Gwinnett man defrauded $500 million in bogus lab tests, U.S. alleges

Khalid Satary (left) and his son, Jordan, in an undated photo from Facebook. Khalid, 47, faces numerous charges of related to allegations of Medicare fraud in genetic testing.

Khalid Satary (left) and his son, Jordan, in an undated photo from Facebook. Khalid, 47, faces numerous charges of related to allegations of Medicare fraud in genetic testing.

A Gwinnett County businessman and convicted felon is at the center of a sweeping federal crackdown on a genetic testing wave that prosecutors say has cost taxpayers more than $1 billion in illegal Medicare reimbursements.

The charges leveled against Khalid Satary, a Palestinian national, could send him to prison for decades. But perhaps the real question is how Satary, who has been under near-constant federal scrutiny for the past five years and was supposed to have been deported more than a decade ago, managed to evade arrest long enough to bill hundreds of millions in allegedly fraudulent tests to Medicare patients.

Satary, a shadowy entrepreneur connected with diagnostic laboratories in Georgia, Florida, Oklahoma and Louisiana, was among 35 people swept up last month in “Operation Double Helix,” a joint action by the Justice Department, the FBI and the Department of Health and Human Services Inspector General’s Office. Federal authorities claim Satary and the other defendants swindled taxpayers out of $1.2 billion in fraudulent Medicare reimbursements.

Satary used middlemen to recruit Medicare patients at county health fairs and senior homes to take DNA diagnostic tests to determine their risk for certain cancers, regardless of whether they needed them, prosecutors say. The tests are expensive — up to $18,000 per patient. And despite the marketing promises, they usually are not covered by government insurance.

If the patient agreed, they would receive a testing kit to collect DNA samples. Satary is alleged by prosecutors to have solicited telemedicine companies to have their physicians authorize the tests “irrespective of whether these telemedicine providers actually spoke with or evaluated” the patients.

Satary used falsified documents from the cooperative telemedicine doctors to bill Medicare more than $500 million in a 20-month period beginning January 2018, prosecutors claim. From that, he collected more than $134 million in reimbursements, funneled through diagnostic labs in Louisiana, Oklahoma, Florida and his home base in Lawrenceville.

Satary, 47, surrendered to authorities on Sept. 30 and posted a $500,000 cash bond to gain his release.

Vic Hartman, a former FBI agent who worked medical fraud cases in Houston and Atlanta, said the Medicare scam is similar to many others he worked. The Centers for Medicare and Medicaid Services, which administer the government health care programs, are slow to catch on, he said.

“It’s pay and chase. The government pays, and if there is fraud you chase it,” he said. “It’s a bad model, but that’s where we are with medical billing.”

Hartman said when he was put in charge of a 50-agent medical fraud team in Houston there were so many scams in the marketplace that officials wouldn’t prosecute unless it reached $10 million and implicated a physician. The genetic testing scam is the same as many before it, he said.

“Somebody found a loophole,” he said.

But Satary isn’t just “somebody.”

Then-U.S. Rep. Jack Kingston officiates a ribbon cutting ceremony for Confirmatrix Dec. 6, 2013, hours before attending a fundraiser for his U.S. Senate campaign orchestrated by two companies linked to Khalid Satary, a felon under a U.S. deportation order.

icon to expand image

A checkered past

Satary’s criminal history dates to 2003 when he was nabbed by the FBI as the ringleader in a $50 million music piracy ring.

According to an FBI agent’s affidavit from that investigation, Satary kept large amounts of cash, hired bodyguards and used shell corporations to shield his involvement. An office manager in Satary’s organization told the FBI he regularly transferred money overseas to Jordan, the United Arab Emirates, Egypt and Israel.

Satary was sentenced to more than three years in prison and released in 2008. The federal government attempted to deport him, but no Middle Eastern country would accept him. After his release from prison, Satary regularly reported in with immigration officials while building a medical testing empire from his home base in Gwinnett County that supported a lavish lifestyle.

He owned a $1 million home with a swimming pool in a gated community in Suwanee, drove expensive cars and, in 2013, began courting powerful Georgia politicians.

An Atlanta Journal-Constitution investigation in 2014 put Satary in the center of a fundraising scandal when employees of two of his labs combined to give then-U.S. Rep. Jack Kingston more than $80,000 in his bid to be the Republican nominee for the U.S. Senate. The story triggered an FBI investigation and the Kingston campaign quickly refunded the money.

The donations were suspect, in part because many of the employees were not registered voters and virtually none of them had ever given before. Sources told the AJC they had been given “bonuses” and were encouraged by Satary and his associates to donate all or most of them to the campaign.

