Source: US FBI
PHOENIX, Ariz. – Today, United States Attorney Timothy Courchaine announced criminal charges against seven defendants in connection with alleged schemes to receive health care kickbacks and to defraud Medicare and Medicaid (specifically AHCCCS, the Arizona Health Care Cost Containment System). The charges filed in federal court are part of the Department of Justice’s 2025 National Health Care Fraud Takedown. The charges stem from alleged schemes to obtain over $1.1 billion by the collective submission of approximately $1.65 billion in fraudulent claims to Medicaid and Medicare and the receipt of health care kickbacks and bribes.
“Health care fraud doesn’t just steal money from taxpayers, it also degrades trust in the system Americans rely on to care for themselves and their loved ones” said United States Attorney Timothy Courchaine. “I am proud that the District of Arizona, in coordination with the entire Department of Justice, is working hard to hold criminals accountable for putting ill-gotten gains above their community’s well-being.”
“This record-setting Health Care Fraud Takedown delivers justice to criminal actors who prey upon our most vulnerable citizens and steal from hardworking American taxpayers,” said Attorney General Pamela Bondi. “Make no mistake – this administration will not tolerate criminals who line their pockets with taxpayer dollars while endangering the health and safety of our communities.”
The charges announced today by United States Attorney Courchaine are part of a strategically coordinated, nationwide law enforcement action that resulted in criminal charges against 324 defendants for their alleged participation in health care fraud and illegal drug diversion schemes that involved the submission of over $14.6 billion in intended loss and over 15 million pills of illegally diverted controlled substances. The defendants allegedly defrauded programs entrusted for the care of the elderly and disabled to line their own pockets. The United States has seized over $245 million in cash, luxury vehicles, and other assets in connection with the takedown.
The following individuals were charged in the District of Arizona:
Farrukh Jarar Ali, 41, of Pakistan, was charged by indictment with conspiracy to commit health care fraud and wire fraud, three counts of wire fraud, and money laundering in connection with an alleged $650 million scheme involving at least 41 substance abuse treatment clinics in Arizona. As alleged in the indictment, Ali owned ProMD Solutions (“ProMD”), a Pakistan-based company that provided credentialing, enrollment, medical coding, and billing services for outpatient treatment centers that were purportedly in the business of providing addiction treatment services for persons suffering from alcohol and drug addiction. Ali and ProMD credentialed and enrolled multiple substance abuse treatment clinics as providers with Arizona’s Medicaid agency, the Arizona Health Care Cost Containment System (“AHCCCS”), but these clinics did not provide legitimate care to patients, many of whom were recruited from the homeless population or Native American reservations. Ali submitted approximately $650 million in false and fraudulent claims to AHCCCS for addiction treatment services that were not provided, were not provided as billed, were so substandard that they failed to serve a treatment purpose, were not used as part of or integrated into any treatment plan, and were medically unnecessary. AHCCCS paid approximately $564 million for these false and fraudulent claims. Ali also created false therapy notes for treatment that was never provided, and the clinics working with Ali provided these falsified records to AHCCCS in response to audits. Ali personally received approximately $24.5 million of AHCCCS funds as a result of the scheme, and he used $2.9 million of the funds to purchase a home located on a golf estate in Dubai, United Arab Emirates. The case is being prosecuted by Trial Attorney S. Babu Kaza of the Midwest Strike Force, Assistant Chief James Hayes of the National Rapid Response Strike Force, and Assistant U.S. Attorney Matthew Williams of the District of Arizona.
Cle’Esther Davenport, 51, of Peoria, Arizona, was charged by indictment with conspiracy to defraud the United States and receive and pay kickbacks, and receiving kickbacks, in connection with a substance abuse treatment scheme. As alleged in the indictment, Davenport owned a company, Davenport House LLC, that purportedly provided housing to individuals enrolled in health plans funded by the Arizona Health Care Cost Containment System (“AHCCCS”), Arizona’s Medicaid program. Davenport received approximately $739,000 in illegal kickbacks to refer individuals to Tusa Integrated Clinic, LLC (“Tusa”), an outpatient treatment center that purported to provide substance abuse and behavioral health treatment to AHCCCS-insured patients, resulting in improper payments of approximately $1.58 million from AHCCCS to Tusa. The case is being prosecuted by Assistant Chief James Hayes and Trial Attorneys Sarah Edwards and Lauren Randell of the National Rapid Response Strike Force and Assistant U.S. Attorney Matthew Williams of the District of Arizona.
Ira Denny, 56, of Surprise, Arizona, was charged by information with conspiracy to commit health care fraud in connection with a scheme to defraud Medicare by billing for medically unnecessary amniotic allografts that were procured through kickbacks and bribes. As alleged in the information, medically untrained sales representatives identified and referred elderly Medicare beneficiaries to Denny, a nurse practitioner, who applied amniotic allografts to the beneficiaries without exercising independent medical judgment and in the amount and frequency determined by the sales representatives. Medicare was billed approximately $209,359,607 for allografts ordered and applied by Denny, which were medically unreasonable and unnecessary, ineligible for reimbursement, and procured through kickbacks and bribes. Medicare paid approximately $138,590,922 based on these false and fraudulent claims. The case is being prosecuted by Trial Attorneys William Hochul III and Shane Butland of the National Rapid Response Strike Force and Assistant U.S. Attorney Matthew Williams of the District of Arizona.
