Pitt County Behavioral Health Businessman Pleads Guilty To Defrauding Medicaid After Threatening To Kill Witness

WILMINGTON - United States Attorney Thomas G. Walker announced that yesterday in federal court, TERRY LAMONT SPELLER, 37, of Winterville, North Carolina, pleaded guilty to Health Care Fraud and Engaging in Monetary Transactions Involving Criminally Derived Property.

“Illegal schemes like this one waste tax dollars and divert funds that are supposed to go toward needed medical care. Our investigators and attorneys will continue to work closely with federal officials to fight health care fraud and recover the public’s money,” said North Carolina Attorney General Roy Cooper.

“Criminals such as Speller, who engage in healthcare fraud, are among the worst, enriching themselves at the expense of others,” said Thomas J. Holloman, Special Agent in Charge of Internal Revenue Service, Criminal Investigation. “IRS Criminal Investigation remains steadfast in our commitment to bring those that would engage in this type of criminal activity to justice.”

"Fraudulently billing for behavioral health services costs the Medicaid program millions of dollars each year and diverts precious resources from those who need it most," said Derrick Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta. "The OIG and our law enforcement partners will continue to aggressively pursue these thieves to ensure they are held accountable."

The Criminal Information to which SPELLER pleaded guilty provides that between 2010 and 2015, TERRY LAMONT SPELLER was an individual doing business through various Outpatient Behavioral Health and Outpatient Health Service providers in Pitt County and surrounding areas.  Through these providers, SPELLER recruited hundreds of Medicaid beneficiaries, mostly children, from various communities in Eastern North Carolina to receive alleged services compensable by Medicaid.

In 2010, North Carolina’s Division of Medical Assistance (DMA), which administers the Medicaid program in this state, began an investigation of one of SPELLER’s companies based upon allegations that the company was billing for services that were not actually rendered.  When requested, SPELLER failed to provide records to support the services that were billed.  As such, the company was suspended from further participation in Medicaid programs.

Although excluded from the Medicaid program, over the next several years SPELLER concocted various schemes to continue getting paid.  The schemes included getting various other providers to bill the Medicaid program on his behalf and submitting a forged document to Medicaid in order for payments to be wired into a bank account controlled by SPELLER.   

In total, SPELLER fraudulently caused in excess of $4 Million to be billed to Medicaid using another provider’s number for service not provided and caused the proceeds to be deposited into an account controlled by SPELLER.  SPELLER used the proceeds of the false and fraudulent claims to fund various purchases, including a $20,000 check to purchase a Shelby Cobra automobile.

Prior to pleading guilty, SPELLER was arrested and detained for threatening to kill a witness if she spoke to law enforcement.  SPELLER will remain detained until the time of his sentencing, which will occur later in 2015.

At sentencing, SPELLER faces up to 20 years in prison.  The maximum term of imprisonment for Health Care Fraud is 10 years.  The maximum term of imprisonment for Engaging in Transactions Using Fraudulent Proceeds is 10 years.  SPELLER also faces up to 3 years of supervised release, $500,000 in fines, and an order of restitution for the full amount of the fraud.

The investigation of this case was conducted by agents of the North Carolina State Bureau of Investigation assigned to the Medicaid Investigations Division of the North Carolina Attorney General’s Office; The Internal Revenue Service - Criminal Investigation; and the United States Department of Health and Human Services Office of the Inspector General.  The investigation and prosecution of this matter is being handled in a partnership between the United States Attorney’s Office for the Eastern District of North Carolina and the Medicaid Investigations Division of the North Carolina Attorney General’s Office.

Assistant United States Attorney William M. Gilmore of the Economic Crimes Division, and Special Assistant United States Attorney Daniel Spillman of the Medicaid Investigations Division of the North Carolina Attorney General’s Office, represent the United States.