Professional Documents
Culture Documents
U")J ~ eN i
UNITED STATES DISTRICT COURT . ,i. rI.
DISTRICT OF NEW HAMPsmRF;..
J' 'i I ;.~, - "
HOWARD KATZ, )
) 18 U.S.C. § 1347
INFORMATION
the Chief Executive Officer and Chainnan of the Board of Directors ofMDwerks, Inc,
processing, claims management, and col1ections solutions for health care providers, MDwerks
did business through three wholly-owned subsidiaries, Xeni Financial Services, Inc" Xeni
Medical Billing Corp. and Xeni Medical Services, Inc. (MDwerks and its subsidiaries are
2. In October 2007, the Katz Companies entered into a contract with Ortho Supply
Management, Inc, ("OSMI"), a Massachusetts company, in which the Katz Companies agreed
to accept the assignment of insurance claims for transderrnal cream compounds dispensed to
claims from a California medical claims factoring company ("Factoring Company"). Factoring
Company, in turn, represented to OSMI that it had purchased these claims from the dispensing
physicians and that all the claims sold by Factoring Company involved an actual dispensing of a
3. Pursuant to the Katz Companies' contractual relationship with OSMI, the Katz
Companies processed the assigned claims by submitting the claims for payment to numerous
health care benefit programs, including private health insurance companies, the State of
California Insurance Fund, and the United States Department of Labor. The Katz Companies
then paid the amount collected on these claims from the health care benefit programs to OSMI,
4. On or about March II, 2008, several months after the Katz Companies assumed
responsibility for the claims that OSM[ bought from Factoring Company, the Katz Companies
purchased similar claims directly from Factoring Company. To fund this purchase of claims
from Factoring Company, on or about March 31,2008, the Katz Companies received
approximately $6.8 million from a hedge fund operating in New York and Florida. In exchange
for this funding and other additional debt that the Katz Companies already owed the hedge fund,
the Katz companies gave a $10 million Note to the hedge fund. It was KATZ's intention to use
proceeds from the collection of the claims purchased from Factoring Company to resolve the
5. To assist the Katz Companies in billing the health care benefit programs for the
claims that it owned and that OSMI assigned to it, the Katz Companies engaged a New
Hampshire company with expertise in health care billing (hereafter "Billing Agency"). Billing
Agency submitted the claims to health care benefit programs, and the Katz Companies paid
with the claims that were being submitted for payment to health care benefit programs on behalf
of the Katz Companies. These problems included the discovery that billings were being
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Case 1:08-cr-00159-SM Document 1 Filed 12/10/08 Page 3 of 4
submitted for creams purportedly dispensed to a patient who was deceased on the purported
dates of service.
7. In or about August 2008, Billing Agency informed KATZ by telephone that there
appeared to be substantial problems with the claims. KATZ later traveled to New Hampshire for
a meeting regarding the claims, at which time Billing Agency explained to KATZ the basis for
its concern. At the meeting, KATZ stated that he would investigate the situation further, but that
pending the result of the investigation, claims should continue to be submitted without
interruption.
received, by no later than September 15, 2008, KATZ knew that the claims OSMI had assigned
to the Katz Companies, and also the claims that the Katz Companies had purchased directly from
Factoring Company, were largely fraudulent in that the claims involved erroneous dates of
service and, in many cases, were based on services that had not in fact been rendered. Despite
knowing the fraudulent nature of the claims, KATZ continued to cause claims to be submitted to
health care benefit programs for payment until on or about September 23, 2008.
which the Katz Companies could collect on the claims. In furtherance of this goal, KATZ made
four payments to Billing Agency totaling $146,847.50 to pay for related costs and expenses.
COUNT ONE
II. From on or about September 15, 2008 through on or about December 3, 2008,
within the District ofNew Hampshire and elsewhere, defendant HOWARD KATZ knowingly
and willfully executed and attempted to execute, a scheme and artifice (l) to defraud health care
benefit programs and (2) to obtain, by means of false and fraudulent pretenses, representations,
and promises, money and property owned by, and under the custody and control of, health care
benefit programs in connection with the delivery of and payment for health care benefits, items,
and services.
THOMAS P. COLANTUONO
UNITED STATES ATTORNEY
. Aframe
ant U.S. Attorney
COMES NOW the defendant, by and through counsel, and respectful1y requests
that this Court continue the Sentencing for a period of 30 days with regard to the
above-captioned matter.
