White Collar Crime News

Co-Owner of Defunct Mercer County Mental Health Clinic Pleads Guilty to Medicaid Fraud January 27, 2010

Acting Attorney General Paula T. Dow and Division of Criminal Justice Director Stephen J. Taylor announced that a co-owner of a Trenton mental health clinic pleaded guilty today for his role in a conspiracy to fraudulently over-bill the Medicaid program by more than $160,000.

According to Acting Insurance Fraud Prosecutor Riza Dagli, Osvaldo Morales Sr., 61, of Bronx, N.Y., a co-owner of the now-defunct Chambers Mental Health Clinic LLC, pleaded guilty to third-degree Medicaid fraud before Superior Court Judge Edward M. Neafsey in Mercer County. The charge was contained in a Nov. 13, 2007 state grand jury indictment.  The state recommended that Morales serve a probationary sentence.

Morales’s co-defendants – Pedro Acosta, 64, of Queens, N.Y., a co-owner of Chambers Mental Health Clinic LLC and Arnold Jacques, M.D., 60, of Jackson, the former medical director of the clinic, a medical doctor who practices as a psychiatrist – were also charged in the Nov. 13, 2007 state grand jury indictment. Acosta pleaded guilty to second-degree health care claims fraud and is awaiting sentencing. The case against Jacques is pending. A co-owner of the clinic, Bernardo Estambul, 61, of New York, N.Y., pleaded guilty to an accusation charging him with Medicaid fraud. Estambul was sentenced to three years probation and ordered to pay $10,044 in fines and restitution. Estambul was also barred from participating in the Medicaid program for five years.

In pleading guilty, Morales, who operated Chambers Mental Health Clinic in Trenton, admitted that between January 2004 and November 2005, he fraudulently over-billed the Medicaid program.

Morales, Estambul and Acosta caused Medicaid claims to be billed under Jacques’ Medicaid provider number even though Jacques did not provide the counseling services billed. In addition, Morales, Estambul and Acosta billed Medicaid for longer counseling sessions than those that were actually provided. Medicaid pays a higher rate for longer counseling sessions and for counseling services provided by a medical doctor as opposed to counselors who did not have licenses. It is charged that the defendants allegedly fraudulently billed the Medicaid program for more than $160,000 to which they were not entitled.