Fam­ily in GET-THIN probe seeks seized funds

Broth­ers in fed­eral in­quiry and their mother fight U.S. for re­turn of $109 mil­lion.

Los Angeles Times - - BUSINESS - By Stu­art Pfeifer

Fed­eral agents have seized $109 mil­lion in cash and se­cu­ri­ties dur­ing an on­go­ing in­ves­ti­ga­tion of the busi­nesses and in­di­vid­u­als be­hind the 1-800-GET-THIN ad cam­paign for weight-loss surgery — and lawyers are fight­ing to get it back.

An at­tor­ney rep­re­sent­ing three peo­ple be­hind the de­funct Lap-Band surgery en­ter­prise said the seizure was un­jus­ti­fied and frus­trat­ing to his clients be­cause U.S. gov­ern­ment of­fi­cials have re­fused to dis­close why they were en­ti­tled to take the money.

“They’ve spent five years in­ves­ti­gat­ing my clients for fraud and haven’t brought a sin­gle fraud charge against any of them,” said at­tor­ney Matthew Umhofer, who rep­re­sents broth­ers Michael and Ju­lian Omidi, the op­er­a­tors of the 1-800-GET-THIN busi­nesses, and their mother, Cindy.

“They’ve dec­i­mated a re­mark­ably suc­cess­fully busi­ness en­ter­prise that helped a lot of peo­ple over­come life­long strug­gles with obe­sity,” he said. “They seized more than $100 mil­lion al­most a year ago, and now say they can keep all of that money in­def­i­nitely, with­out no­tice or a hear­ing or any due process.”

The Omidi fam­ily ran a weight-loss surgery busi­ness that was cen­tered on the use of the Lap-Band de­vice, a sil­i­con ring im­planted around the stom­ach to dis­cour­age overeat­ing.

The surg­eries were pro­moted through a mas­sive ad­ver­tis­ing cam­paign that ran for sev­eral years on South­ern Cal­i­for­nia free­way bill­boards, ra­dio and tele­vi­sion with a catchy slo­gan: “Let your new life begin, call 1-800-GET-THIN.” The mar­ket­ing cam­paign was highly ef­fec­tive, lead­ing thou­sands of over­weight pa­tients to seek surg­eries at clin­ics through­out South­ern Cal­i­for­nia. But the ads were at­tacked by health of­fi­cials as

mis­lead­ing and pulled in 2012.

Five pa­tients died fol­low­ing surg­eries at clin­ics af­fil­i­ated with the ad cam­paign, ac­cord­ing to law­suits, au­topsy re­ports and other public records. Sev­eral law en­force­ment agen­cies have been in­ves­ti­gat­ing the own­ers of the busi­nesses be­hind the ad cam­paign for pos­si­ble health­care fraud, money laun­der­ing and tax vi­o­la­tions, ac­cord­ing to court fil­ings and pros­e­cu­tors’ state­ments in re­lated court cases.

No charges have been filed, but pros­e­cu­tors said this month at a hear­ing in U.S. Dis­trict Court in Los An­ge­les that an in­ves­ti­ga­tion is con­tin­u­ing. In a court mo­tion, pros­e­cu­tors said the seized money is “trace­able to a long-term fraud scheme.”

The seizure of cash and se­cu­ri­ties was made last June un­der two fed­eral war­rants from ac­counts at Deutsche Bank Se­cu­ri­ties Inc. and Bank of Amer­ica, ac­cord­ing to search war­rant fil­ings and a mo­tion by fed­eral pros­e­cu­tors. The seized prop­erty was trusts and ac­counts af­fil­i­ated with Michael, Ju­lian and Cindy Omidi. Au­thor­i­ties seized $92 mil­lion from 12 Deutsche Bank ac­counts June 4 and $17 mil­lion from two Bank of Amer­ica ac­counts June 24, ac­cord­ing to a mo­tion filed by As­sis­tant U.S. Atty. Steven Welk, who over­sees the as­set for­fei­ture di­vi­sion of the U.S. at­tor­ney’s of­fice in Los An­ge­les.

