US Freezes Millions Of Dollars In Assets Of Rogue Lab Sales Force

The US government is freezing millions in dollars in assets from the owners of BlueWave, the sales company that participated in “a massive kickback scheme” involving Health Diagnostics Laboratory (HDL) and a second smaller laboratory company, Singulex, Inc.

A US judge last week granted an application from US and state attorneys to ensure that BlueWave and its owners, Floyd Calhoun Dent, III and Robert Bradford Johnson will be able to pay the massive debt of nearly $300 million that the government says it is owed “for their role in a scheme to defraud” the government.

In its application to the court the prosecutors described “a massive kickback scheme… between the laboratory clients and the BlueWave sales representatives to pay illegal process and handling fees to physicians, resulting in hundreds of millions of dollars of payment from Federal health care programs, operating to line the BlueWave Defendants’ pockets.”

According to the government, BlueWave may owe the government $240 million and Dent and Johnson $58 million individually for violations of the False Claims Act and the Anti-Kickback Statute. The court granted the government’s request to garnish funds from bank accounts and to place liens on real estate, boats, and an airplane.

The government said the action was necessary because “the BlueWave Defendants have been rapidly disposing of or concealing their assets.” The court document includes many examples of these efforts.

As the HDL/BlueWave scandal began to unfold Dent bought properties for $1.6 million and $2.7 million and then on the same day sold them to his wife for $5 each. Dent’s wife also registered corporations which now contain properties bought earlier by Dent. Dent also “engaged in property reorganization which had the effect of removing his name from the ownership records for many properties previously titled in his name.” In less than six months time Dent’s wife’s corporations owned eight properties. For one of the properties Dent’s wife’s parents were granted a life estate for $5.

Johnson was the sole owner of several properties that he sold to corporate entities that he controlled. In other cases he transferred the titles of other corporations to his accountant.

BlueWave now has only $180,000 available in cash and has told the government that “it has no ability to pay the damages in this case.” But Dent and Johnson started a new healthcare marketing company, Cobalt. Since 2013, according to the government, “BlueWave has depohttp://cardiobrief.org/wp-admin/post.php?post=17492&action=editsited $5.4 million into Cobalt’s account, along with another $4.6 million from Defendant Dent and $1.275 million from Defendant Johnson personally.”

The government issued writs of attachment on four boats owned by Dent and an airplane owned by Johnson. But, the government notes,  Johnson and Dent will “continue to possess and be able to use the property.”

In its application the government said that “BlueWave sales representatives used a variety of techniques…[which included] pointing to the compensation the practice would receive from the payment of process and handling fees, and stating that patients would not receive a bill.” In seeking to identify candidates Johnson earlier “testified that he ‘look[s] for select criteria on a physician before I talk to them’, including that the physician is “money hungry.”

Court documents:

• Application For Judgement [PDF]
• Asset Freeze Order [PDF]