DOJ: Pakistani Nationals residing in Bakersfield and Los Angeles County charged in a scheme to defraud Medicare

• The defendants used shell companies without physical locations to file false durable medical equipment claims.
• They kept about 30% of proceeds and sent the rest to contacts in Pakistan and elsewhere.

Nouman Mustafa and Mohsin Khan, both Pakistani nationals with dual U.S. citizenship, were indicted by a grand jury for health care fraud and aggravated identity theft. They allegedly created shell companies posing as legitimate durable medical equipment providers and submitted more than $3.5 million in fraudulent Medicare claims.

The fraudulent claims relied on stolen information about real Medicare beneficiaries and doctors, obtained from contacts in Pakistan and elsewhere. The defendants retained approximately 30% of the proceeds, sending the remainder to their contacts. Both were arrested, and if convicted, face significant prison time and fines.

• $3.5 million fraudulent Medicare claims submitted
• 30% proceeds kept by defendants
• $250,000 maximum fine per health care fraud count

• Review claims submitted by shell DME companies with no physical storefronts or warehouses, as described in the DOJ indictment.
• Scrutinize Medicare claims involving beneficiary and doctor information sourced from Pakistan or similar external contacts.
• Monitor for rapid company transitions and short-lived entities submitting high volumes of claims, matching the typology in this case.

This case highlights the risk of shell companies being used to defraud Medicare through rapid, high-volume claims and the exploitation of stolen beneficiary and doctor information. Compliance officers must be vigilant for entities lacking physical presence and for patterns of short-lived companies shifting operations when claims are denied. The international element, with proceeds sent abroad, underscores the need for robust controls and cross-border information sharing to detect and prevent similar fraud schemes.