15 indicted in alleged Orange County workers comp fraud scheme

The Orange County Grand Jury has indicted 15 people — including a major donor to President Barack Obama's re-election campaign, 10 doctors and a pharmacist — for their alleged involvement in a multi-million dollar workers compensation fraud scheme. The alleged ringleader and two others also face one charge of involuntary manslaughter.

The sealed indictment — obtained by KPCC — accuses Obama donor Kareem Ahmed of orchestrating the elaborate operation. According to the filing:

• Ahmed allegedly hired pharmacists to produce three "compounded transdermal cream."
• Ahmed then paid kickbacks to a number of physicians and chiropractors to prescribe the creams to their workers' compensation patients.
• Ahmed then allegedly conspired with the doctors to submit fraudulent workers' compensation claims. 

Ahmed paid physicians a total of more than $25 million to dispense the compound creams between June 15, 2010, and Dec. 31, 2012, according to the indictment. The amounts individual doctors received between 2010 and 2013 ranged from $600,000 to more than $2.5 million, it alleged.

Among those Ahmed paid were Daniel Capen, M.D. (more than $2.5 million); Andrew Jarminski, M.D. (more than $1.9 million); pharmacist Michael Rudolph (more than $1 million); and Rahil Kahn, M.D. (more than $1 million), according to the indictment.

KPCC tried to reach Capen, Jarminski, Rudolph and Kahn for comment, but they were unavailable.

Ahmed gave the "'kickback' scheme the appearance of legitimacy by requiring the physicians and the pharmacists to sign a contract for purchase of future accounts receivables," the indictment said.

One of the 44 counts in the indictment charged Ahmed, Rudolph and Jarminski of involuntary manslaughter. It alleged that on or about Feb. 3, 2012, the three "did unlawfully and without malice kill Andrew G. (a minor) ... in the commission of a lawful act which might produce death, in an unlawful manner and without due caution and circumspection." The indictment gave no other details.

Ahmed is president and CEO of Landmark Medical Management, an Ontario firm. In response to a request for comment, his assistant Ladonna Hieber emailed a statement: "Kareem Ahmed and his staff are innocent of all charges that have been alleged.  The charges are meritless and we expect full exoneration of any wrongdoing."

A spokeswoman at the Orange County DA's office said she cannot comment on the indictment, since it is sealed.

An October 2012 article by Talking Points Memo first raised questions about his business practices. The Orange County DA's office raided Landmark Medical's offices last October. 

Ahmed was a top donor to Democratic efforts in 2012. He gave more than $1 million, with most of it going to the pro-Obama super PAC Priorities USA Action, according to data compiled by the Center for Responsive Politics.