Jul 22, 2008 10:30 pm US/Eastern
Pharmed Founders Charged With Fraud, Tax Evasion
Carlos and Jorge de Céspedes
Charged With Conspiracy To Commit Health Care Related Wire Fraud
Also Charged With Tax Evasion
MIAMI (CBS4) ―
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Carlos and Jorge de Céspedes are accused of bilking Kendall Regional Medical Center out of several million dollars and hiding $22 million in income from the IRS
Miami Herald
Two brothers who founded the now-bankrupt Pharmed medical supply company, which was once the eighth-largest Hispanic-owned business in America, were charged Tuesday with conspiracy to commit health care related wire fraud and tax evasion.
The charges against Carlos and Jorge de Céspedes, were filed by the U.S. Attorney's office in federal court, through two separate information papers, which generally means they've agreed to waive their right to be indicted by a grand jury.
The two surrendered themselves Tuesday afternoon in federal magistrate court.
Prosecutors say the brothers were working with three employees of Kendall Regional Medical Center, who allegedly placed phony orders for millions of dollars worth of medical supplies that were never delivered.
Those hospital employees, who were arrested last month and are cooperating with the investigation, were then given a kickback of thousands of dollars a month for a period of 6 years.
Officials say the fraudulent orders, involving $2.5 million to $7.5 million, weren't noticed right away because Pharmed was a large supplier and the phony purchases were just a small amount of the legitimate business that the medical supply company did with the hospital.
The brothers alleged tax fraud was uncovered by the IRS during a routine audit in 2005. The IRS claims the brothers failed to report nearly 22-million dollars in legitimate earnings between 2001-2003 and stiffed Uncle Sam out of 8-million dollars in taxes.
Now they owe double that amount in back taxes, interest and penalties.
If convicted, they face 20 years in prison on the conspiracy to health care wire fraud and 5 years in prison on tax evasion.
U.S. Attorney Acosta stated, "These individuals had it all – success, money, and the admiration of their community. But they have tarnished their good names and reputations because they wanted even more than they already had, and they wanted it the quick and easy way. As this case shows, the quick and easy way usually leads to jail."
Carlos and Jorge de Céspedes were well known businessmen and philanthropists in the South Florida community and once paid millions to Florida International University to have the Panthers Arena named the Pharmed Arena. The Pharmed name has since been removed.
They are also part owners of the NBA Charlotte Bobcats basketball team.
Pharmed filed for bankruptcy in 2007.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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