Before Ozempic and similar “wonder drugs,” medically- assisted weight loss had to happen the old-fashioned way— surgical intervention. For Southern California residents in the 2010s the Wizard of Weight Loss was Dr. Julian Omidi. To make a long story short, Omidi helmed a massive health insurance fraud scheme called “Get Thin.” Omidi’s scheme promised dramatic weight loss through Lap-Band surgery and other medical procedures.
A grand jury indicted Omidi and his company Surgery Center Management, LLC (“SCM”) for mail fraud, wire fraud, money laundering, and other related charges arising from the Get Thin scheme. In a nutshell, the government alleged that Omidi and SCM defrauded insurance companies by submitting false claims for reimbursement.
The claims included, among other misrepresentations, fraudulent patient test results and false assertions that a doctor had reviewed and approved the medical procedures at issue. After three-and-a-half years of pretrial litigation and a 48-day jury trial, the jury convicted Omidi and SCM of all charges. The district court sentenced Omidi to 84 months imprisonment and fined SCM over $22 million.
At a subsequent hearing, the district court considered forfeiture for both defendants. The government argued that the total proceeds of Get Thin’s business during the fraud period – $98,280,221 – should be forfeited because the whole business was “permeated with fraud.” In other words, even if some parts of Get Thin seemed legitimate, the government argued that “all proceeds of that business are forfeitable,” as “the proceeds of that so-called ‘legitimate’ side of the business would not exist but for the ‘fraudulent beginnings’ of the entire operation” (namely, the call center). Omidi and SCM objected to the forfeiture amount, arguing that Get Thin was “not entirely a fraud,” and the forfeiture amount should be limited to the proceeds traceable to falsified insurance claims.
The district court agreed with the government. Reviewing the relevant statutes and persuasive out-of-circuit authority, it agreed that the $98,280,221 in proceeds were directly or indirectly derived from the fraudulent Get Thin scheme.
The 9th Circuit Court of Appeal affirmed in the published case of USA v Omidi – 23-1719 (January 2023).
The question in this case is whether the district court erred in ordering the forfeiture of all Get Thin’s proceeds, even though conceivably some of the incoming funds ultimately paid for legitimate and medically necessary procedures.
Under § 981(a)(1)(C), any property which “constitutes or is derived from proceeds traceable to” a mail or wire fraud scheme is subject to forfeiture. Section 981(a)(2)(A) defines “proceeds” in a health care fraud scheme as “property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto, and is not limited to the net gain or profit realized from the offense”
Said more simply, any proceeds that directly or indirectly derive from the fraudulent scheme must be forfeited, even if particular proceeds were not profits from the offense itself.
Applying the above rules to this case, any money acquired via the fraudulent Get Thin funnel was subject to forfeiture.”