Former Cherry Hill Man Admits Role In $5M Fraud Scheme, Feds Say

CHERRY HILL, NJ — A former Cherry Hill man has admitted to his role in a scheme to defraud 77 people out of more than $5 million in connection with the sale of medical-related business opportunities, Acting U.S. Attorney Rachael A. Honig announced on Thursday.

David Weinstein, 62, now of Dallas, Texas, pleaded guilty to an information charging him with one count of conspiracy to commit wire fraud and one count of engaging in a monetary transaction with criminally derived funds, according to authorities.

Weinstein, 61-year-old Kevin Brown of Burlington, NJ, and 45-year-old Vijay Vanam Reddy of Milan, Michigan, were all arrested on the same charges in December. Read more here: Cherry Hill Man Helped Dupe 43 People Out Of $3 Million: FBI

Reddy pleaded guilty to his role in the scheme last week, according to officials. Weinstein’s sentencing is scheduled for Oct. 25.

The three men advertised business opportunities for sale on various websites from September 2015 through August 2018, according to documents filed in the case and statements made in court.

They sold blocks of contracts of medical providers who wanted to outsource their medical billing, collections, appeals, answering, credentialing, or transcription functions, according to authorities.

The buyers would then provide the contracted services to the medical providers and earn a profit. The conspirators promised to deliver a specified number of providers and pledged that their proprietary marketing efforts would provide a guaranteed client base to the buyers, according to authorities.

They created fake references who were portrayed as buyers who vouched for prior business that was done, authorities said. Weinstein's and Reddy's family members actually posed as the buyers, and they used aliases when giving referrals, authorities said.

After buying the blocks, purchasers entered into contracts with businesses represented by Weinstein and Ruddy, according to authorities.

They then wired payments of between $15,000 and $25,000 to Weinstein and Brown, according to authorities. The rest of the money for each purchase was payable when services were rendered, according to authorities.

However, after receiving the down payments, Weinstein and Reddy only delivered a small number of medical providers to each purchaser, according to authorities.

Even though they didn't fulfill the services promised to any of the purchasers, they continued to sell blocks to new buyers, and they never refunded payments for incomplete services, authorities said.

They also sold batches of previously signed contracts, and disclaimed further responsibility for those contracts to insulate themselves from complaints or legal action from disgruntled buyers, authorities said.

Brown acted as the business broker for most of the transactions and received a commission for the sales he brokered, according to authorities. Weinstein and Reddy acted as the sellers and signed the contracts with the purchasers, authorities said.

Authorities said the conspirators spent the money on personal expenses and transferred money to other bank accounts controlled by them or their family members.

The wire fraud conspiracy count is punishable by a maximum of 20 years in prison, and the money laundering count is punishable by a maximum of 10 years in prison. Both counts are punishable by a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater. As part of his plea agreement, Weinstein agreed to make restitution in excess of $5 million.