A Las Vegas man was convicted recently in federal court in connection with a scheme to embezzle funds from his employer, Muro Pharmaceutical, a Tewksbury-based pharmaceutical manufacturer, and to launder the embezzled funds through Nevada corporations he had established.
United States Attorney Michael Sullivan and Kenneth Kaiser, Special Agent in Charge of the Federal Bureau of Investigation in New England, announced that Michael Howard, 64, of Las Vegas, pleaded guilty before U.S. District Judge Rya Zobel to five counts of Mail Fraud and four counts of Money Laundering.
At the plea hearing, the prosecutor told the Court that, had the case proceeded to trial, the Government’s evidence would have proven that from June 1996 to November 2002, Howard served as Muro’s West Coast National account manager, a position with the objective of convincing insurers, HMOs and prescription benefits managers (“PBMs”) (companies to which some HMOs outsource the management of prescription benefit plans) to include Muro’s products in their coverage plans.
Like a traditional sales person, Howard reportedly spent much of his time cultivating relationships with his account contacts, who were located throughout the West Coast, often through dinners or other entertainment. Howard also was responsible for sponsoring professional training for his clients’ physician members. Muro also would reimburse insurers, HMOs and PBMs for the cost of printing literature about Muro’s products and distributing it to their physician members.
A national account manager like Howard typically would submit invoices to Muro from insurers, HMOs or PBMs for services or materials provided in connection with Muro’s training initiatives. For instance, if a PBM printed literature about a Muro product and distributed it to its physician members, the PBM normally would submit the invoice to the national account manager responsible for the matter. Muro then would cut a check and mail it directly to the PBM for reimbursement.
Howard insisted, however, that he deliver such checks to the PBMs he dealt with, contending that it would ensure speedier delivery and would provide him an opportunity for face time with his account contacts. Using this ruse, Howard reportedly submitted nearly a half million dollars in phony expense invoices from October 1999 to October 2002 that reflected services performed on Muro’s behalf. Howard created the invoices on his computer by scanning in real invoices and changing the dates, the amount owed, and other information.
Howard deposited most of the Muro checks into bank accounts in the names of two Nevada corporations. One was I.M. Worldwide, a web design company started by Howard’s son which generated virtually no revenue and had no employees in the two years it was open. The other account was in the name of Mature Rx Plus of Nevada, a PBM that Howard helped to establish for the sole purpose of bidding to become the PBM for Nevada’s then-new prescription drug benefit program.
In late-2000, the State of Nevada turned down Mature Rx’s bid. Mature Rx ultimately was dissolved in March 2001, never having operated for a single day, much less ever performing any work on behalf of Muro Pharmaceutical.
Judge Zobel scheduled sentencing for June 2, 2005. Howard faces up to 20 years’ imprisonment, to be followed by 3 years of supervised release, and a $250,000 fine on each count of Mail Fraud, and up to 20 years’ imprisonment, to be followed by 3 years of supervised release, and a $500,000 fine on each count of Money Laundering.
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