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Pharmacy Owner and Accountant Indicted Again in $150M Scam

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Department of Justice
Southern District of Texas 

Tuesday, August 2, 2022

HOUSTON – Two Houston area men face new charges in nationwide pharmacy health care fraud scheme that that targeted elderly citizens, announced U.S. Attorney Jennifer B. Lowery. 

Mohamed Mokbel, 57, and Fathy Elsafty, 63, both of Houston, are expected to make their initial appearances before U.S. Magistrate Judge Yvonne Ho today at 2 p.m.

The 18-count superseding indictment, returned July 20, alleges that from 2013 to January 2022, Mokbel and ElSafty conspired to commit a $150 million mail fraud and health care fraud scheme and engaged in money laundering with the fraud proceeds. Mokbel is also alleged to have continued the fraud scheme at MK Pharmacy, a Houston area pharmacy, from April 2021 through January 2022. During this time, he had been permitted release on bond after the return of the original indictment in March 2021.

Mokbel was the CEO of 4M Pharmaceuticals Inc., according to the charges. With ElSafty’s assistance, he allegedly acquired and controlled over a dozen pharmacies that operated in Houston and elsewhere. The indictment alleges Elsafty served as 4M’s accountant and tax preparer and had ownership interests in several pharmacies located in California, Texas and Florida. ElSafty allegedly aided Mokbel by falsifying corporate filings and concealing Mokbel’s involvement in the pharmacies. 

The fraud was pervasive and carried out using a sophisticated mass marketing scheme targeting individuals over the age of 55 using telemarketing and mail, according to the charges. Mokbel is alleged to have purchased patient data and directed 4M Pharmaceuticals’ employees to submit test claims to patient insurance plans to determine insurance coverage. 

4M then allegedly sent prescription fax requests to doctors’ offices on behalf of the patients without their knowledge or consent. In some cases, 4M requested prescriptions for patients who had been dead for months, if not years, according to the allegations.  

Company employees then allegedly called patients to report their doctor had approved prescriptions for them and that they would receive the medications at no cost. However, Medicare and other insurance plans often required a copay which 4M did not collect, according to the charges. When audited, 4M allegedly falsified proof of the copay collection. 

Mokbel and ElSafty are charged with one count of a conspiracy to commit mail and health care fraud, two counts of health care fraud and 15 counts of money laundering. 

If convicted of the conspiracy, they face up to 20 years in prison, while the health care violations carry a 10-year-term. Money laundering also carries a potential 10-year sentence. The use of telemarketing to target people over 55 as a means to commit mail fraud and health care fraud carries an additional penalty of 10 years. Fines could also be assessed in the amounts of $250,000 or not more than twice the amount of the criminally derived property involved in the transaction. 

Department of Health and Human Services - Office of Inspector General, Food and Drug Administration - Office of Criminal Investigations, Homeland Security Investigations, FBI, Texas Attorney General’s Medicaid Fraud Control Unit, IRS - Criminal Investigation, Ohio Medicaid Fraud Control Unit, Texas State Board of Pharmacy, U.S. Postal Inspection Service and California Department of Health Care Services, conducted the joint investigation.  

Special Assistant U.S. Attorney Abdul Farukhi and Assistant U.S. Attorney Zahra Fenelon are prosecuting the case. Assistant U.S. Attorney Kristine Rollinson is assisting with asset forfeiture.

An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless convicted through due process of law.

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USAO - Texas, Southern 

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