Healthcare mogul Esformes cuts plea deal with feds: no more prison time, but heavy fines

A plea agreement has been reached between the Justice Department and convicted South Florida healthcare mogul Philip Esformes, whose 20-year prison sentence was commuted by former President Donald Trump in one of the nation’s biggest Medicare fraud cases.

Despite that huge break from the president, Esformes still faced a potential retrial on the main healthcare fraud conspiracy count and five related charges from his first trial in 2019 because the Miami federal jury deadlocked on those offenses while finding him guilty on 20 others. But over the past year, his defense lawyers have been negotiating with federal prosecutors to prevent a second trial.

The plea agreement will require Esformes, who used to live in Miami Beach with his family before his divorce, to plead guilty to the conspiracy count. The other five hung charges alleging bribery payments, money laundering and obstruction of justice will be dismissed by prosecutors with the Justice Department and U.S. Attorney’s Office in Miami.

READ MORE: Prosecutors will retry Miami healthcare mogul on hung charges from first fraud trial

Esformes, 54, who now lives in Palm Beach County, won’t have to serve additional prison time under the terms of the deal, according to a law enforcement official familiar with the agreement. He will be required, however, to pay $5.5 million in restitution to the taxpayer-funded Medicare program and pledge at least $14 million in assets to his outstanding forfeiture penalty of $38.7 million — the amount of money he received from Medicare through fraudulent billing at his Miami-Dade chain of assisted-living and skilled-nursing facilities between 2010 and 2016.

Word of a breakthrough in the difficult negotiations circulated when U.S. District Judge Robert Scola issued an order Thursday saying the parties “have reached a plea” agreement. As a result, the judge canceled a hearing on Friday to set a date for Esformes’ second trial on the healthcare fraud conspiracy count and other hung charges in Miami federal court. Scola scheduled Esformes’ plea and sentencing hearing for Feb. 22.

The Justice Department declined to comment about Esformes’ upcoming plea and sentencing. Esformes’ defense attorneys, led by Mark Bini with the law firm Reed Smith in New York and Miami, did not respond to a request for comment.

$1 billion Medicare fraud case

Over the past year, the court docket in Miami federal court showed the two sides repeatedly delayed a critical hearing with Judge Scola to set a new trial date because of ongoing negotiations to resolve the criminal case.

Since his release from prison in late 2020, Esformes has kept a low profile. He failed to have his conviction and financial penalties overturned by a federal appeals court in Atlanta.

The U.S Supreme Court declined to hear Esformes’ appeal that the Justice Department’s plan to retry him on the remaining six hung counts amounted to “double jeopardy” and violated his constitutional rights in light of Trump’s commutation of his sentence. But Trump’s commutation was limited to his prison sentence, not his conviction and the deadlocked verdicts, Justice Department lawyers argued.

As federal prosecutors moved forward with retrying Esformes, they were also working behind the scenes to strike a possible plea deal and avoid another bruising trial.

More than seven years ago, top Justice Department prosecutors traveled to Miami for a news conference to unveil the $1 billion healthcare fraud case against Esformes, touting it as the biggest Medicare crime in history.

The first trial

When the former Miami Beach executive’s trial ended in 2019, Esformes was found guilty of 20 of 26 counts, including paying bribes, receiving kickbacks, committing money laundering and obstructing justice.

But the 12-person jury deadlocked on the main healthcare conspiracy charge. Although he dodged that main charge, Esformes was sentenced to 20 years in prison and ordered to pay $5.5 million to Medicare and an additional $38.7 million fine to the U.S. government.

But then, in a shocking blow to prosecutors, Trump commuted Esformes’ sentence in late 2020, allowing him to leave prison after serving 4 1/2 years behind bars, including his time in detention before trial. His conviction and fines remained intact.

Still, infuriated federal prosecutors vowed to retry Esformes on the six hung counts from his first trial.

Payments to get son into UPenn

Even by the standards of Miami’s rampant Medicare rackets, Esformes’ case has stuck out for its sheer size. Before his assets were frozen after his arrest in July 2016, the Chicago transplant owned dozens of local healthcare businesses that, along with other associates, billed $1 billion to Medicare and Medicaid over a decade.

Esformes, who went through a messy divorce, also acquired pricey real estate in Miami Beach and drove a Ferrari sports car. In addition, he used some of his ill-gotten Medicare proceeds to pay for prostitutes, five-star hotel stays and other personal expenses, according to court records.

Esformes, who had been detained without a bond after his arrest in July 2016, went to trial alone because two key conspirators — a physician’s assistant and a former Larkin Hospital administrator in South Miami who recycled patients for cash — had pleaded guilty.

At trial, convicted healthcare operators, the former hospital administrator and an ex-Ivy League basketball coach testified that Esformes paid them and various doctors hundreds of thousands of dollars in bribes to buy and sell patients. The former Penn coach, Jerome Allen, now an NBA assistant coach, testified that Esformes’ illicit payments enabled his son to be accepted to the University of Pennsylvania by reserving a spot for him on the basketball team. The son never played a game, though he ended up graduating from Penn.

In April 2019, the 12-person federal jury in Miami found Esformes guilty of most of the 26 charges, including a money-laundering count that expressly stated on the verdict form that the illegal proceeds came from healthcare fraud.

At his sentencing in September 2019, Judge Scola called Esformes’ scheme to generate thousands of Medicare patients for his chain of 16 assisted-living and nursing-home facilities in Miami-Dade “unmatched in our community, if not our country” and said he “violated [the system’s] trust in epic proportions.”

Trump’s commutation of Esformes’ sentence

Esformes was among 20 people — mostly political cronies of former President Trump implicated in scandals —whom Trump granted a full pardon or commutation of all or part of their sentences.

A statement issued by the White House noted that Esformes’ commutation was “supported” by former U.S. Attorney General Edwin Meese, who served under President Ronald Reagan, and Michael Mukasey, a former attorney general who served under President George W. Bush, as well as by former Deputy Attorney General Larry Thompson, who also served in the Bush administration.

The statement also highlighted that Esformes’ federal appeal of his 20-year sentence was backed by Meese, former Attorney General John Ashcroft and Attorney General Alberto Gonzales, who both served in the Bush administration. Kenneth Starr, the late GOP lawyer best known as an independent counsel who investigated President Bill Clinton, also backed the appeal.