A former advisor with stints at Morgan Stanley, Wells Fargo and Stifel faces decades in prison after being convicted of conspiring to pull off a multimillion health insurance fraud.
Kaival Patel, a New Jersey-based former advisor, was convicted of one count of conspiracy to commit wire fraud and health care fraud, four counts of health care fraud, one count of conspiracy to commit money laundering and five additional counts of money laundering.
Special Agent Tammy Tomlins, heading the IRS-Criminal Investigation Division in its Newark office, said Katel “enriched himself by defrauding the New Jersey public health insurance plans out of more than $4 million.”
According to federal officials, Patel co-created a company called ABC Healthy Living with his wife in order to market compound prescription medications, which are specialty medications mixed by pharmacists in order to meet patients’ specific needs.
While compound medications aren’t FDA-approved, they can be useful when a patient has an allergy to a particular ingredient in one medication, for example. But these medications require a prescription from a physician, according to the DOJ.
In about June 2015, Patel and Paul Camarda, a pharmaceutical sales executive, learned that several state health insurance plans, including the the State Health Benefits Program and the School Employees’ Health Benefits Program, would reimburse some government employees thousands of dollars for certain prescribed compound medications, including vitamins, scar, pain and libido creams as well as acid reflux drugs.
Patel and Camarda concocted a plan to get compound medication prescriptions for patients with no medical need for them in order to pocket the commissions for the meds, according to the Justice Department (Camarda pleaded guilty to health care conspiracy, conspiring to commit money laundering and obstruction of justice in 2021).
But they needed a doctor to sign off on the fraudulent prescriptions. So they went to Saurabh Patel, a doctor operating a clinic in Newark (and a relative of Kaival Patel, according to the DOJ). Saurabh Patel agreed to sign the prescriptions (he pleaded guilty to insurance fraud in federal court earlier this year, according to the DOJ).
From there, Kaival Patel paid a group of corrections officers to visit Saurabh Patel to get the fraudulent prescriptions (with Saurabh Patel pocketing insurance payments for the patient visits). Kaival Patel also told Saurabh Patel which insurance companies covered those compound meds and urged him to prescribe them to current patients of his clinic with those plans, according to the charges against Saurabh Patel.
Kaival Patel also worked with a pharmacist who mixed compound medications to add unnecessary ingredients to them to boost the costs even more. The scheme was wide-ranging, with the DOJ claiming 47 people have been convicted or pleaded guilty in the “overarching conspiracy.”
Patel first entered the financial services industry in 2002, joining AXA Advisors, according to his IAPD profile. He lasted there until September 2007, and later sued AXA for unfairly firing him for allegedly not meeting “minimum production requirements” (the parties later settled and the case was dismissed).
Patel then joined Morgan Stanley from September 2010 through June 2011 before hopping to Wells Fargo in August of that year, lasting until July 2018 when he moved to Stifel. He was fired in January 2022, because of a “loss of confidence relating to issues stemming from his being named in an indictment filed in United States District Court,” according to IAPD. FINRA barred him from the industry in May of that year.
Patel faces a maximum sentence of 20 years in prison for the conspiracy to commit wire and health care fraud, and a maximum of 10 years in prison for the remaining counts. Sentencing is scheduled for April 10, 2024.
