Healthcare exec Philip Esformes pleads guilty to Medicare fraud but is spared prison time
A South Florida businessman pleaded guilty on Thursday to stealing millions of dollars from the taxpayer-funded Medicare program, capping a longrunning case marked by a commutation of his initial 20-year sentence by thenPresident Donald Trump in late 2020.
Philip Esformes, who formerly lived in Miami Beach while running a chain of skilled-nursing and assisted-living facilities, showed no emotion as a federal judge spared him from going back to prison but imposed tens of millions of dollars in penalties reflecting his illgotten gains.
Other than acknowledging his criminal activity as a healthcare operator who paid and received bribes in exchange for Medicare patients, Esformes said little during his change-of-plea hearing in Miami federal court and didn’t respond to a reporter’s questions afterward.
The plea agreement was reached this month between the Department of Justice and Esformes in one of the nation’s biggest Medicare fraud cases. Despite Trump’s commutation of his initial prison term, Esformes faced a potential retrial on the main healthcare-fraud conspiracy count and five related charges from his first trial in 2019 because a Miami federal jury deadlocked on those offenses while finding him guilty on 20 others.
The DOJ vowed to retry Esformes as prosecutors negotiated a plea deal behind the scenes with his defense lawyers.
U.S. District Judge Robert Scola highlighted the “unusual” circumstances of Esformes’ case, revealing for the first time what he thought about Trump’s commutation of Esformes’ sentence after he had only served 4 1⁄2 years, including his time in detention after his arrest in July 2016.
“I can’t say that I was not disappointed when his sentence was commuted by the president,” Scola said, while pointing out that under the Constitution a president has the prerogative to grant clemency petitions.
Then, referring to a mob boss’ famous line in the movie “Godfather II,” the judge noted: “As Hyman Roth said, ‘This is the business we have chosen.’ ”
Before deciding to go along with the plea agreement, Scola asked a prosecutor why the agency was not recommending any more prison time. On Thursday, Esformes, 55, pleaded guilty to a healthcare-fraud conspiracy charge involving bribery that carried up to 20 years in prison.
Prosecutor James Hayes acknowledged the unusual situation but pointed out that Esformes was pleading guilty to the “top count” in the indictment and paying nearly the entire restitution and financial judgments owed to the U.S. government. Hayes also noted the “finality” of the case, saying there would not be a costly second trial on the hung counts from the original trial.
One of Esformes’ lawyers, A. Scott Bolden, said his client has been a “model citizen” since he was released from prison more than three years ago.
“Mr. Esformes doesn’t have a whole lot more to give to the justice system,” Bolden told the judge.
Under the agreement, the other five hung charges from Esformes’ first trial alleging bribery payments, money laundering and obstruction of justice were dismissed by prosecutors. Esformes, who now lives in Palm Beach County, won’t have to serve additional prison time under the terms of the deal.
However, he’s required to pay $5.5 million in restitution to the federal Medicare program. He’s also required to pay at least $14 million from the sale of real estate and other business assets toward his outstanding forfeiture penalty of $38.7 million — the amount of money that he received from Medicare through fraudulent billing between 2010 and 2016.
After the hearing, prosecutor Daren Grove said Esformes has already paid the restitution amount and is expected to pay at least $30 million toward his forfeiture obligation.
More than seven years ago, top DOJ 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.
Esformes, who went through a messy divorce, 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.
In addition, an ex-Ivy League basketball coach testified that Esformes paid him hundreds of thousands of dollars to ensure a place for the healthcare mogul’s son on his basketball team. The former Penn coach, Jerome Allen, now an NBA assistant coach, testified that Esformes’ illicit payments enabled the son to be accepted to the University of Pennsylvania by reserving the spot for him on Allen’s basketball team. The son never played a game, though he ended up graduating from Penn.
At sentencing in September 2019, Judge Scola called Esformes’ scheme “unmatched in our community, if not our country” and said he “violated [the system’s] trust in epic proportions.”