After serving a nine-year prison sentence for drug dealing, Lazaro Delgado soon found a way to make a quick buck in Miami’s corrupt Medicare market, prosecutors say.
Without putting his name on any corporate records, Delgado acquired two home healthcare agencies that billed the taxpayer-funded Medicare program $4.1 million.
Delgado, accused of stealing the ID numbers of physicians and patients enrolled in the Medicare network to submit fraudulent claims, raked in $1.8 million for “purported” home care services in 2010-11, according to an indictment.
On Wednesday, a Miami federal magistrate denied Delgado’s request for bond, citing a prosecutor’s fear that he could flee to Cuba after noting the defendant owns four residential properties in Miami-Dade and Monroe counties.
“When you put this all together, you have massive amounts of unaccountable wealth,” Assistant U.S. Attorney Dan Bernstein argued in court. “He has strong ties to Cuba.”
As a freed felon, Delgado’s reinvention as a Medicare entrepreneur is nothing new. According to authorities, numerous criminals convicted of drug trafficking and other offenses routinely join Miami’s Medicare rackets because it’s seen as less risky and more profitable. Medicare officials say the federal program, notorious for lax oversight, regularly conducts criminal background checks on healthcare operators and has disqualified many felons as a result.
But Delgado, 46, slipped through the system because his two Medicare-licensed businesses, Loyal Home Health and Loving Nursing, both of Miami-Dade, were not registered in his name. They were registered under the names of “straw” owners who did not control the businesses, according to Health and Human Services’ Office of Inspector General, which led the investigation.
One straw owner was eventually caught by investigators and prosecuted for healthcare fraud, then began cooperating with the U.S. attorney’s office.
Delgado’s defense attorney, Anthony Genova, tried to convince Magistrate Judge Alicia Otazo-Reyes that his client should be granted bond because billing records show he was not responsible for any fraudulent Medicare claims. “The [evidence] against my client is the spoken word of convicted felons,” Genova said. “There is no proof he received one single penny in this case.”
The defense lawyer also said Delgado, who is married with children and lives in southwest Miami-Dade for years, has strong ties to the community. His wife is a mortgage broker.
But the magistrate judge was not swayed and denied the request for bail.
In late 1998, Delgado was convicted for his role as the “financial backer” in a drug-trafficking ring that traded guns for cocaine, according to court records. Delgado was sentenced to nine years after a federal judge found at his sentencing that he also obstructed justice. With good behavior, he was released in 2006, but remained on probation for another four years.
By October 2010, Delgado was involved in Medicare scams, said Bernstein, the prosecutor. He argued for Delgado’s detention before trial, saying the defendant faces between 11 and 14 years in prison if convicted on the new healthcare fraud offenses as well as a separate charge for mortgage fraud.
Bernstein said that Delgado, who was arrested on Monday, lied on a pre-trial services report that he has been making $6,000 a month as a horse trainer during the past three years. The prosecutor pointed out that the defendant’s tax returns between 2007 and 2010 showed that Delgado earned roughly $4,000 to $10,000 each year.
“With that limited income, he’s been able to amass a portfolio of properties in South Florida,” Bernstein said, citing two homes in southwest Miami-Dade, a Miami Beach condominium, and a mobile home in Key Largo.