Four ex-NBA players from Chicago area among those charged in NY with $4 million scheme to defraud players’ health care fund

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Four former Chicago-area basketball standouts who went on to play in the NBA were charged Thursday in New York with participating in a scheme with more than a dozen other players to defraud the NBA’s health care program for players.

Among those charged were Melvin Ely, 43, and William Bynum, 38, who were arrested in the Chicago area Thursday morning and appeared via teleconference at the Dirksen U.S. Courthouse in Chicago. A judge ordered that they be released on their own recognizance.

Also accused in the indictment unveiled in U.S. District Court in Manhattan were Chicago native Anthony Allen, 39, a former teammate of Bynum’s at Crane High School and six-time member on the NBA All-Defensive Team, and Shannon Brown, 35, a Proviso High School standout who played for the Chicago Bulls.

Former Bulls players C.J. Watson, 37, and Eddie Robinson, 45, were also named in the indictment.

Allen, Brown, Watson and Robinson were all arrested in other districts, according to prosecutors.

The 32-page indictment unsealed in New York charges 19 defendants, including 18 former NBA players, with defrauding the NBA’s Health and Welfare Benefit Plan, which is funded largely by the league’s 30 teams, out of approximately $4 million. Among the other ex-players charged were Sebastian Telfair, Glen “Big Baby” Davis and Darius Miles.

The scheme allegedly was masterminded by Terrence Williams, a former star for the New Jersey Nets, according to prosecutors. In all, the players received about $2.5 million in ill-gotten gains, while kicking back about $230,000 to Williams, the indictment alleged.

All 19 defendants were charged with conspiracy to commit health care fraud and wire fraud.

At a news conference Thursday morning in New York, acting U.S. Attorney Audrey Strauss said the scheme began in November 2017 and involved a “playbook” where players would submit phony invoices to the health care fund for medical and dental services that were never rendered, including chiropractic and “wellness” care, root canals and crowns.

According to Strauss, one of the former NBA players, Gregory Smith, claimed he was under IV sedation for a root canal in Beverly Hills, California, in December 2018, when he was actually playing basketball in Taiwan that week. The evidence investigators found to prove the invoice was false included the box scores from Smith’s games overseas, she said.

Other players allegedly submitted invoices claiming they were having root canals and crowns on the same 13 teeth on the same day, Strauss said.

Ely, a 6-foot-10 power forward, was a McDonald’s All-American at Harvey Thornton High School before playing at Fresno State. He was drafted by the Los Angeles Clippers as the 12th overall pick in the 2002 NBA draft. His NBA career ended with the Washington Wizards in 2014.

The allegations against Ely center on a medical office in Washington state — identified only as “Wellness Office 1″ — that specializes in “sexual health, anti-aging, and general well-being,” according to the indictment.

From March 2019 to January 2020, Ely submitted a series of false invoices purporting to show he’d been treated at the center when in fact he was not in Washington at all, the indictment alleged.

His invoices also matched exactly those of another defendant, Milt Palacio, a former player and current assistant coach of the Portland Trail Blazers, the indictment alleged.

In all, Ely’s submitted $206,000 in claims for services never rendered by Wellness Center 1 to the players’ health program, the indictment alleged.

Bynum, meanwhile, was accused of submitting false invoices from a chiropractor in Encino, California, that he in fact never visited. On Dec. 12, 2018, six days after the NBA health plan paid out his claim, Bynum paid Williams a $30,000 kickback, the indictment alleged.

Bynum graduated from Crane High School on Chicago’s South Side and played college basketball at the University of Arizona and Georgia Tech. After going undrafted in the 2005 NBA draft, he played for a series of professional teams, including the Golden State Warriors, Detroit Pistons and Boston Celtics.

Allen, who was Bynum’s teammate at Crane, was accused of submitting hundreds of thousands of dollars in fraudulent invoices from the same chiropractor, according to the indictment.

After a health plan administrator flagged the charges as suspicious, Allen repaid about $350,000 of the more than $420,000 he fraudulently received, the indictment alleged. His wife, Desiree Allen, was the only one named in the indictment who was not a former player.

Also accused of submitting false chiropractic care bills were Brown and Watson, who played for the Bulls from 2010 to 2012. Brown billed about $320,000, while Watson billed $250,000, none of which was repaid, according to the charges.

Tribune reporter Paige Fry contributed.

jmeisner@chicagotribune.com