By PAUL ANDERSON
City News Service
An Orange County workers' compensation insurance kickback scheme that was allegedly orchestrated by a major supporter of President Barack Obama and led to the death of a 5-month-old boy caused losses of at least $106 million, it was disclosed today during a hearing in the case.
Orange County Superior Court Judge Thomas Goethals lifted a freeze on the assets of the 15 doctors, pharmacists and other medical professionals indicted in the kickback scheme, but he ordered all but one defendant to post $1 million bonds that would be set aside for restitution if they are convicted.
Kareem Ahmed, the alleged mastermind of the scheme, was ordered to post a $5 million bond in addition to the $5 million he has already posted for bail.
If he is convicted, the bail money would go to the restitution fund, and his four homes and his business, Landmark Medical Management, would also be used to amplify the restitution fund.
Goethals ordered assessments of the property and said he was aiming to create a $40 million fund.
Grand jurors were told that Landmark was due about $214 million, with $106 million so far linked to the alleged fraud scheme, it was revealed during today's hearing.
The indictments unsealed last week allege that Ahmed -- who donated $1.2 million to Obama's re-election campaign, according to one of the attorneys involved in the case -- orchestrated a scheme to concoct a pain-relief cream and provide kickbacks to physicians and chiropractors to dispense it while also defrauding insurance companies with workers' compensation claims.
Priscilla Lujan, a patient who was given the cream, filed a lawsuit in Los Angeles County a year ago against one of the defendants, Dr. Andrew Jarminski. She alleged the cream came without standard warnings, which led her to expose the ointment to her infant son, who died after ingesting it while she used her fingers as a pacifier, according to Lujan's attorney, Shawn McCann.
Los Angeles prosecutors declined to file a case against Lujan, McCann said, but the baby's death in February 2012 led to an involuntary manslaughter charge against Ahmed, Jarminski and pharmacist Michael Rudolph.
Ahmed's attorney, Richard Moss, called the manslaughter allegation "outrageous," and denied all the other claims in the indictment.
"There's no basis in law to support any criminal liability this case," Moss told City News Service.
Attorney Mark Werksman, who represents Dr. Arsalan Pourteymour, said the prosecution's allegations have been "spun out of thin air." Pourteymour had "nothing to do with billing," and just prescribed the cream, Werksman said.
Deputy District Attorney Shaddi Kamiabipour referred questions to Farrah Emami, a spokeswoman for the Orange County District Attorney's Office, who said she is legally prohibited from commenting on the case until the grand jury transcripts are made public.
McCann told City News Service that had his client known the dangers the cream posed for her son, she would have taken care to not expose the baby to it.
"It didn't have a proper label with instructions or any warnings," McCann said. "They didn't even take the time to write her name on the product. It says to be applied under supervision or the direction of a physician, but instead she was told it was like Icy Hot -- just apply it wherever it hurts -- and she was sent on her way."
Lujan "had no idea how strong and potent this medication was," McCann said. "Had she been warned or given proper instructions, she would have maybe not applied it while caring for her baby or she would have washed her hands thoroughly ... She certainly wouldn't have allowed her son to suck on her fingers with prescription medication on there."
The indictment alleges that Ahmed and three other defendants formulated the cream in 2009 and that Ahmed then had employees recruit doctors who treated workers' compensation patients to prescribe the medication. Rudolph, the owner of Tustin Community Pharmacy, manufactured the medication that was dispensed, according to the indictment.
Between mid-June and the end of 2012, Ahmed paid physicians millions to dispense the creams created by pharmacists with whom he contracted, the indictment alleges. Jarminski is accused of receiving about $1.9 million and Rudolph $1 million in kickbacks.
Rudolph's attorney, Michael Nasatir, argued this morning that putting his client's business under a court-appointed receiver would damage the pharmacy.
"Why should a receiver be appointed?" Nasatir said. "Do you know how money they waste?"
Several attorneys said their clients, such as chiropractor David Evans, did not have $1 million in assets. For those defendants, Goethals said he would fashion some sort of alternative posting of assets to be used for restitution if there are convictions.
The judge said it was important to keep the businesses of the physicians and chiropractors in operation so they can continue to bolster any restitution that may come due. Some of the attorneys said they had payroll due Friday and could not pay employees with the freeze in place.