U.S. Department of Justice United States Attorney’s Office Eastern District of Virginia ALEXANDRIA NEWPORT NEWS NORFOLK RICHMOND Chuck Rosenberg - United States Attorney

HOUSTON MAN SENTENCED FOR MEDICAID FRAUD

(Richmond, VA) – Kenneth D. Beverly, age 56, of Houston, Texas, was sentenced today to 151 months of imprisonment on 43 charges, including Health Care Fraud, Subornation of Perjury, Witness Tampering, Tax Evasion, and False Statements. The Court also ordered Beverly to pay more than $2.6 million in restitution, the largest restitution order ever entered in the Eastern District of Virginia in a Medicaid fraud case. Pursuant to an ordered also entered today, Beverly will forfeit $161,856.40 in personal assets to be applied towards his restitution obligation. Chuck Rosenberg, United States Attorney for the Eastern District of Virginia; Bob McDonnell, Attorney General of Virginia; Donald Thompson, Special Agent-In-Charge, Federal Bureau of Investigation, Richmond Resident Office; Patrick W. Finnerty, Director, Virginia Department of Medical Assistance Services; and Charles R. Pine, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation Division, Alexandria Field Office, announced the sentencing.

From October 9, 2000, through June 6, 2003, Beverly was the owner, operator, and Executive Director of Rites of Passage Enhanced, Inc. (ROPE), a Medicaid Provider. ROPE billed Medicaid for providing psychosocial rehabilitation services to individuals in Richmond and Sandston, Virginia. According to evidence presented at trial, Beverly improperly submitted claims for services which did not meet Medicaid’s standards for psychosocial rehabilitation and for individuals who were ineligible to receive the services rendered. An investigative audit of ROPE determined that Beverly was receiving reimbursements for psychosocial rehabilitation when the services he was providing essentially amounted to adult daycare. Beverly was charged with submitting 36 false claims, and convicted in a jury trial on April 27, 2006. At sentencing, the Court found that in total, Beverly submitted more than 16,000 fraudulent claims, resulting in Medicaid losses totaling $2,604,573.39.

During the federal investigation, Beverly and his daughter were interviewed by investigators. At trial, the jury found that Beverly had provided materially false statements to the investigators, and that he had also committed witness tampering and subornation of perjury by coaching his daughter to provide false testimony before a federal grand jury. When called before the Grand Jury, Beverly’s daughter, at his behest, falsely testified that she had been employed by ROPE, and that she had personally performed services for patients in Richmond, Virginia on behalf of ROPE.

Beverly was also convicted of tax evasion. Although he received at least $370,962 in compensation from January 1, 2001, through April 15, 2003, for his work with ROPE and another business, Quality Assisted Living, Inc. (QAL), Beverly filed a false personal income tax return for the tax year ending in December 2001, and failed to file a personal income tax return for the tax year ending in December 2002, resulting in a total tax loss to the Internal Revenue Service (IRS) of approximately $125,054. Furthermore, Beverly failed to file corporate tax returns for both ROPE and QAL as required by law. In an effort to hide his earnings and assets from the IRS, Beverly received multiple payments made out to his daughter, which he then deposited in a joint account under his control; entered into a lease/purchase agreement for a residence in Richmond, Virginia, which he titled in his daughter’s name; and made false statements to investigators when questioned about his earnings and assets.

United States Attorney Rosenberg stated, “The fraud in this case was staggering and Beverly’s brazen greed threatened the well being of the many who rely on the Medicaid program for their legitimate medical needs. This superb result demonstrates once again our firm response to those who exploit the Medicaid program for their own personal enrichment.”

Virginia Attorney General McDonnell added, “This unprecedented recovery, coupled with significant federal prison time, sends an unmistakable message to those criminals who prey upon Virginia's indigent citizens who need legitimate medical services. My Medicaid Fraud Control Unit will continue to work with federal, state, and local law enforcement to combat fraud against the Medicaid program.”

The case was investigated by agents of the Federal Bureau of Investigation, the Virginia Attorney General’s Medicaid Fraud Control Unit, the Virginia Department of Medical Assistance Services, and the IRS Criminal Investigations Division and was prosecuted by Assistant United States Attorneys Gregg R. Nivala and G. Wingate Grant as well as Steve Buck, Special Assistant United States Attorney and Deputy Director of the Virginia Attorney General’s Medicaid Fraud Unit.