FROM LEFT: Khalid Satary, Jordan Satary, then-U.S. Rep. Jack Kingston, and Confirmatrix VP Richard Sasnett at a Dec. 6, 2013, fundraiser for Kingston at the Chateau Elan Winery and Resort in Braselton.

icon to expand image

Kingston attended a fundraiser hosted by Satary at Chateau Elan and also a ribbon cutting for urinalysis lab founded by him called Confirmatrix.

According to a business associate, Satary was hoping to build clout in Washington for expanded drug testing for entitlement programs, which would be a boon for Confirmatrix. "They wanted it where if you wanted to get Medicaid, you have to get a drug test," the associate told the AJC.

Kingston claimed he knew nothing about Satary when he accepted the campaign donations, and he lost in a primary runoff to eventual winner Sen. David Perdue. The FBI dropped the investigation.

Then-U.S. Rep. Jack Kingston officiates a ribbon cutting ceremony for Confirmatrix Dec. 6, 2013, hours before attending a fundraiser for his U.S. Senate campaign orchestrated by two companies linked to Khalid Satary, a felon under a U.S. deportation order.

icon to expand image

In 2016, FBI agents raided Confirmatrix, carting off boxes of paper. Two days later, Confirmatrix filed for bankruptcy.

By that time, Confirmatrix had already been tagged by an industry publication as “the biggest outlier” in Medicare billing among urinalysis labs across the nation, with an average per-patient cost of $2,406, more than three times the national average. However, no charges emerged from the raid and the company was liquidated.

Satary's labs turned up again in 2017 as part of a federal takedown of reputed "pill mills" in east Tennessee that have been linked to hundreds of opioid deaths. According to the indictment in the ongoing case, Confirmatrix paid kickbacks to the pill mill operators to test the urine of their patients and billed the costs to TennCare, the state's Medicaid program.

‘Overwhelming’ evidence, government says

Satary nor any other figures connected with Confirmatrix have been charged in the Tennessee pill mill case, but the scheme is strikingly similar to the one alleged in Operation Double Helix. The allegations in the indictment unsealed last month suggest a pattern of operations that merely ramped up when Satary moved his business from urinalysis to the higher-profit field of genetic testing.

In a motion filed in the case, federal prosecutors claim the evidence is “overwhelming,” but have so far released few specifics.

“The government has executed over a dozen search warrants, including search warrants for each of the three labs, multiple email accounts and cellular phones,” the motion states. “The government has interviewed numerous cooperating witnesses who have admitted their criminal conduct in connection with the scheme with which Satary is currently charged, and who have explained Satary’s role in the scheme.”

In addition, prosecutors say they have interviewed current and former employees of Satary’s labs and have undercover recordings of Satary himself where he explains the scheme and his role in it.

The state claims Satary sent a text message on Oct. 25, 2017, to a co-conspirator regarding Medicare reimbursement to one of his labs, Clio Laboratories in Lawrenceville.

“We got paid for Clio $8000 each,” Satary allegedly wrote.

“How many were (paid). That’s amazing,” the co-conspirator replied.

“5=$41000,” Satary is said to have responded.

Prosecutors say Satary texted the same co-conspirator two months later telling him that he was wiring $23,687 to him “as soon as the bank opens.” The money was a kickback for referring patients to Clio, state officials claim.

An email on Jan. 8, 2018, to another co-conspirator included a contact which promised $1,200 for every “comprehensive” test referred to Clio.

No ‘smoking gun’, says defense

Satary’s lawyers did not return emails seeking comment, but in court documents, they said the state’s claims of evidence amounted to little more than “generalized” claims of wrongdoing.

“If the government had smoking gun evidence against Mr. Satary as it seems to indicate, it would have presumably brought at least some of it to this court’s attention,” his legal team wrote in a motion.

Lead attorney Richard Westling specializes in white collar and health industry regulatory defense, but he is a former federal prosecutor in the New Orleans U.S. Attorney’s office, so he knows the circuit well. Westling also was on the defense team of Paul Manafort, President Trump’s ex-campaign director.

Also on the team is Art Leach, a white collar defense attorney in Alpharetta who describes himself on his website as a “bet the company” defense lawyer. Leach was part of disgraced health care executive Richard Scrushy’s legal defense.

Former U.S. Attorney John Horn said health care fraud can be cumbersome to investigate because it relies so much on the accumulation of data. Even with whistleblowers and patient complaints, such investigations take time.

