to every offense known to the law, and may be exercised at any time after its commission, either before legal proceedings are taken or during their pendency, or after conviction and judgment.” It is unusual for a president to issue a prospective pardon before any charges are filed, but there are examples, perhaps most famously President Gerald R. Ford’s pardon in 1974 of Richard M. Nixon to prevent him from being prosecuted after the Watergate scandal.
- May a president pardon his relatives and close allies? Yes. The Constitution does not bar pardons that raise the appearance of self-interest or a conflict of interest, even if they may provoke a political backlash and public shaming. In 2000, shortly before leaving office, President Bill Clinton issued a slew of controversial pardons, including to his half brother, Roger Clinton, over a 1985 cocaine conviction for which he had served about a year in prison, and to Susan H. McDougal, a onetime Clinton business partner who had been jailed as part of the Whitewater investigation.
- May a president issue a general pardon? This is unclear. Usually, pardons are written in a way that specifically describes which crimes or sets of activities they apply to. There is little precedent laying out the degree to which a pardon can be used to instead foreclose criminal liability for anything and everything.
- May a president pardon himself? This is unclear. There is no definitive answer because no president has ever tried to pardon himself and then faced prosecution anyway. As a result, there has never been a case which gave the Supreme Court a chance to resolve the question. In the absence of any controlling precedent, legal thinkers are divided about the matter.
- Find more answers here.
They said he used the money to fuel a luxurious lifestyle that included a $360,000 watch, a $1.6 million Ferrari, a series of multimillion-dollar homes in Miami, Chicago and Los Angeles and even bribes for a basketball coach to help his son get into college.
Mr. Esformes, according to testimony during his trial, used code words like “fettuccine” for cash payments that would be placed in Publix supermarket bags and delivered to a closet in the same Miami Beach home where he celebrated New Year’s Eve.
The average prison sentence in Medicare fraud cases is four or five years, according to recent summaries of convictions. But the longest sentences are reserved for defendants like Mr. Esformes and Ms. Negron who are shown to have played key roles in organizing the schemes.
The prosecutors intentionally sought long sentences both to punish them for the immense scale of the fraud and to send a deterrent message, Mr. Pelletier said.
“If you are going to steal $250 million from Medicare, you are going to jail for 20 years,” he said. “I have no sympathy for these people. None.”
Ms. Negron is now helping her husband run his pool construction business and looking after her two teenage sons. There was effectively no chance she would have managed to pay the government her share of the full restitution amount— $87.5 million split among several of the defendants. But now she will no longer have 10 percent of her monthly wages deducted to cover the debt.
Ms. Negron gained the attention of Mr. Trump in part because she happened to serve time in federal prison with Alice Marie Johnson, who after lobbying on her behalf by Kim Kardashian West had a life sentence on nonviolent drug charges commuted by Mr. Trump and has gone on to advise the White House on other pardon and commutation candidates.
Among those Ms. Johnson brought to the attention of the White House was Ms. Negron, given the length of her prison sentence, the fact that she had two children at home, and that this was her first criminal offense.
Ms. Negron later visited the White House with Ms. Kardashian West and Ms. Johnson to thank Mr. Trump.
Mr. Esformes’s release came after a lobbying campaign by the Aleph Institute, a group advised by Mr. Dershowitz and started by the Chabad-Lubavitch movement of Hasidic Jews, which seeks to help inmates facing long sentences. The movement has longstanding connections to Jared Kushner, Mr. Trump’s son-in-law and senior adviser who helped oversee the pardon process.
Rabbi Sholom Lipskar, the founder and chairman of the Aleph Institute — which has collected $65,000 worth of donations from Mr. Esformes’s family since his 2016 arrest — officiated the wedding held at Mr. Esformes’s property on New Year’s Eve.
Mr. Esformes is also still facing an order that he repay the federal government $5 million and forfeit another $38 million in illegal proceeds. But his lawyers are seeking to overturn those orders. Even though Mr. Esformes no longer faces any remaining prison time, his criminal conviction, and the resulting penalty, is being appealed in the United States Court of Appeals, with his lawyers claiming prosecutorial misconduct.
The festivities at Mr. Esformes’s home on New Year’s Eve, soon after his release, surprised some of his neighbors. Anticipating complaints, the bride and groom distributed gift baskets to neighbors with a note apologizing “for any noise from the celebration.”
But one neighbor tweeted a photo of the gift basket, asserting that the lawn at Mr. Esformes’s home went uncut during his time in prison, and expressing wonderment that Mr. Esformes so quickly “found the wherewithal to host a grand wedding for his daughter in his backyard tonight!”
The neighbor added the hashtag #CrimePays.
Kenneth P. Vogel and Jesse Drucker contributed reporting.
Source : New York Times