Texas Man Sentenced to 12 Years in Prison for Defrauding Business Opportunity Buyers of More Than $5 Million | USAO-NJ

CAMDEN, N.J. – A Dallas, Texas, man was sentenced today to 144 months in prison for his role in orchestrating and operating a fraudulent scheme to sell medical-related business opportunities, causing a loss of more than $5 million, Acting U.S. Attorney Rachael A. Honig announced. 

David Weinstein, 62, formerly of Cherry Hill, New Jersey, previously pleaded guilty before U.S. District Judge Robert B. Kugler to an information charging him with conspiracy to commit wire fraud and money laundering. Judge Kugler imposed Weinstein’s sentence today in Camden federal court.

According to documents filed in this case and statements made in court:

From December 2015 through November 2020, Weinstein and his conspirators, Vijay Reddy and Kevin Brown, advertised business opportunities for sale on various websites. They purported to sell “blocks” of contracts with medical providers who allegedly wanted to outsource their medical billing, collections, appeals, answering, credentialing, or transcription functions. The buyers would then provide the contracted services to the medical providers and earn a profit. The conspirators promised to deliver a specified number of providers and pledged that their proprietary marketing efforts would provide a guaranteed client base to the buyers.

To induce buyers to purchase the business opportunities, the conspirators created fake references purporting to be buyers who vouched for their prior business purchases from the conspirators. In fact, the references were Weinstein, Reddy, and their friends and family members, and they used aliases and disguised phone numbers to speak with potential buyers.

After agreeing to purchase the blocks of medical providers, victims entered contracts with companies represented by Weinstein or Reddy and wired down payments ranging from $15,000 to $240,000 to accounts controlled by Weinstein or Brown. The remainder of each purchase price was payable when the conspirators fulfilled the contract by delivering the agreed-upon number of providers.

After receiving the down payments, Weinstein and Reddy typically delivered to each victim only a small number of medical providers. Despite not fulfilling the contracts of any of the buyers identified by law enforcement, the conspirators continued to sell blocks of medical providers to new buyers and refused to provide refunds for their failures to satisfy the terms of the contracts. The conspirators also periodically sold batches of previously signed contracts and disclaimed further responsibility for those contracts to insulate themselves from complaints or legal action from disgruntled buyers.

Brown acted as the business broker for most of the transactions and received a commission for the sales he brokered. Reddy or Weinstein acted as the seller and signed the contracts with the victims. Approximately 90 victims sent more than $5 million to accounts controlled by the defendants. The defendants spent the victims’ money on personal expenses, including a travel, jewelry, real estate, a wedding and a college education, and other business investments.

In addition to the prison term, Judge Kugler sentenced Weinstein to three years of supervised release and ordered him to pay $5.85 million in restitution. The court also ordered Weinstein to forfeit $1.98 million.

Acting U.S. Attorney Honig credited special agents of the FBI’s South Jersey Resident Agency, under the direction of Special Agent in Charge Jacqueline Maguire in Philadelphia; special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; and postal inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Damon Wood in Philadelphia, with the investigation leading to today’s sentence.

The government is represented by Assistant U.S. Attorneys Daniel A. Friedman and Diana V. Carrig of the U.S. Attorney’s Office Criminal Division in Camden.

Vijay Reddy pleaded guilty in June 2021 to an information charging him with conspiracy to commit wire fraud and wire fraud and is awaiting sentencing. 

The charges and allegations in the criminal complaints against Brown are merely accusations, and he is presumed innocent unless and until proven guilty.

Maria Flores

Next Post

Fee structure holds back Clark County small-business owners

Wed Dec 8 , 2021
“I understand what those fees are for; inspectors make sure everyone’s doing a safe job. I’m for that. I want to eat food that isn’t going to make me sick. I can see fees increase because people have to be paid, but it was a surprise when I heard the […]

You May Like