Kenyan faces Sh111.5m fraud charges in the US

Mr Oscar Simon Ndereva

Authorities in the US have busted a scheme involving health insurance reportedly masterminded by Mr Oscar Simon Ndereva, a Kenyan.

Photo credit: AFP

What you need to know:

  • Mr Oscar Simon Ndereva was arrested in Texas in October.
  • He denied the 16 counts state attorneys levelled against him on November 10.
  • According to estimates by America’s National Healthcare Anti-Fraud Association, theft costs the US around $68 billion every year.

Authorities in the US have busted a scheme involving health insurance reportedly masterminded by Mr Oscar Simon Ndereva, a Kenyan.

Prosecutors say the syndicate started around 2015. They say Mr Ndereva defrauded American health insurers of at least $1 million (Sh111.5 million) between August 2019 and January 2020.

The man sent more than 780 fraudulent claims to health insurers in that period seeking $5.068 million, they say.

Mr Ndereva was arrested in Texas in October. He denied the 16 counts state attorneys levelled against him on November 10.

According to documents filed in court, Mr Ndereva committed most of the crimes using the name of another Kenyan identified only as JK, who left the US in 2005 and has never returned.

The files say Mr Ndereva used JK’s details, including a falsified driving licence, to open bank accounts, register companies, cash cheques and other crimes.

Fraudulent healthcare businesses

Prosecutors categorised charges against Mr Ndereva, who also uses the alias “Dereva”, into four: Counts 1-3 (maximum 20 years in prison), counts 4-6 (maximum 20 years), counts 6-13 (maximum 20 years) and counts 14-16 (two years on top of any other sentence).

The first three counts are on wire fraud and cover his activities from 2015 to 2020.

The court was told that Mr Ndereva “controlled and operated fraudulent healthcare businesses, including a pharmacy called Healogix”.

“From in or around 2015 to the date of this indictment, in the Eastern District of Texas and elsewhere, Mr Ndereva devised...a scheme and to defraud BlueCross BlueShield and to obtain money and property by means of materially false and fraudulent pretences, representations and promises,” the charges read.

Healogix pharmacy business, prosecutors say, was opened using JK’s identity.

Pharmacies in the United States submit bills to insurers for medicines issued to the insured.

Payers of those insurance firms then follow up and remit the money.

It is said Mr Ndereva studied the system used to make health insurance claims and found a way of duping companies to pay even when there was no patient.

Health insurance

“Beginning in or around August 2019 and continuing to around January 2020, Mr Ndereva, under the guise of Healogix, submitted fraudulent claims to commercial health insurance payers requesting payment for services and medication allegedly prescribed by doctors and provided to patients,” prosecutors told the Texas court.

“However, the medication identified on the Healogix claims submitted to the payers were never prescribed by a physician and never delivered to the people listed on the claims.”

The next two counts are to do with money laundering. The court heard that Mr Ndereva cleaned the cash obtained through wire fraud, cashing cheques and using a debit card assigned to JK.

The next seven charges are also about money laundering.

Prosecutors say Mr Ndereva used cheque payments from Healogix to individuals.

The payments, prosecutors say, were less than $10,000, meaning banks were not needed to report them as per the US law.

The seven transactions in the indictment involve cheques to people of amounts ranging from $6,000 to $9,850.

Prosecutors say Mr Ndereva did so “knowing that the transactions were designed in whole and in part to avoid a reporting under federal law”.

The final three charges are about identity theft. They relate to Mr Ndereva’s transactions in January 6 and 7, 2020.

He is said to have used accounts in JP Morgan Chase, BBVA Compass and other banks to receive the money he claimed from insurers.

The prosecutors say Healogix opened an account at JP Morgan Chase in May 2019 with a person identified as NP being the only signatory.

Two months later, Mr Ndereva added JK as a signer. He then removed NP as a signatory, leaving only JK on July 9, 2019.

Money laundering

The indictment says of the $5,068 million the insurers received in fraudulent claims from Mr Ndereva’s company, at least $1 million was channelled through the JP Morgan Chase account.

Mr Ndereva is said to have opened two bank accounts at BBVA Compass using JK’s identity in January .

If he is convicted, the money in the accounts that will be linked to the offences will be forfeited to the government.

The counts he faces come with an option of fines.

The wire fraud charges attract a fine not exceeding $250,000 while the first money laundering charges attract $500,000 or double the laundered amount, whichever is higher. The second money laundering charges carry the same penalty.

The identity theft charge has no option of a fine. One must serve a two-year prison term.

According to estimates by America’s National Healthcare Anti-Fraud Association, theft costs the US around $68 billion every year.

BlueCross BlueShield, one of the firms that Mr Ndereva reportedly defrauded, says on its website that it works with the Federal Bureau of Investigations, health officials, police and prosecutors whenever it suspects fraud.

eondieki@ke.nationmedia.com, chrisjwamalwa@gmail.com

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