Two additional South Florida residents plead guilty to health care fraud charges in diabetic test strip diversion scheme

MIAMI – On May 10, two additional South Florida men pleaded guilty to conspiracy to commit health care fraud for their role in a diversion scheme involving the distribution of adulterated and misbranded diabetic test strips.

The scheme involved the acquisition of non-retail or international diabetic test strips (i.e., diabetic test strips intended by manufacturers for distribution only outside of the United States), for sale to licensed retail pharmacies as retail diabetic test strips to make a higher profit. The fraud scheme resulted in around $12 million in fraudulent proceeds. 

Howard Neil Frank, 60, of Marco Island, Florida, owner of two diabetic test strip wholesale businesses, Wholesale Diabetic Supplies Inc and HMF Distributing Inc, and Perfecto Fermin Hallon, 77, of Miramar, Florida, former president of another diabetic test strip wholesale business, Medical Care Supplies Inc, acquired the diabetic test strips through illegal importations, theft, or by buying the diabetic test strips from patients who obtained prescriptions but chose to sell them rather than use them. The wholesale company owners then sold the adulterated and misbranded diabetic test strips to licensed retail pharmacies, some of which they also owned. These licensed retail pharmacies sold the adulterated and misbranded diabetic test strips to patients who did not know the real source of the diabetic test strips. In turn, these licensed retail pharmacies then submitted claims for reimbursement through private and government health benefit plans as retail diabetic test strips.

To deceive auditors and inspectors, Frank and Hallon altered invoices, purchase orders and shipping records, counterfeited National Drug Code (NDC) numbers, bar codes and accompanying labeling, to appear like they had acquired the diabetic test strip from legitimate manufacturers.

Hallon’s sentencing hearing is scheduled for May 29 in West Palm Beach. He faces up to 10 years in prison.

Frank’s sentencing hearing is scheduled for Aug. 2 in West Palm Beach. He faces up to 10 years in prison.

To date, a total of four defendants have been indicted in connection with this scheme.

In 2021, Mohamed Mokbel, was charged with conspiracy to commit health care fraud. The trial is scheduled for October in West Palm Beach. Mokbel is also charged with health care fraud and money laundering in the Southern District of Texas. The trial is scheduled for August in Texas.  

In 2022, Jason Grama, who pleaded guilty to conspiracy to commit health care fraud, was sentenced to three years supervised release and ordered to pay almost $300,000 in restitution. 

U.S. Attorney Markenzy Lapointe for the Southern District of Florida and Special Agent in Charge Justin C. Fielder of the U.S. Food and Drug Administration, Office of Criminal Investigations (FDA - OCI), Miami Field Office, announced the guilty plea. 

FDA - OCI Miami investigated the case. Assistant U.S. Attorney Laurence M. Bardfeld is prosecuting the case. Assistant U.S. Attorney Daren Grove is handling asset forfeiture.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov, under case number 21-cr-60113.

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