Case against doctor lined with threats, exotic dancers

Detroit — A doctor accused of orchestrating a $112 million health care fraud is a lying bully who hid millions of dollars in offshore bank accounts while threatening to "break the legs" of one associate and entrapping another with exotic dancers, prosecutors said.

Prosecutors, court records and social-media posts portray Dr. Frank Patino as a conniving crook with lies as big as his biceps, an alligator-wrestling, steroid-buying, frequently shirtless fraudster who spent ill-gotten gains on mixed martial arts fighters and a vanity diet program.

More than $2 million remains missing amid a hunt for money stretching from Metro Detroit to the Cayman Islands.

Patino, 63, of Woodhaven, is a central figure in one of the largest health care fraud schemes in U.S. history who was indicted last month amid a broader nationwide crackdown by federal agents.

"(Patino's) fraud was blatant and it was flagrant," Justice Department trial attorney Jacob Foster said during a recent federal court hearing. "This is about the thousands of patients who were taken advantage of in order for the defendant and others to line their pockets with U.S. taxpayer funds, to put himself on TV, to fund advertisements and to pay MMA fighters so they would hang out with him."

The probe is linked to an investigation involving a $200 million scheme and businessman Mashiyat Rashid, who prosecutors say spent his share of the scheme on a $7 million Franklin mansion, courtside NBA tickets, a Lamborghini, Hermes clothes and rare watches.

During the Rashid investigation, federal agents have seized more than $21 million worth of cash and real estate and want Rashid's mansion forfeited to the government.

Defense lawyer Brian Lennon tried last week to keep Patino out of jail while the case is pending in federal court. He described Patino as an award-winning physician, a humanitarian who distributed holiday hams to the hungry, who is being victimized by a former business partner and the government's misrepresentations.

The case against Patino emerged almost one year after Rashid was indicted.

A team of federal agents from the FBI, Internal Revenue Service and Health and Human Services started investigating Rashid in 2016, according to a search warrant affidavit obtained by The News.

Agents focused on Rashid's network of pain management clinics, labs, diagnostic companies and home health agencies. One firm, Global Quality Inc., was a Medicare and Medicaid provider based in the iconic Hammer and Nail Building on Woodward in Midtown.

Prosecutors say Rashid used Global Quality in a broader conspiracy that involved recruiting homeless people as patients, sending phony bills to Medicare, subjecting drug addicts to unnecessary back injections and prescribing powerful pain medication that ended up being sold on the street.

Rashid failed to disclose his ownership or managing control of Global Quality and other firms. Instead, he hid behind straw-man physicians who lied about owning the companies, according to court records.

Rashid was listed as resident agent of Global Quality on a state business filing in 2011, according to the Michigan Department of Licensing and Regulatory Affairs.

The same filing also lists Patino as company president.

Federal prosecutors say Patino controlled and operated the company.

Global Quality was part of a web of companies Patino used in a scheme that defrauded Medicare by distributing opioids and administering painful and experimental back injections, the government alleges.

"He required vulnerable patients to submit to these injections even if they didn’t need them or didn't want them," Foster said during a recent bond hearing. "But he told them they had to have them if they wanted to obtain pain medication."

The injections and prescriptions were lucrative and frequent, Foster said.

While federal investigators have frozen Patino's bank accounts, millions of dollars remain missing, the prosecutor said.

"There are millions of dollars unaccounted for, including over $2,190,562.84 in cash that has been withdrawn from financial institutions," Foster said.

From 2016 to 2017, Patino wrote prescriptions for more than 2.2 million pills, including fentanyl, oxycodone and oxymorphone. Some of the medically unnecessary drugs ended up being resold on the street, according to the indictment.

During that period, Patino was the state's top prescriber of oxycodone 30 mg, the powerful opioid painkiller, prosecutors said.

There is a simple explanation, Patino's lawyer said.

Patino’s prescription pads were stolen and people who were not his patients received prescriptions by someone using his U.S. Drug Enforcement Administration number, Lennon said.

"This indictment is full of misstatements," he said during a recent court hearing.

Patino and others sought and received illegal kickbacks and bribes in return for referring patients and ordering various tests, including urine drug tests, prosecutors allege.

He hid the kickbacks and bribes by entering into sham contracts or employment relationships, prosecutors allege. Some of the money generated by the conspiracy, including more than $100,000, was spent advertising the "Patino Diet" through sponsorship of boxers, MMA and Ultimate Fighting Championship combatants, prosecutors allege.

