FBI used spy gadget to hunt man in $132M fraud
Detroit — FBl agents got approval to use a terrorism-fighting tool to hunt for a businessman charged with orchestrating a $132 million health-care fraud scheme, sealed federal court records show.
The records, exclusively obtained by The Detroit News, provide a broader picture of one of the largest health-care fraud investigations in Metro Detroit history. Attorney General Jeff Sessions highlighted the case July 13 while trumpeting a nationwide crackdown on Medicare fraud.
Hundreds of pages of search warrant affidavits also further illustrate the creeping use of a terrorism-fighting tool to solve a variety of crimes, including immigration offenses. In recent months, federal agents in Detroit have used the counter-terrorism tool, a cell-site simulator, to find an undocumented immigrant and catch a man accused of a low-level gun crime.
On July 10, a federal magistrate judge approved an FBI request to use the device to find jet-setting businessman Mashiyat Rashid, 37, of West Bloomfield Township. That’s the same day a surveillance team watched the venture capitalist withdraw $500,000 from an area bank and stuff the money in a duffel bag, according to the court records.
The court-authorized search warrant let FBI agents use the cell-site simulator, known as a Hailstorm or Stingray, which masquerades as a cell tower. The device, originally designed for military and intelligence agencies, tricks nearby phones into providing location data and can interrupt cellular service of all devices within the targeted location.
“This demonstrates how (the device) really has become a run-of-the-mill law enforcement tool in a whole range of investigations,” said Nathan Wessler, a staff attorney with the American Civil Liberties Union’s Speech, Privacy and Technology Project. “We shouldn’t assume or take any comfort in the assumption that these are being reserved just for violent crimes and national-security investigations.”
Rashid’s lawyer declined comment.
As the FBI received court approval to pinpoint the location of Rashid’s cellphone, agents also were allowed to search 18 email accounts, phones and locations in Ohio and Michigan, the court records show. Agents searched Rashid’s home in West Bloomfield Township — he was arrested at gunpoint while wearing pajamas — and Detroit’s iconic Fisher Building, which houses several Rashid businesses.
The search warrant affidavits, outlining probable cause to search the locations, were briefly unsealed Monday in federal court. The News obtained the affidavits before a judge resealed the documents.
Lists of items that were seized during the searches are sealed in federal court. Rashid’s former lawyer claimed investigators seized all of the businessman’s money during the raids, leaving the businessman unable to bankroll a defense.
Using the device was legal and authorized by a judge to find a wanted man who investigators feared would try to flee justice, the U.S. Attorney’s Office said in a statement Wednesday.
Use of the surveillance tool raises broad civil liberty concerns, said Dawud Walid, executive director of the Michigan chapter of the Council on American-Islamic Relations.
“Our organization has long had concerns about surveillance tactics being used by the FBI and the intrusive nature in which they have been deployed,” Walid said Wednesday. “There have been concerns from some Muslim professionals that people in the Muslim community may be getting initially on the FBI’s radar, not due to any potential crimes they’ve been involved in, but because the agency is surveilling Muslims in general.”
Before the raids, Rashid had a multimillion dollar fortune. The Muslim businessman, who moved to the United States from Bangladesh and is a U.S. citizen, was building a $7 million mansion in Franklin, leased a private jet for a golf vacation up north, spent hundreds of thousands of dollars on courtside NBA tickets, drove a Rolls-Royce and stuffed secret storage units with cash, according to federal court records and prosecutors.
The money came from a nearly decade-long scheme, federal prosecutors say.
In all, Rashid transferred $10 million into his personal bank accounts and made $6.6 million worth of investments, the government alleged.
Prosecutors say the conspiracy 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.
The indictment against Rashid and six others was unsealed July 12, two days after FBI agents received permission to use the cell-site simulator. He is being held without bond and is considered by prosecutors a flight risk with overseas ties and access to vast sums of money.
Since his arrest, the government has frozen Rashid’s bank accounts, defense lawyer Walter Pisczatowski wrote in a request for bond Wednesday.
The lawyer also challenged information from a government source that Rashid had money hidden in storage units.
“Admittedly, Rashid has a storage locker in Commerce Township,” Pisczatowski wrote. “In it is a 2006 Range Rover.”
The lawyer wants Rashid released on bond with several possible conditions, including house arrest and a GPS tether.
Rashid is not a flight risk and has no incentive to flee if released on bond, the lawyer wrote. Rashid needs to be out of jail to help care for a special needs son, the lawyer added.
Rashid faces up to life in federal prison if convicted of crimes including health-care fraud conspiracy, money laundering and receiving kickbacks.
Investigators are armed with a variety of evidence, including recorded conversations, text messages, medical records and bills, surveillance photos and pictures from Rashid’s Facebook page, according to one court filing.
Agents also have evidence from cooperating witnesses and others, including Commerce Township resident Glenn Saperstein, a pain management doctor who the FBI says participated in the health-care fraud conspiracy.
Saperstein’s involvement in the conspiracy is revealed in the search warrant documents obtained by The News.
Saperstein, 53, secretly reached a plea deal with prosecutors on an unknown date, admitting he participated in a health-care fraud conspiracy involving Rashid and others, according to the search warrant affidavits.
As part of his plea deal, Saperstein outlined the conspiracy, FBI Special Agent Stephen Osterling wrote in one search warrant affidavit.
While working at Rashid’s company, Tri-County Physician Group, Rashid ordered doctors, including Saperstein, to prescribe medically unnecessary drugs to Medicare patients, “many of whom were addicted to narcotics,” the FBI agent wrote.
Saperstein also admitted billing Medicare for injections that were not necessary, documented or performed, Osterling wrote.
The doctor also recorded conversations with Rashid, according to the FBI.
In one recording, Rashid said the back injections were the “meat of our business,” according to one search warrant affidavit.
“Rashid also discusses the specific codes that should be used to ensure that Medicare is billed $1,000 for each patient visit, a strategy that does not depend on the specific medical condition of the beneficiary,” the FBI agent wrote.
From 2011 to 2016, Rashid’s business billed Medicare for $42 million worth of back injections and was paid $14 million — tops among all medical practices nationwide, the FBI alleges.
In all, the Medicare scheme cheated Medicare out of almost $132 million, federal prosecutors say.