“That’s a tremen­dous amount of money; it’s got to be one of the largest seizures in the coun­try in the last year, if not the last cou­ple years,” said Michael S. We­in­stein, a for­mer fed­eral pros­e­cu­tor who now prac­tices white-col­lar de­fense with the law firm Cole Schotz in New Jer­sey.

Pros­e­cu­tors have de­clined to com­ment on the on­go­ing crim­i­nal in­ves­ti­ga­tion and the as­set seizure. Pros­e­cu­tor Welk de­fended the seizure at an April 13 hear­ing be­fore U.S. Dis­trict Judge Otis D. Wright II in Los An­ge­les.

“It’s a big crim­i­nal in­ves­ti­ga­tion and there were a lot of seizures of data and ev­i­dence, in ad­di­tion to the money here, and that in­ves­ti­ga­tion is on­go­ing,” he said.

Wright dis­missed a mo­tion seek­ing the re­turn of the seized money filed on be­half of Cindy Omidi — whose sons op­er­ated the 1-800GET-THIN busi­ness — and sev­eral ir­rev­o­ca­ble trusts.

Umhofer, the Omidis’ at­tor­ney, said he in­tends to ap­peal Wright’s rul­ing. He said an af­fi­davit that pros­e­cu­tors filed in a re­quest to seize the funds was sealed by a judge, so he does not know the grounds un­der which the war­rants were ob­tained.

“Our po­si­tion is the money was ob­tained law­fully and the gov­ern­ment did not have prob­a­ble cause to seize it,” Umhofer said. “We want to chal­lenge it, and the gov­ern­ment is deny­ing us that op­por­tu­nity.”

Philip Hilder, a for­mer fed­eral pros­e­cu­tor who now prac­tices white-col­lar de­fense in Hous­ton, said pros­e­cu­tors should not be al­lowed to hold onto such a large sum of money with­out prov­ing that it was the pro­ceeds of a crime.

“There are cer­tain con­sti­tu­tional pro­tec­tions peo­ple have against un­rea­son­able search and seizure,” Hilder said. “While they might have the right to file the seizure war­rant, they just can’t do it in­def­i­nitely with­out fol­low­ing up with a civil ac­tion or mov­ing the seized items into the crim­i­nal case.”

An at­tor­ney who rep­re­sents rel­a­tives of a pa­tient who died af­ter Lap-Band surgery greeted news of the seizure with en­thu­si­asm.

“The amount of the money that was seized is stunning and it in­di­cates the scope of this en­ter­prise and its com­plex­ity,” said Kathryn Tre­pin­ski, who filed a wrong­ful-death law­suit re­lated to the 2010 death of Lap-Band pa­tient Ta­mara Wal­ter. “I hope this money will be used to com­pen­sate the vic­tims and the fam­i­lies of those whose loved ones died fol­low­ing surg­eries.”

The Wal­ter fam­ily’s law­suit is pending.

Although pros­e­cu­tors have not yet brought a crim­i­nal case re­lated to 1-800GET-THIN, they did file an un­re­lated case against Cindy Omidi. She was con­victed last year by a fed­eral jury of vi­o­lat­ing laws de­signed to pre­vent money laun­der­ing. She is sched­uled to be sen­tenced Mon­day.

In Septem­ber 2014, Unit­edHealth Group Inc. sued Michael and Ju­lian Omidi, al­leg­ing that they op­er­ated a net­work of com­pa­nies that tricked the in­surer into pay­ing more than $40 mil­lion in claims for med­i­cal pro­ce­dures that were un­nec­es­sary, in­el­i­gi­ble for cov­er­age or never even per­formed.

The Omidi broth­ers have de­nied wrong­do­ing. The surgery cen­ters had pre­vi­ously sued Unit­edHealth, al­leg­ing that the in­surer failed to pay for tens of mil­lions of dol­lars in surg­eries it had agreed to cover. Both cases are pending.

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