Feds seek to jail wealthy CEO and others before their Medicare fraud sentencings | Miami Herald

For years, Karen Kallen-Zury has lived in a $2 million-plus home in the coastal community of Lighthouse Point, taken care of her family and run a lucrative healthcare business.

Now, the 60-year-old chief executive officer of Hollywood Pavilion, a psychiatric hospital once managed by her late father, confronts the bleak likelihood of spending the rest of her life in prison.

Convicted with three others of swindling Medicare by paying bribes for patient referrals, Kallen-Zury faces up to 170 years in prison at her Sept. 10 sentencing for a $67 million billing scam. The taxpayer-funded program paid about $40 million to her business, described as a “brothel of fraud” by prosecutors.

The Justice Department, raising fears that Kallen-Zury has secreted away money and could flee to Israel, has urged a federal judge to revoke her $3 million bond and put her behind bars as soon as possible.

Prosecutor Robert Zink said in court papers that trial evidence showed she made — “conservatively” — more than $10 million from the “fraud scheme.”

The prosecutor noted that her husband, Tamir Zury, is an Israeli citizen and has a bank account in his native country, and that the couple own a 37-foot luxury powerboat that could be used to flee the United States. The prosecutor also said Kallen-Zury transferred $1 million to her lawyer when she was charged with Medicare fraud last fall. And, he said her mother receives more than $1 million a year from annuities.

“Her lifestyle will change drastically in prison,” Zink wrote in a motion filed Wednesday to revoke bail for Kallen-Zury and two other defendants. “This creates an incentive to flee.”

Kallen-Zury’s defense attorney, Michael Pasano, said the prosecution is telling “half the story,” pointing out that the Justice Department has already frozen his client’s assets, that her husband has little money in his Israeli bank account, and that she is close to her teen-age son and elderly mother. The mother lives in an assisted-living facility and provides financial support for her daughter.

And Pasano said the $1 million transferred to him is sitting in an escrow account and will be turned over to the prosecution.

Lastly, he pointed out that the couple’s Intrepid powerboat is for sport fishing.

“The bottom line is, she showed up every day for trial,” Pasano said. “There is no way this woman is going anywhere.”

At the end of trial in late June, prosecutors asked U.S. District Judge Jose Martinez to revoke the bonds of Kallen-Zury; Daisy Miller, 44, chief hospital clinical officer; and Christian Coloma, a therapist/administrator, 49, who worked for the CEO at Hollywood Pavilion. All three testified at trial.

The judge denied the prosecutors’ immediate request, but proposed they file a motion seeking to revoke the defendants’ bonds. The prosecutors’ raised the issue because It has become common practice for South Florida federal judges to remand convicted Medicare fraud defendants to prison before sentencing to prevent them from fleeing the country.

The vast majority of some 150 Medicare fraud suspects have fled either before they were arrested or after they were charged and obtained a bond while awaiting trial, according to court records and the FBI. Most often, they left for Cuba, Mexico or another Latin American country.

In 2008, Chief U.S. District Judge Federico Moreno, detecting the phenomenon of Medicare fraud offenders fleeing South Florida, urged magistrate judges be take stricter action on bond requests.

Coloma, who was convicted along with Kallen-Zury of paying more than $1 million in bribes to recruiters for Medicare patients, is a native of Chile who became a naturalized U.S. citizen in 2008.

Zink, the prosecutor, said the Miami Beach resident, who is facing up to 30 years in prison, has family in Chile and traveled abroad at least 15 times in the last four years to his homeland and to Spain, Ecuador and France.

“The frequency with which he traveled abroad — and to Chile specifically [eight trips] — along with his lack of family ties to the United States, further demonstrates that defendant Coloma is likely to flee to avoid incarceration,” Zink wrote in court papers.

Coloma’s defense attorney, Ronald Gainor, disputed that assertion, saying that when his client was under investigation by federal agents with the FBI and Health and Human Services, he was visiting Greece.

“They talk about all this travel, but he was in Greece when federal agents executed a search warrant on [Hollywood Pavilion] and he returned,” Gainor said, noting this was an issue that came up when Coloma was granted a $500,000 bond last fall.

“His actions speak louder than words,” Gainor said. “It’s pretty clear he’s not a flight risk.”

Zink also argued in court papers that Miller, a Hollywood resident who faces up to 145 years in prison, should have her $300,000 bond revoked.

Zink said Miller was born in Cuba, and that in 2008 she attempted to find work in Venezuela. “These facts favor detention,” he wrote.

Miller’s attorney, Omar Malone, could not be reached for comment.

In June, a federal jury in Miami found that Kallen-Zury conspired with the other defendants to submit false Medicare claims for $67 million. The 12-person jury also found that Medicare was tricked into paying almost $40 million to Hollywood Pavilion, whose CEO and others covered up the scheme by falsifying the records of ineligible patients and marketing contracts with patient recruiters. The recruiters, many convicted felons, were paid more than $1 million for the patient referrals.

The jury found most of the defendants guilty of conspiracy, healthcare fraud, wire fraud and kickback offenses.

One defendant, Gloria Himmons, an Alabama patient broker, pleaded guilty in March to conspiracy and kickback offenses for receiving payments from Hollywood Pavilion for referring Medicare patients with alcohol or drug addictions but did not suffer from mental illness.

The prosecution of Hollywood Pavilion’s executives was the latest crackdown by the Justice Department and U.S. attorney’s office against operators of mental-health facilities accused of bilking the Medicare program.

Three previous major prosecutions led to the convictions of about 80 clinic operators, doctors, therapists and patient recruiters at American Therapeutic, Biscayne Milieu and Health Care Solutions Network in South Florida.

Eight of those convicted defendants testified at the Hollywood Pavilion trial. Among them: Dr. Alan Gumer, a former medical director at the Hollywood Pavilion facility who is facing sentencing in August in the American Therapeutic case, and Keith Humes, a Hollywood Pavilion patient recruiter who is serving a seven-year prison sentence stemming from another Medicare fraud offense.