Fraud hatched by Kenyan nurse, refined by his wife

Kenyan nurse caught in Sh12 billion US fraud scheme took over criminal empire from husband.

Two Kenyan nurses who defrauded the US government of $100 million (Sh12 billion) through healthcare fraud would have steered clear of trouble had they not continued with a scheme hatched by the husband of one of them, who was apprehended six years ago.

Ms Winnie Waruru, 42, of Lowell, Massachusetts, last week pleaded guilty to charges of conspiracy to commit healthcare fraud, conspiracy to pay and receive kickbacks, two counts of making false statements and one count of making a false statement in a healthcare matter.

“The charges of healthcare fraud, conspiracy to commit healthcare fraud, money laundering conspiracy and money laundering each provide for a sentence of up to 10 years in prison, three years of supervised release and a fine of up to $250,000 or twice the amount of money involved in the laundering,” said the US Department of Justice after the nurse pleaded guilty.

“The conspiracy to pay kickbacks, make false statements and make a false statement in a healthcare matter each provides for a sentence of up to five years in prison, three years of supervised release and a fine of up to $250,000,” the department further said.

Her co-defendant, Ms Faith Newton, 52 who is also a Kenyan and a former boss of Ms Waruru’s, denied the charges and is set to undergo full trial, with a possibility of getting a 20-year prison sentence in case she is found guilty.

All would have been well had Newton not taken over a similar scheme masterminded by her husband, Mr Francis Nderitu Kimaru, which saw the US government lose $43 million (Sh4.1 billion) back in 2016.

Faith Newton fraudulently made $100 million (Sh12 billion) using a network of recruiters, mules and money launderers using Arbor Homecare Services LLC, a company she formed in February 2013 and which she ran until last year when she was arrested./Pool

Fake claims

Mr Kimaru, who was the owner of Compassionate Homecare Inc, which had branches in Worcester, West Springfield and Lawrence, was arrested on October 1, 2016, after investigators found out that the company had been filing fake claims under the US Medicaid programme.

Started in 1965, the programme, which currently covers 81 million people, was designed to provide health coverage to children from low-income families, elderly people aged above 65, pregnant women and people with disabilities.

The programme, which is funded by both the federal and state governments, is administered indirectly through licensed medical providers.

The providers enrol eligible members of the population who fit the criteria set by the various states and then bill the government for services offered after certification by a licensed physician.

Over the years, however, the programme, which offers a health safety net to low-class Americans at a cost of US$671 billion (Sh68 trillion), has become prone to fraudsters, who siphon billions of dollars through fraudulent claims.

One of these fraudsters was Mr Kimaru, who was 41 by the time he was arrested in 2016. The flamboyant Mr Kimaru had a fleet of luxury cars and homes spread all over Massachusetts.

It is not known when Kimaru arrived in the US, or how he met his wife Faith, but they were both registered nurses before they started their own medical facility.

Documents filed in a Massachusetts court in defence of Mr Kimaru however show that he is “a Kenyan orphan who became a US citizen after years of hard work in the United States”.

Documents accessed by the Nation’s Investigation Desk show that Compassionate Homecare was registered as a Limited Liability Company on March 16, 2010.

The company, Registration Number 001024182, operated from Suite 202 on the second floor of the 51 Union Street building in Worcester, Massachusetts.

Both Ms Faith and Mr Kimaru are registered as the managers of the company, with Mr Kimaru as the bank signatory.

All was going well for the organisation until the Federal Bureau of Investigations (FBI) was called in after the State of Massachusetts noticed a sharp spike in the costs incurred by the Medicaid programme. That was in 2013, just three years after Compassionate Homecare was formed.

The nine-bedroom palatial mansion bought by Faith Newton from the proceeds of her US medical insurance scam operation./Pool

According to an audit carried out before the FBI was called in, the State of Massachusetts had recorded an 82 per cent jump in programme costs, which saw it spend an unexplained Sh91 billion.

The state immediately stopped accepting applications from prospective medical providers, as investigations began on the listed providers.

“More than 80 per cent of the spending growth since 2013 has been driven by 62 companies that started doing business with the state during that time,” said the State of Massachusetts at the beginning of the probe.