Tyler Kontos, 29, of Mesa, Arizona, Joel “Max” Kupetz, 36, of Scottsdale, Arizona, and JorgeKinds, 49, of Phoenix, Arizona, were charged by indictment with conspiracy to commit health care fraud, health care fraud, and conspiracy to defraud the United States in connection with a $1 billion amniotic wound allograft fraud scheme. Kontos and Kupetz were also charged with transactional money laundering, and Kupetz was charged with receiving health care kickbacks. As alleged in the indictment, the defendants targeted elderly Medicare patients, many of whom were terminally ill in hospice care, through Arizona-based companies Apex Mobile Medical LLC, Apex Medical LLC, Viking Medical Consultants LLC, and APX Mobile Medical LLC to cause unnecessary and expensive allografts to be applied to these vulnerable patients’ wounds indiscriminately, without coordination with the patients’ treating physicians, to superficial wounds that did not need this treatment, and in sizes excessively larger than the wound. Kontos and Kupetz—neither of whom had any medical training—located elderly Medicare patients with wounds of any size or severity, ordered and recommended the ordering of allografts to be placed on the patients’ wounds, and referred the patients to Kinds and other nurse practitioners to apply the allografts. Kinds, a licensed nurse practitioner, applied whatever quantities and sizes of allografts medically untrained sales representatives ordered for the patients, without conducting an independent medical assessment, resulting in the application of numerous and inappropriately large allografts to single small wounds and wounds that required only traditional conservative treatment to heal. In just fourteen months, the defendants and their co-conspirators caused the submission of over $1 billion in false and fraudulent claims to Medicare, CHAMPVA, TRICARE, and commercial insurers, of which over $600 million was paid. Kontos and Kupetz received illegal kickbacks for ordering and arranging for and recommending the purchasing and ordering of allografts, while Kinds received up to $1,000 for each allograft application. Assets were seized upon the defendants’ indictment, including cryptocurrency and bank accounts totaling more than $7.2 million. The case is being prosecuted by Trial Attorneys William Hochul III and Shane Butland of the National Rapid Response Strike Force and Assistant U.S. Attorney Matthew Williams of the District of Arizona. Trial Attorney Yuliana Reyes of the Money Laundering and Asset Recovery Section and Assistant U.S. Attorney Joseph Bozdech of the District of Arizona are handling asset forfeiture.
Gina Palacios, 40, of Phoenix, Arizona, was charged by information with conspiracy to commit health care fraud in connection with a scheme to defraud Medicare by billing for medically unnecessary amniotic allografts that were procured through kickbacks and bribes. As alleged in the information, medically untrained sales representatives identified and referred elderly Medicare beneficiaries to Palacios, a nurse practitioner, who applied amniotic allografts to the beneficiaries without exercising independent medical judgment and in the amount and frequency determined by the sales representatives. Medicare was billed approximately $59,470,478 for allografts ordered and applied by Palacios, which were medically unreasonable and unnecessary, ineligible for reimbursement, and procured through kickbacks and bribes. Medicare paid approximately $28,442,271 based on these false and fraudulent claims. The case is being prosecuted by Trial Attorneys William Hochul III and Shane Butland of the National Rapid Response Strike Force and Assistant U.S. Attorney Matthew Williams of the District of Arizona.
“The FBI takes the responsibility to investigate and pursue those who commit fraud for personal gain extremely seriously,” said FBI Phoenix Special Agent in Charge Heith Janke. “Fraud and dishonesty undermine the integrity of our health care system and cost taxpayers’ money; but beyond that and most importantly, when funds are diverted from where they are truly needed, the people who are most vulnerable are hurt the most.”
The Health Care Fraud Unit’s National Rapid Response, Florida, Gulf Coast, Los Angeles, Midwest, New England, Northeast, and Texas Strike Forces; U.S. Attorneys’ Offices for the District of Arizona, Central District of California, Northern District of California, Southern District of California, District of Columbia, District of Connecticut, District of Delaware, Middle, District of Florida, Northern District of Florida, Southern District of Florida, Middle, District of Georgia, District of Idaho, Northern District of Illinois, Eastern District of Kentucky, Western District of Kentucky, Eastern District of Louisiana, Middle District of Louisiana, District of Maine, District of Massachusetts, Eastern District of Michigan, Northern District of Mississippi, Southern District of Mississippi, District of Montana, District of Nevada, District of New Hampshire, District of New Jersey, Eastern District of New York, Northern District of New York, Southern District of New York, Western District of New York, Eastern District of North Carolina, Western District of North Carolina, District of North Dakota, Northern District of Ohio, Southern District of Ohio, Northern District of Oklahoma, Western District of Oklahoma, District of Oregon, Eastern District of Pennsylvania, District of South Carolina, Middle District of Tennessee, Western District of Tennessee, Northern District of Texas, Southern District of Texas, Western District of Texas, District of Vermont, Eastern District of Virginia, Western District of Washington, and Northern District of West Virginia; and State Attorney Generals’ Offices for Arizona, California, Georgia, Illinois, Indiana, Louisiana, Massachusetts, Missouri, New York, Ohio, and Pennsylvania are prosecuting the cases in the National Health Care Fraud Takedown, with assistance from the Health Care Fraud Unit’s Data Analytics Team. Descriptions of each case involved in today’s enforcement action are available on the Health Care Fraud Unit’s Website.
The District of Arizona, in particular, worked with the Department’s Criminal Division and the following law enforcement organizations to investigate and prosecute the cases filed during the enforcement period: the FBI, the Department of Health and Human Services Office of Inspector General, the Department of Defense – Defense Criminal Investigative Service, and the Department of Veterans Affairs Office of Inspector General.
A complaint, information, or indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
CASE NUMBERS: CR-25-00822-PHX-DWL, CR-25-0083-PHX-MTL, CR-25-00915-PHX-SMB, CR-25-00944-PHX-SPL, CR-25-00947-PHX-DWL
RELEASE NUMBER: 2025-106_Health Care Fraud Takedown
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
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