Two Indian Americans have been convicted of major crimes — one of multimillion-dollar health care fraud conspiracy and the other of participating in a scheme to commit insider trading based on material, non-public information.
Kaival Patel, 54, a West New York, New Jersey financial advisor was found guilty on 11 counts of defrauding public health insurance plans out of more than $4 million and transacting in the criminal proceeds, US Attorney’s Office, District of New Jersey announced.
READ: Indian convicted of $2.8 million Medicare fraud (October 5, 2023)
He was convicted on Dec 7 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 by transacting in criminal proceeds, and five counts of money laundering by transacting in criminal proceeds following an 11-day trial before US District Judge Robert B. Kugler.
According to court documents and the evidence at trial, Patel created and operated a company called ABC Healthy Living LLC to market compound prescription medications.
Patel and his conspirators learned that certain state and local government employees had insurance that would reimburse up to thousands of dollars for a one-month supply of certain compound medications such as vitamins, scar creams, pain creams, libido creams, and acid reflux medications.
READ: Indian American gets 27-year jail for $463 million Medicare fraud (August 21, 2023)
Patel and a conspirator approached Patel’s family member, a medical doctor who owns and operates a clinic in Newark, New Jersey, and convinced him to authorize prescriptions for the compound medications for patients who had no medical need for the prescriptions. Patel received commissions for the compound medication prescriptions.
Patel and his conspirators paid a group of corrections officers to go to Patel’s family member’s medical practice for the purpose of receiving fraudulent prescriptions.
Patel conspired with a compounding pharmacist to add unnecessary ingredients to the compound medications to further increase their cost and augment his illicit profits. Patel engaged in a series of financial transactions to receive proceeds from the health care fraud and wire fraud conspiracy.
READ: Four Indian Americans convicted of $463 million fraud, kickbacks and bribery (December 16, 2022)
To date, approximately 47 people have been convicted or pleaded guilty in the overarching conspiracy.
On the count of conspiracy to commit wire fraud and health care fraud, Patel faces a maximum penalty of 20 years in prison and a fine of $250,000 fine, or twice the gross pecuniary loss from the offense, whichever is greatest.
On each of the remaining 10 counts, he faces a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross pecuniary gain or loss from the offense, whichever is greatest. Sentencing is scheduled for April 10, 2024.
In the second case, Amit Bhardwaj, 49, the former Chief Information Security Officer at Lumentum Holdings, was sentenced to 24 months in prison and ordered to pay a fine of nearly $1 million for misappropriating information about impending corporate transactions to trade on that information and tip his associates.
He was sentenced by US District Judge Gregory H. Woods on Dec 8, Damian Williams, the United States Attorney for the Southern District of New York, announced. He previously pled guilty to 13 counts relating to the insider trading scheme.
According to the allegations in the indictment in December 2020, Bhardwaj learned that Lumentum was considering acquiring Coherent, Inc.
READ: 2 Indians get 41 months jail for $1.2 million robocall fraud (September 25, 2023)
Based on this information, Bhardwaj purchased Coherent stock and call options, then tipped three associates –– his friend Dhirenkumar Patel, another friend, and one of Bhardwaj‘s close family relatives –– and these individuals all traded in Coherent securities as a result.
Bhardwaj and Patel agreed that Patel would pay Bhardwaj 50% of the profits that Patel earned by trading in Coherent based on the MNPI provided by Bhardwaj.
When Coherent’s stock price increased substantially following the announcement of the Lumentum acquisition, Bhardwaj, his close family member, his friend Patel, and another friend closed their positions in Coherent securities and collectively profited by nearly $900,000.
In or about October 2021, Bhardwaj learned that Lumentum was engaged in confidential discussions with Neophotonics Corporation about a potential acquisition.
Bhardwaj provided this information to Srinivasa Kakkera, Abbas Saeedi, and Ramesh Chitor, and these individuals all subsequently traded in Neophotonics securities.
In connection with Chitor’s trading, Bhardwaj and Chitor agreed that Chitor and Bhardwaj would split the profits equally. When Neophotonics’s stock price increased substantially following the announcement of the Lumentum acquisition in November 2021, Kakkera, Saeedi, and Chitor closed their positions in Neophotonics securities and collectively made approximately $4.3 million in realized and unrealized profits.
After they were interviewed by the Federal Bureau of Investigation voluntarily and served with federal grand jury subpoenas on March 29, 2022, Bhardwaj took steps to obstruct the federal investigation of their conduct. He drove to the homes of certain of his co-conspirators to encourage them not to tell the federal authorities the truth about their insider trading scheme.
Bhardwaj and his associates subsequently met in person on multiple occasions and discussed, among other things, potential false stories that would conceal their insider trading scheme. They also created false documents to buttress lies regarding payments that were, in reality, related to the insider trading scheme.
In addition to the prison sentence, Bhardwaj was ordered to forfeit $547,286 and pay a fine of $975,000.