Federal court records indicate some of the money flowed to an unidentified hall of fame UFC fighter, who also is a UFC champion.

Patino's stable of sponsored fighters included hall of fame UFC fighter Urijah Faber, according to a 2013 press release. Faber, while a member of the UFC hall of fame, never won a UFC championship.

Faber told The News his team of fighters, Team Alpha Male, was paid $40,000 to promote Patino's diet book.

Federal investigators talked to his manager about the payment, Faber said.

"I had zero relationship with Dr. Patino other than him paying me to promote his diet book for three months," Faber said. "I would be happy to cooperate, but I don't know anything."

There is at least one UFC hall of famer and UFC champion who was sponsored by Patino. That is Mark "The Hammer" Coleman, 53, of Columbus, Ohio.

Coleman, shown in numerous Facebook photos wearing "Patino Diet" shirts and attending a book-signing event with Patino, did not respond to messages seeking comment.

One fighter has been charged during the investigation.

Josh Burns, 40, of Dexter, a former heavyweight mixed martial artist and bare-knuckle brawler, was charged last month with conspiracy to defraud the U.S. in the bribery and kickback scheme involving Patino.

Lennon, meanwhile, blamed others for acts alleged by the government. One unidentified woman, a former business partner, destroyed documents, stole money and sold drugs, Lennon said.

After Patino was arrested June 27, court officials who were considering recommending he be released on bond asked the doctor about international travel. Patino said he'd taken two trips to Mexico and the Caribbean island of St. Barts.

"The defendant lied," Foster said.

Patino has taken 11 international trips since 2000, the prosecutor said, including multiple trips to the Cayman Islands.

"Two independent witnesses told law enforcement that Patino told them that he physically transported cash to the Cayman Islands to place in undetectable bank accounts in case the federal government froze his assets in the United States," Foster said.

There is a reason investigators haven't found the money, Lennon said. That's because Patino was not involved in fraud alleged by prosecutors.

"We deny any type of money laundering or offshore accounts," Lennon said.

Patino is charged with conspiracy to commit health care fraud, health care fraud, conspiracy to defraud the U.S. and pay and receive health care kickbacks and receiving kickbacks. If convicted, he could face up to 40 years in federal prison.

On July 3, prosecutors tried to convince U.S. Magistrate Judge Anthony Patti to jail the doctor pending trial, calling him a flight risk and a serial liar who obstructed the investigation.

Patino lied about the number of companies he was involved in and his annual income, telling investigators he earned $300,000 a year when the real number was $900,000, Foster said.

"This is a man," Foster said, "who thinks he's above the justice system, and he'll manipulate it to prevent a reliable result."

Patino tried to intimidate underlings into signing false affidavits and hired private investigators to shoot compromising photos of a married, former business partner with exotic dancers, the prosecutor said.

Patino denied knowing anything about compromising photos with exotic dancers.

"Hiring private investigators is not illegal," Lennon said.

Prosecutors also said Patino tried to hire someone to "break the legs" of a person who cheated him in a steroid deal.

“(Patino) has bragged to multiple witnesses about hiring individuals to inflict acts of violence on others,” Foster said. “A witness told law enforcement that they had personally been asked to break the legs of a individual who offered to sell illegal steroids to (Patino) on the Internet.”

Patti, the federal magistrate, cited the opioid prescriptions in considering whether to release the doctor from jail while awaiting trial.

"The evidence indicates . . . your willingness to prescribe opioids to people who don’t need them, which is extremely dangerous to society and has been, quite frankly, a scourge on society and is causing addiction and death in our society," Patti said.

He also cited Patino's willingness to lie.

"I won’t go so far as to say it appears pathological, but I will go as far as to say that there seems to be a pattern of a willingness to lie in ways that make it difficult for the court to be able to trust that you’d carry out your bond conditions and that you’d reappear here, especially given the means that you have to flee and the familiarity with other places," Patti said.

Patti refused to release Patino on bond, a move that dismayed a dozen Patino relatives and friends who filled a federal courtroom July 3 in downtown Detroit.

Patino, dressed in a beige Wayne County Jail uniform and wearing handcuffs and leg shackles, sat with his head and shoulders slumped before heading back to jail for what could be a lengthy stay.

Patino's adult son doubled over and sobbed.

rsnell@detnews.com

(313) 222-2486

Twitter: @robertsnellnews