A Department of Veterans Affairs employee used a network of shell companies to steal millions of dollars from a VA program to provide health services to children of veterans who are suffering from a debilitating spinal condition, federal prosecutors say.
The Justice Department lodged 23 federal criminal charges late last year against Joseph Prince, a former Veterans Affairs employee who prosecutors say used his position to steer almost $20 million in taxpayer money to companies run by family members and associates. Those companies then provided huge kickbacks to Prince, his wife, and other family members, the government alleges.
The previously unreported criminal case appears set to go to trial in Colorado in November. Prince has pleaded not guilty. An alleged co-conspirator, Roland Vaughn, initially did the same, but recent federal court filings indicate he is set to change that plea to guilty at a hearing early next month. Neither of their attorneys responded to requests for comment on the case.
Before he was fired late last year, Prince worked at a VA facility in Denver, where he oversaw a program that provides health benefits to the families of Vietnam and Korean War veterans with children who suffer from spina bifida, a debilitating spinal birth defect. Part of Prince’s job entailed counseling those families about the treatment options available to them through the VA. Prosecutors say he exploited that position of trust to steer patients to seven different home health agencies that subsequently kicked back money to Prince and his family.
The scale of the alleged fraud was extraordinary, according to data filed by federal prosecutors in search warrant affidavits. Of the $25.2 million the VA paid to home health agencies through the spina bifida program from June 2017 through June 2018, $18.9 million, or 75 percent, was paid to the seven companies implicated in the indictment against Prince.
Prince’s alleged scheme involved selling VA patients on home health services offered through the department’s spina bifida program. Certain services can be performed by family members and others without medical training provided they register with the VA ahead of time. Those services include basic assistance with daily tasks such as meal preparation and home care, but home providers can also be certified by medical professionals to help with bladder and bowel care often required for spina bifida patients. They can then submit invoices for services provided for reimbursement at a preset hourly rate.
According to the indictment, Prince sold patients on the benefits of doing that home health work themselves and recouping the hourly payments that the VA provided. He even allegedly encouraged them to falsely inflate the number of hours they worked, and falsely told some that there were minimum hourly billing requirements.
Prince then referred the patients to one of seven home health companies, assuring them that the companies could secure them the best reimbursement rates and assist with VA red tape. One of those companies was run by Prince’s wife. Others had reached pre-arranged deals with Prince under which he would steer them VA patients in exchange for referral fees. In many cases, Prince even sent patients prepopulated VA forms with his preferred home health agency.
Prince vouched for the companies’ track records even though, according to prosecutors, none were run by medical professionals. He used terms like “preferred,” “handpicked,” and “vetted,” and promised that the companies would assist with the red tape and would take the smaller fees than their competitors off of VA reimbursement checks.
In fact, the companies were taking huge premiums—paying home health caregivers between $16 and $20 per hour while filing for VA reimbursement at hourly rates between $86 and $141.
When patients found out about that discrepancy, they were livid. After receiving a regular statement of benefits from the VA, one beneficiary referred to a Prince-affiliated agency wrote to Rep. John Moolenaar (R-MI) in April 2018. “Our daughter is in the Spina Bifida Program,” the unnamed parent wrote, according to documents filed in court. “The program has a provision to provide health care for her at home for the rest of her life. We were told that we would be paid for this. We signed a contract with a company that would take care of getting us paid, but they didn’t tell us that they got to keep 82% and pay us 18% for doing all the work. This is highway robbery.”
The scheme was extremely lucrative for both Prince and the home health agencies with which he worked. Prosecutors say his wife’s Advantage Home Health Agency alone received more than $4.3 million in VA payments as part of its work for the spina bifida program. Three agencies owned by Prince’s half-sister received more than $7.1 million.
Together, all seven agencies kicked back roughly $1.5 million to Prince individually, according to the indictment, and hundreds of thousands more to members of his family.
Some of the money went directly into Prince’s bank account, while some was paid to a consulting firm he owns. He used the funds to buy a house and a car, pay down student loans, fund plastic surgery procedures (for whom it’s not clear), and even to donate to his and his wife’s church, according to documents filed by federal prosecutors.
In an emailed statement, the church said Prince “has not been associated with our congregation for quite a while,” but that “we are saddened to learn of these allegations, and our prayers are extended to all who may have been victimized by the crime alleged.”
Prince was arrested last summer after an investigation by the FBI and the VA inspector general's criminal investigations division. The evidence against him appears to be considerable, due in large measure to the official record of his time at the VA. Because he worked in a call center, all of Prince’s phone conversations were recorded. And his emails were preserved as required under the Federal Records Act. Federal prosecutors have amassed an evidentiary record consisting of at least 6,000 printed pages and 1,414 audio files.
“Evidence at trial will include the testimony of numerous witnesses, including VA employees, at least 16 caregivers… as well as the playing of recorded phone calls between Mr. Prince and the beneficiaries, which will be time consuming,” according to prosecutors. Prosecutors have also filed more than 40 federal seizure notices on the bank accounts of those involved in the scam, hoping to get back nearly $3.2 million taken by Prince and his associates.
During questioning after his arrest, Prince denied any wrongdoing, and said “he thought he was providing more benefit to the beneficiaries and caregivers by sending them to companies that were going to pay them more for the same services.”
Privately, his tone was far different. The FBI recruited the owner of one of the implicated home health agencies to conduct a monitored phone call with Prince, during which he admitted receiving kickbacks from the agencies to which he referred patients. “It may not be” legal, Prince admitted.
“All it takes is one person to say something and that’s the end of it for everybody,” he added. But “everything is fine if nobody finds out.”