Photo Via: NBC New York
18 former NBA Players, a coach, and a player’s wife are being indicted on a $4M Health Care Fraud Scheme
The Manhattan Federal Court, no not Madison Square Garden, will be up against 18 former National Basketball Association (“NBA”) players, an NBA assistant coach, and a player’s wife (19 defendants total and collectively, “Defendants”). The Federal Bureau of Investigations (“FBI”) arrested at least 16 of the defendants thus far for an alleged scheme that started in or around November of 2017 and lasted until sometime in 2020.
Terrence Williams, Alan Anderson, Anthony Allen (and his wife), Shannon Brown, William Bynum, Ronald Glen “Big Baby” Davis, Christopher Douglas-Roberts, Melvin Ely, Jamario Moon, Darius Miles, Milton Palacio (current Trailblazers assistant coach), Ruben Patterson, Eddie Robinson, Gregory Smith, Sebastian Telfair, Charles Watson Jr., Antoine Wright and Anthony Wroten.
The indictment contends the Defendants pocketed approximately $2.5 million in the scheme by teaming up to defraud the NBA’s health and welfare benefit plan. Authorities cite fictitious medical and dental expenses as the source for the illegally obtained funds. Allegedly, the Defendants submitted fraudulent claims to thereafter be reimbursed for the medical and dental procedures that never happened. The NBA’s benefit plan received approximately $3.9M in false claims — the Defendants subsequently received approximately $2.5 M in fraudulent proceeds. Each defendant made false claims for reimbursement ranging from approximately $65,000 all the way up to $420,000.
Although shocking, the crackdown is a part of a larger FBI effort to put an end to fraud in the health care industry that has lost approximately $10B to such fraudulent schemes. Further, this is the second scheme in professional sports in recent history. Former National Football League (“NFL”) players plead guilty to a similar scheme through the NFL’s benefit plan.
The NBA league office is cooperating with the U.S. Attorney’s office to help mitigate its own losses and is ‘disheartened’ by the scheme, saying:
“The benefit plans provided by the NBA and the National Basketball Players Association to our players are critically important to support their health and well-being throughout their playing careers and over the course of their lives, which makes these allegations particularly disheartening.”
The prosecution is charging the Defendants with (i) conspiracy to commit health care fraud and (ii) wire fraud. The Defendants are facing a potential penalty of up to 20-years in prison. Further, one former NBA player defendant, Terrance Williams (“Williams”), is additionally being charged with (iii) aggravated identity theft, which carries a potential and additional two-year prison sentence.
Although the authorities have not spoken to the Defendants’ motivation or financial situations, we can analyze each of the presented charges and thereafter alleged evidence and outlook.
(I) Conspiracy to Commit Health Care Fraud
(a) Two or more persons have an agreement to do something that’s a federal crime (although it does not need be explicit);
(b) An over act (although it need not be illegal); and
(c) Does not need to be successful.
(II) Wire Fraud
(a) Having devised or intending to devise a scheme to defraud (or to perform specified fraudulent acts); and
(b) Require the use of an interstate telephone call or electronic communication made in furtherance of the scheme.
(III) Aggravated Identity Theft
(a) a person knowingly transfers, possesses, or uses without permission, identification of another person; and
(b) then uses that identification during and/or in relation to the act of a particular felony violation.
Although this is by no means is all encompassing, here is a summary of the evidence weighing against the NBA players:
Allegedly, the conspiracy leader is Williams, and in November of 2017, he submitted a $19,000 fraudulent claim to the NBA benefits plan, subsequently receiving a payout of $7,000. Thereafter, Williams recruited other former NBA players to defraud the benefit plan and offered to provide them with fraudulent invoices from chiropractors and a dentist in Southern California and a wellness office in Washington.
Additionally, once Williams involved other players, Williams attempted to intimidate a co-defendant into paying a kickback by impersonating an employee from the NBA benefit plan administration, claiming there was an issue with an invoice that required the co-defendant to pay money back. This is why Williams is additionally being charged with aggravated identity theft.
Furthermore, Williams allegedly provided other defendants with fake treatment invoices and medical necessity forms. The treatment invoices were a template consisting of the date, invoice number, services, and a charge of $15,000 filled in. However, the “Bill” to box was left blank for Defendants to fill their names in. Both the invoices and medical necessity forms alarmed the NBA benefit plan administration because they were not on a letterhead, contained unusual formatting, and had grammatical errors. To make matters worse, the paperwork was sent to the NBA benefit plan on the same dates, but from different offices.
Prosecutors also have travel records, email, and GPS records proving players were at times nowhere near the medical and dentist offices at the times they were allegedly being treated. For instance, in 2018, a defendant was playing basketball overseas when he was allegedly receiving $48,000 worth of root canals and crowns on eight teeth in Beverly Hills, California.
The prosecution is seeking all real or personal property that is connected to the fraud as restitution. If such cannot be provided, the government is going to seek forfeiture of any other property the Defendants have of value.
Lesson here, money is never free, especially the government’s. With the evidence seen thus far, the Defendants will likely be charged. Many, if not all, will attempt to take plea deals prior to this getting too far.
Seeing former professional athletes in this much trouble is never fun. It is painful to see athletes who once were playing at the peak of their profession stoop to theft. The Defendants have collectively derived approximately $350M in their careers, yet one of the defendants, Sebastian Telfair — who once was proclaimed to be the next NBA superstar — qualifies for a public defender. I am not here to speculate as to what athletes do what their money or count their paychecks and wonder where their money has gone. However, I am here to say this is going to get much uglier before it gets better.
Tony Allen, a former NBA champion, whose jersey was going to be retired this season by the Memphis Grizzlies, is now going to be in federal court — along with his wife, who is also a defendant.
The Portland Trailblazers have placed defendant and assistant coach Milt Palacio on administrative leave due his involvement in the scheme.
Glen “Big Baby” Davis, a former NBA Champion and Boston Celtics favorite, is a defendant.
Darius Miles, former number one draft-pick and host of one of my personal favorite podcasts, “The Knuckleheads,” is a defendant.
The list goes on.
These retired NBA athletes are returning to the wrong court.
3rd year law student and Co-President of the Buffalo Sports ands Entertainment Law Society. I enjoy writing and learning more about the intersection of business, sports, entertainment and law.