Things went haywire for Compassionate Homecare when one of the doctors licensed by the State of Massachusetts complained that the company was seeking authorisation to provide services, through “phony” referral forms, for patients who did not need home health services.

Three-year probe

Investigators spent the next three years going through paperwork at the company and, in October 2016, were satisfied that they had a case – not just on Compassionate Homecare – but 11 other Medicaid providers as well.

The investigators discovered that Compassionate Homecare had made millions of dollars by recruiting patients who did not need any health-related services. The firm would, nevertheless, bill the State of Massachusetts for ‘treatment’ offered to these ‘patients’.

“The company routinely and knowingly billed the state for services that had not been authorised by a doctor and, in several instances, altered records to make it look like patients denied care by doctors had been approved,” said investigators.

“Additionally, the company billed the state for care it never provided to people who were already at inpatient facilities while, in some cases, forged doctors’ signatures after the physicians refused to authorise services,” they said.

In his defence, Mr Kimaru, through lawyer James Boumil Jr, claimed investigators refused to detail the allegations against him, prompting Compassionate Homecare to sue the State of Massachusetts, terming the allegations “utterly preposterous”.

He said the company had billed out more than $90 million (Sh10 billion) since its inception, making the alleged $1 million claimed as fraudulent only seven per cent of its total earnings.

“If you’re running a company on the basis of massive fraud, who would expect that?” asked the lawyer, adding that his client was a Kenyan orphan who became a US citizen after years of hard work in the US.

“He loves his country, he loves his company,” Mr Boumil said. “He would be the last person in the world to commit a crime.”

The Department of Justice would, however, hear none of that. Mr Kimaru was immediately placed under arrest on the orders of State of Massachusetts Attorney General Maura Healey, who said it was unfortunate that the company stole money that was meant to provide healthcare for the poor.

Also arrested was the company’s chief operating officer, Wilberto Rodriguez (31) and an administrator, Deborah Giordano, 57. The three were each individually charged with three counts of medical assistance fraud and larceny.

“Compassionate Homecare either knew that it was submitting false claims for payment to Mass Health or recklessly disregarded its obligation to familiarise itself with the legal requirements, standards and procedures of the Medicaid programme,” the prosecution told the court.

“Based on its unlawful billing, Compassionate Homecare received overpayments from Mass Health of at least $34 million (Sh4.1billion),” said prosecutors.

Cornered, the three suspects, who had initially pleaded not guilty, offered to enter into a plea agreement with the US government in 2019. The plea agreement, which took another three years to be ratified due to complications created by Compassionate Homecare filing for bankruptcy in 2020, came into effect on March 29 this year.

In the agreement, Mr Kimaru and his company agreed to pay back to the American government $6.53 million (Sh787 million) in exchange for a two-year suspended sentence. He also agreed to pay $85,000 (Sh10.2 million) to his former 79 employees, who had been rendered jobless after the discovery of the fraud.

“As recommended by Assistant Attorney General Kaushal V. Rana and Mr Kimaru’s lawyer, S. James Boumil Jr, the judge suspended the jail sentence for two years, during which time Mr Kimaru will be on administrative probation,” said the US Department of Justice, following the agreement between the prosecution and the key suspect, Mr Kimaru.

“Home health aides provide critical services to vulnerable populations, and they, like all workers, must be paid their earned wages in full and in accordance with our laws,” added the department in reference to Mr Kimaru’s workers.

On paper, it looked like a win for the US government. Authorities had managed to recover money stolen by one of the companies entrusted to provide medical assistance to the vulnerable in society.

However, unknown to them, Faith Newton, Kimaru’s wife and one of the directors of Compassionate Homecare but who was never arrested as there was no direct link to her involvement in the fraud orchestrated by the company, was also involved in a similar but larger scam of her own.

By the time they realised this, years later, Ms Newton had stolen three times the $34 million her husband had stolen and laundered it through a network of Kenyans in the US who used the money to buy luxury cars and houses, including a $3.2 million (Sh386 million) nine-bedroom house.

Part Two: How Kimaru’s wife grew a bigger criminal empire than her husband’s after his arrest using the skills she learnt from him. Plus, the names of all her Kenyan accomplices and the properties they bought across America using money stolen from poor patients. And how this empire fell apart.

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