As grounds for, and in support of this Motion, the defendant states as fol1ows:
with the United States. To date, the United States has deemed Defendant's
cooperation to be significant, useful, timely, and reliable. The United States has
Respectfullysubmitted,
,I
Marl( isti
Sisti L w Offices
387 Dover Road
Chichester, New Hampshire 03258
(603) 224-4220
STATEMENT OF CONCURRENCE
RULE 11 CERTIFICATION
CERTIFICATION
I HEREBY CERTIFY that a copy of the foregoing Motion has been forwarded
this 3'd day of February, 2009 to Seth Aframe, Esq., U.S. ttorney's Office, via U.S.
Mail.
Mark L. Sisti
Case 1:08-cr-00159-SM Document 27 Filed 04/30/10 Page 1 of 5
AO 245B (Rev. 09/08) Judgment in a Criminal Case - Sheet 1 Q^rop„
THE DEFENDANT:
ACCORDINGLY, the court has adjudicated that the defendant is guilty of the following offense(s):
The defendant is sentenced as provided in pages 2 through 5 of this judgment. The sentence is imposed
pursuant to the Sentencing Reform Act of 1 9 8 4 .
[ ] The defendant has been found not guilty on count(s) _ and is discharged as to such count(s).
STEVEN J . MCAULIFFE
Chief Judge
Name & Title of Judicial Officer
f'M'Zsrd
Date
Case 1:08-cr-00159-SM Document 6 Filed 12/12/08 Page 1 of 14
e,}URT
UNITED STATES DISTRICT COURT '-.'. , ,I l,' :LH.
,L. ,: U
DISTRICT OF NEW HAMPSHIRE
follows:
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under the custody and control of, a health care benefit program
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services.
3. Penalties.
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attention;
Court.
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and not a promise, and is not binding on the United States, the
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offense level. The defendant may argue for any other downward
6. Acceptance of Responsibility.
time;
Probation Office;
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Office;
sentencing;
p~eparing for trial and permitting the United States and the
U.S.S.G. §3El.l(b).
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Case 1:08-cr-00159-SM Document 6 Filed 12/12/08 Page 8 of 14
not withdraw the defendant's guilty plea if, for any of the
reasons listed above, the United States does not recommend that
acceptance of responsibility.
defendant which was not known by the United States, or which the
defendant's statements.
right:
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defendant;
kind.
guilty, the Court may ask the defendant questions about the
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guilty;
attorney.
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13. Waivers.
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collaterally challenge:
cases decided after the date of this Plea Agreement which are
agreement.
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rights.
defendant and his attorney and until signed by the United States
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THOMAS P. COLANTUONO
United States Attorney
By:
frame
U.S. Attorney
--'...cNJ' 643288
U.S. Attorney's Office
53 Pleasant St., 4th Floor
Concord, NH 03301
(603) 225-1552
Date:
Katz
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<;:orz.. l<A .. z.
Case 1:08-cr-00159-SM Document 27 Filed 04/30/10 Page 2 of 5
PROBATION
The defendant is hereby placed on probation for a term of 3 years.
The defendant shall not commit another federal, state, or local crime
Pursuant to Public law 1 0 8 - 4 0 5 , Revised DNA Collection Requirements Under the Justice for All A c t of 2 0 0 4 , the defendant
shall submit to DNA collection while incarcerated in the Bureau of Prisons, or at the direction of the U S Probation Office
The defendant shall refrain from any unlawful use of a controlled substance The defendant shall submit to one drug test within
1 5 days of placement on probation and at least t w o periodic drug tests thereafter, not to exceed 72 drug tests per year of
supervision
[x] The above drug testing condition is suspended based on the court's determination that the defendant poses a low risk
of future substance abuse (Check if applicable )
[x] The defendant shall not possess a firearm, destructive device, or any other dangerous weapon
If this judgment imposes a fine or a restitution obligation, it shall be a condition of probation that the defendant pay any such
fine or restitution in accordance w i t h the Schedule of Payments set forth in the Criminal Monetary Penalties sheet of this
judgment
The defendant shall comply w i t h the standard conditions that have been adopted by this court (set forth below) The defendant
shall also comply w i t h the additional conditions on the attached page
1) the defendant shall not leave the judicial district w i t h o u t permission of the court or probation officer,
2) the defendant shall report to the probation officer and shall submit a truthful and complete written report within the first
five days of each m o n t h ,
3) the defendant shall answer truthfully all inquiries by the probation officer and follow instructions of the probation officer,
4) the defendant shall support his or her dependants and meet other family responsibilities,
5) the defendant shall work regularly at a lawful occupation unless excused by the probation officer for schooling, training or
other acceptable reasons,
6) the defendant shall notify the probation officer at least ten days prior to any change in residence or employment,
7) the defendant shall refrain from excessive use of alcohol and shall not purchase, possess, use, distribute, or administer any
controlled substance or any paraphernalia related to any controlled substances, except as prescribed by a physician,
8) the defendant shall not frequent places where controlled substances are illegally sold, used, distributed, or administered,
9) the defendant shall not associate w i t h any persons engaged in criminal activity, and shall not associate w i t h any person
convicted of a felony unless granted permission to do so by the probation officer,
10) the defendant shall permit a probation officer to visit him or her at any time at home or elsewhere and shall permit
confiscation of any contraband observed in plain view of the probation officer,
11) the defendant shall notify the probation officer within seventy-two hours of being arrested or questioned by a law
enforcement officer,
1 2) the defendant shall not enter into any agreement to act as an informer or a special agent of a law enforcement agency
w i t h o u t the permission of the court,
13) as directed by the probation officer, the defendant shall notify third parties of risks that may be occasioned by the
defendant's criminal record or personal history or characteristics, and shall permit the probation officer to make such
notifications and to confirm the defendant's compliance w i t h such notification requirement
Case 1:08-cr-00159-SM Document 27 Filed 04/30/10 Page 3 of 5
AO 245B (Rev. 09/08) Judgment in a Criminal Case - Sheet 4 - Probation
CASE NUMBER: 08-cr-159-01 -SM Judgment - Page 3 of 5
DEFENDANT: H O W A R D KATZ
The defendant shall perform 100 hours of community service as directed by the probation officer.
