TX: Fraudster Who Stole Protected Health Information to Fund Spending Spree Sentenced to Prison

There’s an update to a previously noted case in Texas.

From the U.S. Attorney’s Office, Eastern District of Texas on July 8:

PLANO, Texas – A McKinney man has been sentenced to prison for federal violations in the Eastern District of Texas, announced Acting U.S. Attorney Nicholas J. Ganjei today.

Demetrius Cervantes, 46, pleaded guilty on Dec. 4, 2020, to conspiracy to obtain information from a protected computer on Dec. 4, 2020, and was sentenced to 48 months in federal prison today by U.S. District Judge Sean D. Jordan.

“Today’s sentence sends the message that the theft of protected health information, the fabrication of physicians’ orders, and the sale of prescriptions will not be tolerated in the Eastern District of Texas,” said Acting U.S. Attorney Nicholas J. Ganjei.  “This office will continue to pursue those who place profits over patients and manipulate the healthcare system for their personal gain.”

According to information presented in court, Cervantes, Amanda Lowry, and Lydia Henslee, were named in a federal indictment on Sept. 11, 2019 charging them with conspiracy to obtain information from a protected computer and conspiracy to unlawfully possess and use a means of identification.  They are alleged to have breached a health care provider’s electronic health record (EHR) system in order to steal protected health information and personally identifiable information belonging to patients.  This stolen information was then “repackaged” in the form of false and fraudulent physician orders and subsequently sold to durable medical equipment (DME) providers and contractors.  The defendants obtained more than $1.4 million in proceeds from the sale of the stolen information.  The defendants used those proceeds to purchase items such as sport utility vehicles, off-road vehicles and jet skis.

Lowry pleaded guilty to conspiracy to obtain information from a protected computer and is set to be sentenced on July 22, 2021.

On Nov. 18, 2020, Henslee was charged in a ten-count superseding indictment with one count of conspiracy to unlawfully transfer, possess, and use a means of identification, and nine counts of unlawfully transferring, possessing, and using a means of identification.

Henslee was also charged in a separate superseding indictment along with Steven Churchill, 34, of Boca Raton, Florida, Samson Solomon, 23, of West Palm Beach, Florida, David Warren, 50, of Boca Raton, Florida, and Daniel Stadtman, 67, of Allen, Texas, with one count of conspiracy to commit illegal remunerations.

According to the superseding indictment, the defendants are alleged to have conspired to pay and receive kickbacks in exchange for orders from physicians that were subsequently used to obtain payments from federal health care programs.  The conspirators obtained patient information, including protected health information and personally identifiable information, and used the information to create fictitious physician orders.  The conspirators then sold the physicians’ orders to each other and to other DME providers.  Within approximately eight months, the defendants collectively obtained more than $2.9 million in proceeds from the criminal scheme.

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by federally funded programs, including Medicare, Medicaid, and TRICARE.  If convicted, the defendants each face up to five years in federal prison.

Henslee pleaded guilty to conspiring to possess and use means of identification in connection with various offenses on March 25, 2021.  A sentencing date has not been set.

These cases were investigated by the U.S. Department of Health and Human Services, Office of Inspector General; U.S. Department of the Treasury, Internal Revenue Service, Criminal Investigation; and the U.S. Department of Defense, Office of Inspector General, Defense Criminal Investigative Service.  They are being prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and Adrian Garcia and Special Assistant U.S. Attorney Bethany Pickett.

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