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In the nation’s biggest Medicare fraud case, a federal judge decided Tuesday to keep the trial of a wealthy Miami Beach businessman on track — despite finding problems with the conduct of prosecutors and agents.
In his ruling, U.S. District Judge Robert Scola found that while they “failed to uphold the high standards” expected of them, federal law enforcement agencies did not act in “bad faith” during their investigation and prosecution of Philip Esformes. Detained since his arrest more than two years ago, Esformes, 49, is charged in a $1 billion Medicare fraud scheme and faces trial in January.
In his ruling, Scola agreed with a magistrate’s previous decision not to throw out the indictment filed in Miami or disqualify the team of prosecutors from the Justice Department and U.S. Attorney’s Office. But Scola disagreed with Magistrate Judge Alicia Otazo-Reyes’ prior ruling on tossing out certain evidence in the high-profile case, and he also described the conduct of the team of prosecutors and agents less harshly than she did in her August decision.
Scola, who as the district judge has the authority to adopt or reject a magistrate’s ruling, said he does not believe “prosecutors acted with any overt intent to violate the defendant’s rights or mislead the court.”
“Although the prosecution team operated in good faith, their execution of their duties was often sloppy, careless, clumsy, ineffective and clouded by their stubborn refusal to be sufficiently sensitive to issues impacting the attorney-client privilege,” the judge wrote in the 50-page ruling.
His view contrasted with Otazo-Reyes’ harsh criticism of the Justice Department prosecutors and FBI agents who were involved in the 2016 search of one of Esformes’ assisted-living facilities. Located in North Miami, the Eden Gardens assisted-living facility had an office for his company’s lawyer.
Esformes’ defense attorneys Howard Srebnick, Roy Black and Jackie Perczek argued that the prosecutors and agents should be disqualified from the case, saying the search at the Eden Gardens ALF was tainted because hundreds of the seized documents in the 70 boxes carted away were protected under attorney-client privilege.
Otazo-Reyes “found the government’s attempt to obfuscate the evidentiary record to be deplorable.” But instead of disqualifying the federal team or dismissing the indictment, Otazo-Reyes chose to suppress the protected correspondence as well as other evidence that was improperly obtained and handled by prosecutors and agents. But that issue became a moot point for Scola because the federal team agreed not to use any of that evidence against Esformes.
According to the Justice Department’s indictment, Esformes is accused of exploiting his network of about 20 Miami-Dade skilled-nursing and assisted-living facilities to fleece the taxpayer-funded Medicare program by filing false claims for services that were not necessary or not provided over the past decade leading up to his arrest in July 2016.
Esformes is also accused of referring his own network of patients to convicted healthcare-fraud offenders, including Guillermo and Gabriel Delgado. The brothers pleaded guilty and admitted swindling Medicare for mental-health, prescription-drug, and home-healthcare services, and they ultimately helped federal investigators target the Miami Beach executive.