Financial Advisor Sentenced to Prison for Multimillion-Dollar Health Care Fraud Scheme

Kaival Patel convicted of defrauding public insurance plans and laundering illicit proceeds.

Kaival Patel, 55, of West New York, New Jersey, was sentenced to 41 months in federal prison for his role in a $4 million healthcare fraud conspiracy involving fraudulent prescriptions for compounded medications. Patel was convicted in December 2023 on 11 counts, including conspiracy to commit wire fraud and health care fraud, health care fraud, conspiracy to commit money laundering, and money laundering. U.S. District Judge Edward S. Kiel imposed the sentence in Camden federal court.

“This defendant lined his own pockets by taking advantage of health insurance plans for New Jersey state and local government employees, defrauding them of millions of dollars by conspiring to obtain reimbursements for medically unnecessary compound prescription medications. Together with our law enforcement partners, we will continue to investigate and prosecute those who abuse and defraud the health care system.” - U.S. Attorney Philip R. Sellinger

Fraudulent Scheme

Patel operated ABC Healthy Living LLC, a business that marketed compounded medications—specialty prescriptions mixed by pharmacists to meet individual patient needs. Working with conspirators, Patel exploited insurance plans that reimbursed thousands of dollars for a one-month supply of certain compounded medications, including vitamins, pain creams, and libido creams.

Patel recruited a family member, a Newark-based medical doctor, to authorize prescriptions for patients without medical need. He also paid corrections officers to visit the doctor’s practice to receive fraudulent prescriptions. Additionally, Patel collaborated with a compounding pharmacist to inflate medication costs by adding unnecessary ingredients, further boosting profits.

Financial Transactions and Penalties

Patel engaged in numerous financial transactions to launder proceeds from the fraudulent scheme. As a result, Judge Kiel ordered Patel to:

• Serve 41 months in prison followed by three years of supervised release.
• Pay $4.72 million in restitution.

Broader Conspiracy

Patel is one of approximately 48 individuals convicted or who have pleaded guilty in connection with the larger conspiracy.

Investigation and Prosecution

The case was prosecuted by the U.S. Attorney’s Office for the District of New Jersey, led by U.S. Attorney Philip R. Sellinger. Patel’s conviction followed an 11-day trial before U.S. District Judge Robert B. Kugler. The investigation and prosecution underscore the federal government’s commitment to combating healthcare fraud and holding offenders accountable.

This sentencing sends a clear message about the consequences of defrauding public health insurance programs and profiting from criminal schemes.