Trump’s clemency freed Esformes, but he still faces pending Medicare fraud charges

Convicted Miami Beach healthcare mogul Philip Esformes received a coveted clemency gift from President Donald Trump just before Christmas, freeing him after four and a half years behind bars. But while Esformes is out of prison, the wealthy businessman is still not in the clear with law enforcement.

At his federal trial in Miami, one of the nation’s biggest Medicare fraud cases, Esformes was found guilty of 20 counts of bribery, money laundering and obstruction of justice, resulting in a 20-year prison sentence that was commuted by Trump. But the jury also deadlocked on six counts, including the main charge of conspiring to commit healthcare fraud, in the $1 billion case against Esformes, who owned a chain of skilled-nursing and assisted-living facilities in Miami-Dade.

After his sentencing, U.S. District Judge Robert Scola ruled that Justice Department lawyers could proceed with retrying Esformes on those hung counts and reiterated his position after Trump’s commutation, which only affected the 52-year-old businessman’s prison sentence — not his conviction or the unresolved jury verdicts. Esformes still has to repay $5.3 million to the taxpayer-funded Medicare program along with a $38 million forfeiture judgment to the U.S. government.

In a post-Christmas court order involving a co-defendant in the same Medicare fraud case, Scola noted “that while Esformes’s sentence has been commuted, he still has pending charges ... and [is] awaiting trial.”

The Justice Department and U.S. Attorney’s Office, when asked about its plan to retry Esformes, declined to comment. But a former federal prosecutor, who was not authorized to speak about the bitterly fought case, said “those counts are still out there.”

Miami attorney Howard Srebnick, one of several lawyers on Esformes’ defense team, did not respond to a question about his client’s potential retrial in federal court.

Whatever the Justice Department’s strategy, Esformes’ clemency relief from Trump has come to symbolize the president’s upending of major Medicare fraud cases in Florida, long considered the capital of healthcare fraud in the United States.

The public cost of clemency

Bruce Udolf, a former federal corruption prosecutor and prominent defense attorney in South Florida, said that Trump’s rationale for his clemency decisions may be based on “criminal justice reform.” But Udolf said the president’s pardons and commutations were really about taking care of “moneyed and privileged” political cronies and white-collar criminals — including Trump’s former advisers Stephen Bannon, Paul Manafort and Roger Stone — rather than “more deserving people languishing in prison” with draconian sentences for drug offenses.

Trump’s clemency decisions — totaling almost 300 during his administration — had a direct impact not only on the Esformes case but also these high-profile prosecutions:

▪ Dr. Salomon Melgen, 66, a native of the Dominican Republic who operated a lucrative ophthalmology practice in Palm Beach County, was sentenced to 17 years in prison after being convicted of Medicare fraud almost four years ago. He was found guilty of 67 counts, including healthcare fraud, submitting false claims and falsifying records in patients’ files, costing the Medicare program $73 million. Prosecutors showed that between 2008 and 2013, he became the nation’s highest-paid Medicare doctor, building his practice by giving elderly patients unnecessary eye injections and laser blasts on their retinas. Melgen’s sentence was commuted by Trump before he left office last week. The physician, who surrendered his medical license, repaid $25 million to the government, his lawyer said.

▪ Judith Negron, 49, was sent to prison for 35 years after being convicted of aiding in a $200 million fraud case in the country’s biggest mental health billing racket. Negron was the only defendant in the American Therapeutic case to refuse a plea deal and go to trial. She was convicted by a jury in August 2011 on 24 counts of conspiracy, fraud, paying kickbacks and money laundering in collaboration with the owners of a Miami-based company. Last February, she was released after serving eight years and relieved of her court-ordered obligation to pay back $87 million to Medicare, thanks to a commutation from Trump.

▪ Before leaving office, Trump also pardoned five former executives of WellCare Health Plans in Tampa who were convicted in 2013 of defrauding Florida’s Medicaid program, partly funded by the federal government. Those pardoned were former WellCare CEO and President Todd Farha, former General Counsel Thaddeus Bereday, former Chief Financial Officer Paul Behrens, former Vice President William Kale and former Vice President Peter Clay. They served sentences ranging from probation to three years for deceiving the state about how much money the company spent on behavioral-health services for Medicaid beneficiaries and did not refund money as required. The healthcare fraud scheme totaled $35 million, according to the Justice Department. WellCare, as part of an agreement with prosecutors, was required to pay $40 million in restitution and forfeit another $40 million to the federal government.

A former federal prosecutor who served as the U.S. attorney in Miami experienced firsthand the challenge of bringing these complex Medicare fraud cases against Esformes, Melgen and Negron to trial, at an enormous cost to taxpayers, the Justice Department and Medicare itself — only to see them undone with the stroke of a pen by Trump.

