Ex-Wells Fargo Advisor Defrauded Health Plans, Jury Finds
What You Need to Know
The case in New Jersey involves custom-made prescription medications, according to the indictment.
Prosecutors say the expensive prescriptions were not medically necessary.
Kaival Patel maintains that he was used by others and was unwittingly involved in their scheme.
A jury at a federal court in Camden, New Jersey, last week found that a former investment advisor worked with a physician and others to defraud state and local public employee health plans in New Jersey.
Prosecutors allege that the former advisor, Kaival Patel, created a company, ABC Healthy Living, that caused plan enrollees to buy expensive, medically unnecessary compound medications, or custom-made prescription drugs, through the physician, according to an indictment filed with the U.S. District Court for New Jersey in 2022.
The health plans made about $4 million in extra benefits payments through their pharmacy benefits administrator as a result, U.S. Attorney Philip Sellinger said Friday.
The pharmacy rewarded Patel by paying ABC Healthy Living about $490,000, according to the 2022 indictment.
About 47 people in New Jersey have been convicted of wrongdoing or pleaded guilty in connection with a federal investigation of compound prescription claims there, officials said.
What it means: Any advisors with clients involved with pharmacies, health plans or the practice of medicine in New Jersey should be aware that federal prosecutors there are interested in health care fraud.
ABC Healthy Living: ABC Healthy Living was formed in 2015 and dissolved in 2021, according to New Jersey state records. Prosecutors allege in the indictment that the company was active from 2015 through 2017.
Patel was a financial advisor with Wells Fargo Advisors from 2010 through 2018. He joined Stifel Financial as a senior vice president and worked there from 2018 through 2022.
Patel’s wife formed ABC Healthy Living in her name to conceal Kaival Patel’s connection because “Kaival Patel was precluded by his employer from engaging in certain outside business activities,” according to the indictment.
Stifel told the Financial Industry Regulatory Authority in 2022 that it had discharged Patel because of a loss of confidence related to the filing of the indictment.
