Criminal Investigative Updates

Gregory Schreck, of Johnson County, Kansas, pleaded guilty to operating an online platform that generated false doctors’ orders to defraud Medicare, VA, and other federal healthcare benefit programs of more than $1 billion. Through their company, DMERx, Schreck and his co-conspirators targeted hundreds of thousands of beneficiaries to provide their personally identifiable information and agree to accept medically unnecessary orthotic braces, pain creams, and other items. The loss to VA was more than $1 million. This investigation was conducted by the VA OIG, FBI, Department of Health and Human Services OIG, and Defense Criminal Investigative Service.

Gary Cox, of Maricopa County, Arizona, the CEO of Power Mobility Doctor Rx, LLC (DMERx), was convicted for his role in operating a platform that generated false doctors’ orders to defraud Medicare and other federal healthcare benefit programs of more than $1 billion. Cox and his co-conspirators targeted hundreds of thousands of Medicare beneficiaries who provided their personally identifiable information and agreed to accept medically unnecessary orthotic braces, pain creams, and other items through misleading mailers, television advertisements, and calls from offshore call centers. Cox and his co-conspirators owned, controlled, and operated DMERx, an internet-based platform that generated false and fraudulent doctors’ orders for these items. As part of the scheme, Cox connected pharmacies, durable medical equipment (DME) suppliers, and marketers with telemedicine companies that would accept illegal kickbacks and bribes in exchange for signed doctors’ orders transmitted using the DMERx platform. Cox and his co-conspirators received payments for coordinating these illegal kickback transactions and referring the completed doctors’ orders to the DME suppliers, pharmacies, and telemarketers that paid kickbacks and bribes for the orders. The VA OIG, HHS OIG, FBI, and the Department of Defense OIG’s Defense Criminal Investigative Service investigated this case.

Gary Cox, CEO of Power Mobility Doctor Rx, LLC, was sentenced to 15 years in prison and ordered to pay more than $452 million in restitution for conspiring to defraud Medicare and other federal health care benefit programs of more than $1 billion by operating an online platform that generated false doctors’ orders used to support fraudulent claims for various medical items. He and his co-conspirators targeted Medicare beneficiaries who provided their personally identifiable information and agreed to accept medically unnecessary orthotic braces, pain creams, and other items through misleading mailers, television advertisements, and calls from offshore call centers. As part of the scheme, Cox connected pharmacies, durable medical equipment suppliers, and marketers with telemedicine companies that would accept illegal kickbacks and bribes in exchange for signed doctors’ orders. In June 2025, Cox was convicted of conspiracy to commit health care fraud and wire fraud, three counts of health care fraud, conspiracy to pay and receive health care kickbacks, and conspiracy to defraud the United States and make false statements in connection with health care matters. The VA OIG, Health and Human Services OIG, FBI, and  Defense Criminal Investigative Service investigated the case.

Dr. Kingsley R. Chin, the founder, president, and CEO of SpineFrontier, Inc., a Massachusetts-based medical device company, was sentenced to one year of supervised release with the first six months to be served in home confinement. Chin was also ordered to pay a fine of $9,500, in addition to $40,000 he agreed to pay as part of a related civil settlement, and $855,000 that his company, KICVentures, agreed to pay as part of the same settlement. In May 2025, Chin pleaded guilty to one count of false statements. Under the Physician Payment Sunshine Act, device manufacturers are required to report any payments or transfers of value to physicians. The Centers for Medicare & Medicaid Services maintains a database, via the Open Payments website, which makes all such payments or transfers of value publicly accessible. SpineFrontier offered surgeons the opportunity to engage in purported consulting on product development. Specifically, Chin directed his employees to report the payment of fees paid to a surgeon as consulting fees that were not compensation for actual consulting work. The VA OIG, Health and Human Services OIG, US Postal Inspection Service, and FBI investigated this case.

Donald Estes, of Bath, New Hampshire, was charged with four counts of bank fraud and four counts of mail fraud for allegedly stealing approximately $225,000 from an elderly disabled veteran who lived at a nursing home and received monthly disability payments from the VA. The veteran was unable to manage his money or make decisions independently. In 2020, the nursing home contacted Estes asking whether he would serve as the veteran’s legal guardian. Estes never applied to become the guardian; however, he had the veteran sign an agreement granting him access to the veteran’s bank account. Over the next several years, Estes took funds from the veteran’s account to make personal purchases. The VA OIG and the US Postal Inspection Service investigated this case.

Donald Estes, of Bath, New Hampshire, pleaded guilty to one count of bank fraud for stealing approximately $225,000 from an elderly disabled veteran. The veteran, who resided at a nursing home, was unable to manage his finances or make independent decisions. Initially, the veteran’s mother served as his legal guardian. After her passing, the nursing home reached out to Estes asking whether he would serve as the victim’s legal guardian. Estes never applied to become the guardian; however, he had the veteran sign an agreement granting him access to the veteran’s bank account. Over several years, Estes withdrew funds from the veteran’s account for personal purchases. The VA OIG and the US Postal Inspection Service investigated this case.

Edward Cannatelli, Robbyn Cannatelli (both of Parkland), Thomas Farese (of Fort Lauderdale), and Virginia Lockett (of Margate) were indicted for their roles in a conspiracy to defraud the Medicare program, make false statements relating to health care matters, and offering and paying illegal kickbacks and bribes. They are also charged in a second conspiracy to commit wire and health care fraud, and with related substantive counts concerning the falsification of records in the federal investigation leading to the indictment. Allegedly, beginning in June 2019 and continuing into at least June 2020, they and other conspirators generated medically unnecessary physicians’ orders via a telemarketing operation for certain orthotic devices—knee braces, back braces, wrist braces, and other braces—referred to as durable medical equipment (DME). The orders were then transmitted to purported “telemedicine” vendors that, in exchange for a fee, paid illegal kickbacks and bribes to physicians who signed the orders, often without ever contacting the beneficiaries to conduct the required telehealth consultations. The fraudulent, illegal brace orders were then returned to the conspirators, who used the orders as support for bogus DME claims submitted to Medicare. To avoid Medicare scrutiny, the conspirators spread the fraudulent claims submitted to Medicare across three DME storefronts operated under the conspirators’ ownership and control. The VA OIG and Health and Human Services OIG investigated this case.

Joel Rufus French, of Amory, Mississippi, the owner of a marketing company and former NFL player, was convicted by a federal jury for his role in a yearslong scheme defrauding VA’s Civilian Health and Medical Program  (CHAMPVA) and Medicare of $197 million. He was convicted of conspiracy to commit healthcare fraud and wire fraud, conspiracy to commit money laundering, and conspiracy to offer, pay, solicit, and receive kickbacks. According to court documents, French worked with overseas call centers to pressure elderly Americans to provide their personal and health insurance information and agree to accept medically unnecessary orthotic braces. Some of the individuals who agreed to the braces suffered from Alzheimer’s and dementia. In certain instances, call centers altered call recordings to make it seem as if patients agreed to the braces when they did not. The VA OIG, the Health and Human Services OIG, and the FBI investigated this case.