“It’s a time-consuming process to collect the data from the different sources of billing and usage data,” he said. “For something like the genetic testing, it wouldn’t surprise me that that is a long-term or a more extended investigation.”

Edgar Bueno, a former federal prosecutor, said the complexity of the cases is one factor, but also the “real bad actors” are taking pains to cover their tracks.

“I think it’s a combination of the complexity of the cases and the way they structure their scheme,” he said. Even so, Bueno said Satary’s alleged fraudulent billings should have sent up a number of red flags.

Khalid Satary, a Palestinian national under a deportation order, owned this $2.6 million waterfront home in Delray Beach, Fla., before losing it in bankruptcy.

icon to expand image

Hidden wealth

Since his 2003 piracy conviction, Satary has been essentially a “stateless” person, unable to travel abroad. That hasn’t stopped him from trying, prosecutors allege.

According to court records, attorneys for the state said Satary went to the FBI in 2016, shortly before the Confirmatrix raid, and reported to agents that he had attempted to move himself and his family to the Gulf state of Qatar. Allegedly, Satary had paid millions of dollars to someone abroad to secure a Jordanian passport from the black market but was instead “defrauded by the individual.”

Most of Satary’s business interests are now in the names of his son or associates, although AJC sources and federal prosecutors agree that Khalid Satary remains in “operational control.”

He placed the family home in Suwanee in son Jordan Satary’s name when they purchased the $1.2 million gated estate in 2014. In 2016, Jordan Satary transferred the Suwanee home to an associate for $1, according to Gwinnett County records. The family lost a a $2.6 million waterfront home in Delray Beach, Fla., when one of the Satary holding companies went into bankruptcy there.

For his bond hearing, Satary’s defense team told U.S. District Judge Wendy Vitter there was no reason to believe Satary would or could leave. He has no passport, no driver’s license, and he has not fled despite multiple grand jury subpoenas and knowledge that his business was under investigation.

But Justice Department attorneys argued that no bond amount could ensure he would not abscond. He’s got the wealth to leave and take his entire family, they said in a motion to the court.

Between January 2017 and August 2019, Satary deposited $25 million into a bank account in his wife’s name. “Virtually all of the money is directly traceable to the Medicare fraud scheme,” the motion states.

Another $21 million “has been dissipated” — spent or moved somewhere the government has been unable to locate. In addition, Satary withdrew $1.1 million in cashier’s checks, “the whereabouts of which are unknown.”

“In short, the defendant has access to tens of millions of dollars that could be used to flee the jurisdiction and support a life abroad,” the government stated.

For the time being, however, Satary is back at home, released to the custody of his son, Jordan.

Khalid Satary: Timeline

October 2003: Khalid Satary, known at the time as "DJ Rock," is arrested on a 15-count music piracy indictment. He would eventually be convicted and serve more than three years in prison.

April 2008: Satary is released from prison. He remains under a federal deportation order, but the United States is unable to find a country to accept him.

2009: Satary opens a pain management clinic in Commerce with partners.

2012: Satary opens Confirmatrix, a urinalysis lab, in Lawrenceville. He initially lists himself as CEO, but removes himself from the corporate paperwork the following year.

December 2013: Confirmatrix and sister company Nue Medical host a fundraiser for U.S. Rep. Jack Kingston, then considered the front runner to be GOP nominee for U.S. Senate. Employees for both companies donate more than $80,000 to the Kingston campaign.

June 2014: The Atlanta Journal-Constitution publishes an investigation linking Satary to the Kingston fundraiser.

March 2015: Federal agents shut down a series of pain clinics charged with illegally distributing opiates. Confirmatrix would be implicated as an unindicted co-conspirator in the scheme.

June 2015: Clio Laboratories opens under Jordan Satary's name.

November 2016: Federal agents raid Confirmatrix. The company quickly files for bankruptcy protection. Other labs under Satary's control continue operation.

January 2017: Clio Laboratories enrolls as a Medicare provider. Federal investigators claim the lab and unnamed co-conspirators billed $121 million in false claims from the lab.

October 2018: Satary acquires Performance Laboratories in Oklahoma City. Two months later, Performance enrolls as a Medicare provider. Federal investigators say Performance billed $413 million in false claims.

January 2019: Satary acquires Lazarus Services, a diagnostic lab in New Orleans, and enrolls it as a Medicare provider. At least $13 million in false claims were submitted from this lab, according to prosecutors.

September 2019: Khalid Satary surrenders to authorities in New Orleans as one of 35 defendants swept up in Operation Double Helix, a federal sting targeting allegedly fraudulent Medicare billings.