Pharma Exec Convicted in $200M Medicare Fraud Scheme, Faces Decades in Prison

Mohamad Mokbel, leader of 4M Pharmaceuticals, convicted for orchestrating a $200M Medicare fraud targeting older patients.Photo byToon LambrechtsonUnsplash

Mohamad Mokbel, the head of 4M Pharmaceuticals, was convicted of orchestrating a $200 million Medicare fraud scheme, the U.S. Attorney's Office for the Southern District of Texas announced Tuesday, with sentencing set for Jan. 7, 2025. Mokbel faces charges of conspiracy, health care fraud, bribery, and money laundering.

The department stated that from 2014 to 2021, Mokbel operated 14 pharmacies under straw ownership through 4M Pharmaceuticals. During that time, Mokbel purchased personal information from thousands of Medicare beneficiaries, including identification numbers, health data, and physician details, paying between $16 and $40 per individual.

The department says Mokbel primarily targeted older diabetic patients reliant on testing supplies to manage their blood sugar levels.

According to the department, Mokbel directed 4M employees to use this personal information to submit fraudulent insurance claims for unnecessary products such as topical creams and Omega-3 supplements. The department states that Mokbel aimed to maximize insurance reimbursements, disregarding medical necessity.

To further the scheme, the department revealed, 4M employees faxed pre-filled prescription requests to doctors, appearing to be for legitimate diabetic testing supplies but including other medications.

The department says these prescriptions falsely indicated that patients had requested 4M Pharmacy to fill their orders, even though many patients were unaware their personal information had been used.

Many doctors, believing the requests to be legitimate, signed and returned the prescriptions, allowing 4M to excessively bill Medicare, Medicaid, and private insurers.

According to the department, the pharmacies shipped out unnecessary medications, often on auto-refill. The fraudulent billing resulted in Mokbel receiving over $200 million in proceeds.

From 2015 to 2020, Mokbel also bribed an employee of OptumRx, a pharmacy benefits manager, paying between $2,000 and $5,000 per bribe, totaling over $188,000.

The department says these bribes secured favorable treatment for 4M pharmacies, allowing them to remain credentialed with OptumRx and continue submitting claims through Medicare Part D.

According to the department, Mokbel was convicted of conspiracy to commit mail fraud and health care fraud, health care fraud, money laundering, bribery concerning programs receiving federal funds, and conspiracy to violate the Anti-Kickback Statute.

He faces up to 20 years in prison for conspiracy charges, 10 years for each of five counts of health care fraud, and additional penalties for money laundering and bribery. He may also be ordered to pay up to $4 million in fines and over $160 million in restitution, the department says.

Mokbel, who had been released on bond, was taken into custody after the conviction. The department states that sentencing will take place in January 2025.