The defendant shall be confined in the custody of the Bureau of Prisons from 6:00 p.m. each Friday until 7:00 a.m. each
Upon a finding of a violation of probation or supervised release, I understand that the court may: (1) revoke supervision; (2)
extend the term of supervision; and/or (3) modify the conditions of supervision.
These conditions have been read to me. I fully understand the conditions and have been provided a copy of t h e m .
(Signed)
Defendant Date
[ ] The determination of restitution is deferred until . An Amended Judgment in a Criminal Case (AO 245C) will be
entered after such determination.
[ ] The defendant shall make restitution (including community restitution) to the following payees in the amount
listed.
If the defendant makes a partial payment, each payee shall receive an approximately proportioned payment,
unless specified otherwise in the priority order or percentage payment column below. However, pursuant to 18
U.S.C. § 3664(i), all non-federal victims must be paid in full prior to the United States receiving payment.
TOTALS:
[ ] The defendant shall pay interest on any fine or restitution of more than $ 2 5 0 0 , unless the fine or restitution is
paid in full before the fifteenth day after the date of the judgment, pursuant to 1 8 U.S.C. §361 2(f). All of the
payment options on Sheet 6 may be subject to penalties for delinquency and default, pursuant to 18 U.S.C.
§3612(g).
[ ] The court determined that the defendant does not have the ability to pay interest, and it is ordered that:
[ ] The interest requirement for the [ ] fine and/or [ ] restitution is modified as follows:
* * Findings for the total amount of losses are required under Chapters 1 0 9 A , 110, 11OA, and 11 3A of Title 18 for offenses committed on or
after September 13, 1 9 9 4 but before April 2 3 , 1 9 9 6 .
Case 1:08-cr-00159-SM Document 27 Filed 04/30/10 Page 5 of 5
SCHEDULE OF PAYMENTS
Having assessed the defendant's ability to pay, payment of the total criminal monetary penalties shall be due as
follows:
A [x] Lump sum payment of $ 1 0 0 . 0 0 due immediately, balance due not later than August 6, 2 0 1 0 .
[ ] in accordance w i t h C, D, or E below; or
C [ ] Payment in _ installments of $_ over a period of _, to commence _ days after the date of this judgment; or
D [ ] Payment in _ installments of $_ over a period of _ , to commence _ days after release from imprisonment
to a term of supervision; or
Criminal monetary payments are to be made to Clerk, U.S. District Court, 55 Pleasant Street, Room 110, Concord,
NH 0 3 3 0 1 . Payments shall be in cash or in a bank check or money order made payable to Clerk, U.S. District
Court. Personal checks are not accepted.
Unless the court has expressly ordered otherwise in the special instructions above, if this judgment imposes a period
of imprisonment, payment of criminal monetary penalties shall be due during the period of imprisonment. All
criminal monetary penalties, except those payments made through the Federal Bureau of Prisons' Inmate Financial
Responsibility Program, are to be made payable to the clerk of the court, unless otherwise directed by the court, the
probation officer, or the United States attorney.
The defendant will receive credit for all payments previously made toward any criminal monetary penalties imposed.
[ ] The defendant shall forfeit the defendant's interest in the following property to the United States:
Payments shall be applied in the following order' (1) assessment, (2) restitution principal, (3 (restitution interest, (4) fine principal, (5) c o m m u n i t y
restitution, (6) fine interest, (7) penalties, and (8) costs, including cost of prosecution and court costs.