“It is completely demoralizing and disheartening for the prosecutors and agents who worked so hard on these cases,” said Ben Greenberg, who served in the U.S. Attorney’s Office for 20 years and joined the Miami law firm, Greenberg Traurig, as a partner in 2019. “There are times when a prosecutor might feel a commutation or pardon is appropriate, but these cases are at the polar opposite of that spectrum.”

Esformes’ checkered history

At sentencing in September 2019, federal Judge Scola called Esformes’ scheme of paying bribes to generate thousands of Medicare patients for his chain of 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.”

Esformes weeped at his sentencing but refused to accept responsibility for his crimes under pressure from Scola so that he could challenge his convictions before the U.S. Court of Appeals for the 11th Circuit, which is still pending, records show.

Prosecutors described Esformes as a greedy and unscrupulous businessman who used proceeds from his crimes to not only pay off doctors and other medical professionals for patients to feed his 16 nursing homes and ALFs in Miami-Dade, but also to buy luxury real estate, a Ferrari, fancy watches and escorts at five-star hotels. They also proved that Esformes paid hundreds of thousands of dollars in bribes to the basketball coach at the University of Pennsylvania to get his son into the Ivy League school, with the coach testifying at trial that the son was unqualified and took the place of a qualified recruit.

Esformes’ release from prison on Dec. 22, 2020, came after a lobbying campaign by the Aleph Institute, a group advised by renowned lawyer Alan Dershowitz and started by the Chabad-Lubavitch movement of Hasidic Jews, which seeks to help inmates facing long sentences, according to The New York Times. The movement has longstanding connections to Jared Kushner, Trump’s son-in-law and former senior adviser who helped oversee the pardon process. (Kushner’s father, who served two years in prison after being convicted of 18 offenses, including tax evasion and making illegal campaign contributions, was among those pardoned by Trump.)

Rabbi Sholom Lipskar, the founder and chairman of the Aleph Institute, has collected $65,000 worth of donations from Esformes’ family since Esformes’ July 2016 indictment, according to the Times.

The Miami Herald previously reported that with Esformes’ corporate and personal assets frozen, his father, Morris Esformes, a rabbi, paid for the son’s costly defense, which has included lawyers from Roy Black’s high-profile law firm and other attorneys. The father, with his son’s assistance, had amassed a fortune in the healthcare field in Chicago before they set their sights on Miami, where they got into trouble with the law for the first time in 2006. Back then, the Esformes family and the owners of Larkin Hospital paid $15.4 million to the U.S. government in a Justice Department settlement to resolve a civil violation of recycling patients between the hospital and the family’s nursing-home facilities and ALFs — a precursor to the latest criminal case.

“This is not a mistake,” Allan Medina, a Justice Department prosecutor, said at Esformes’ sentencing, describing his history of fleecing the Medicare system. “Day after day, this defendant chose to steal, this defendant chose to bribe. ... Mr. Esformes asked for a second chance of redemption. He had that chance” after the previous civil settlement with the government.

Who supported Esformes’ clemency?

A statement issued by the Trump White House did not mention the Esformes family’s prior civil settlement or the Aleph Institute. Instead, it noted that Esformes’ commutation was “supported” by former U.S. Attorney General Edwin Meese, who served under President Ronald Reagan, and Michael Mukasey, 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, a GOP lawyer best known as an independent counsel who investigated President Bill Clinton, also backed the appeal.

The statement alluded to their support of Esformes’ appeal “challenging his conviction on the basis of prosecutorial misconduct” by lawyers in the U.S. Attorney’s Office and Justice Department relating to an FBI search and seizure of records from the office of the healthcare executive’s lawyer in one of his Miami-Dade facilities. Esformes’ defense team argued that the search and seizure of those documents violated “attorney-client privilege” between the businessman and his company lawyer, that the prosecution’s evidence was tainted and its case should be thrown out along with the prosecutors.

That didn’t happen.

One of Esformes’ trial attorneys, Srebnick, declined to comment on the president’s commutation of his client’s sentence, but he said the convicted defendant’s appeal mirrored his petition to the president.

In a statement, Srebnick alluded to a Miami magistrate judge’s 113-page report “detailing the prosecutorial misconduct that we exposed” before trial — a decision that was later overturned in part by Scola, the district judge who found that federal prosecutors and agents did not act in “bad faith” in the Esformes case.

Ultimately, however, the controversial issue over the FBI’s gathering of privileged documents from the office of Esformes’ company lawyer became a moot point for Scola because prosecutors agreed not to use any of that evidence at his trial — making that issue a “red herring” on the businessman’s pending appeal, according to prosecutors.