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Date: 12-29-2018
Case Style:
United States of America v. Oscar Elizondo
Case Number: 7:17-cr-01140
Judge: Randy Crane
Court: United States District Court for the Southern District of Texas (Hidalgo County)
Plaintiff's Attorney: Andrew Swartz
Defendant's Attorney: Ricardo L. Salinas and Ricardo Perez
Description:
McAllen, TX - Former City Commissioner Heads to Prison for Health Insurance Fraud Scheme
A former Pharr City Commissioner was ordered to prison in connection with a scheme to defraud Blue Cross Blue Shield of Texas. Oscar Elizondo, 48, of Pharr, pleaded guilty to conspiracy to commit health care fraud Nov. 29, 2017.
Elizondo was charged with conspiring with the owner of Penitas Family Pharmacy aka Riverside Pharmacy, located in Penitas, to submit more than $1.7 million in fraudulent claims to Blue Cross Blue Shield of Texas (BCBS) for expensive pain patches and scar creams.
Today, U.S. District Judge Randy Crane imposed a 22-month prison sentence to be followed by a three-year term of supervised release. Elizondo was also ordered to pay more than $1.4 million in restitution to BCBS, the amount they paid based on the fraudulent claims.
In handing down the sentence, Judge Crane characterized the scheme as “blatant fraud” and a “complete ruse.” Crane further noted that although the fraudulent claims were submitted to BCBS, the scheme also defrauded local school districts, municipalities and small businesses, who had self-funded health insurance programs through BCBS.
Co-defendant Omar Espericueta, 46, of Palmhurst, pleaded guilty Dec. 1, 2017, and is set for sentencing in May 2019.
During an approximately five-month period starting in late 2015, Elizondo and his co-conspirators recruited marketers to target employees of entities throughout the Rio Grande Valley with BCBS insurance. The marketers solicited employees with meals, drinks and promises of “free” prescription pain patches and scar creams in order to obtain their health insurance information. The co-conspirators then used the insurance information, along with fraudulent prescriptions, to submit hundreds of fraudulent and medically unnecessary claims to BCBS. Prescriptions were written for individuals who never saw a doctor and did not want or need pain patches or scar creams. Other individuals were taken to a doctor, but it was a doctor with whom Elizondo and his co-conspirators had made arrangements to sign fraudulent prescriptions in exchange for cash, fake loans and prescription pain killers.
Employees who were targeted in the scheme were falsely told that the prescription medication was “free,” when in reality Penitas Pharmacy planned to use their health insurance information to bill BCBS for several thousand dollars worth of prescriptions for each employee. In many instances, the defendants billed BCBS for prescriptions that were never delivered to employees, including multiple refills that were never requested.
Elizondo was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.
The FBI, Mission Police Department, Texas Department of Insurance – Fraud Unit and Texas Health and Human Services Commission conducted the investigation. Assistant U.S. Attorney Andrew Swartz is prosecuting the case.
Charge:
HEALTH CARE FRAUD
(1)
Outcome: Twenty-two (22) months custody of the Bureau of Prisons and three (3) years of supervised release term with special condition defendant participate in a Treatment Program for the treatment of alcohol addiction, dependency and abuse, until completed to be discharged with the approval of the Program Director and Probation Officer; $100 special assessment; waived fine; restitution in the amount of $1,484,268.05, jointly and severely liable with co-defendant, payable to the US District Clerks Office of the Southern District of Texas for the benefit Blue Cross Blue Shield of Texas; the first $1 million payable within 60 days from his release from imprisonment, any remaining balance payable in equal monthly installments beginning the following month, with final amount due and payable 60 days prior to the expiration of his supervised release term.
Minute Entry for proceedings held before Judge Randy Crane: Sentencing held on 12/19/2018 for Oscar Elizondo (2). Defense counsel presented arguments. Government responded. Counsel approached bench for conference-SEALED. The Court GRANTED 68 Government's Sealed Event. [TOL=20, GRS=33-41 months] Sentence Count(s) 1: Twenty-two (22) months custody of the Bureau of Prisons and three (3) years of supervised release term with special condition defendant participate in a Treatment Program for the treatment of alcohol addiction, dependency and abuse, until completed to be discharged with the approval of the Program Director and Probation Officer; $100 special assessment; waived fine; restitution in the amount of $1,484,268.05, jointly and severely liable with co-defendant, payable to the US District Clerk's Office of the Southern District of Texas for the benefit Blue Cross Blue Shield of Texas; the first $1 million payable within 60 days from his release from imprisonment, any remaining balance payable in equal monthly installments beginning the following month, with final amount due and payable 60 days prior to the expiration of his supervised release term. The Court advised the defendant of his right to an appeal. The Court allowed defendant to self-surrender to the US Marshal Service on the 1st floor of this building on Wednesday, 1/2/2019 by 2:00 PM. Count(s) 13-14, 15-16: Dismissed on Government's oral motion. Oscar Elizondo terminated. Appearances: Andrew R. Swartz, AUSA; Ricardo Perez/Ricardo L. Salinas, Ret; C. Corona, US Probation-Mc.(ERO: Ricardo Rodriguez) (Interpreter: Elena Medrano-not used.) Deft continued on pretrial release., filed.(DeliaRodriguez, 7) (Entered: 12/19/2018)
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Defendant's Experts:
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