Kareem Ahmed, Major Obama Donor Accused of Workers Comp Fraud, Assets Unfrozen, But …

See Update No. 2 on Page 2 on a judge un-freezing the assets of Kareem Ahmed and 14 doctors, pharmacists and other medical professionals, but you won't believe the bond and bail amounts that were set. Update No. 1 was on today's hearing.

ORIGINAL POST, JUNE 25, 9:30 A.M.: Did a Santa Ana politician's quest to save California's workers compensation system help lead to the Orange County grand jury indictment of Inland Empire businessman Kareem Ahmed, a major donor to Barack Obama as well as such charities as Lupus LA, Cedars-Sinai Medical Center, St. Jude's Children's Hospital, the California Highway Patrol 11-99 Foundation and the Drug Enforcement Agency Survivors Benefit Fund?

]

Center for Responsive Politics data shows Ahmed gave more than $1 million to the president's reelection campaign in the 2012 cycle, with most of it going to the pro-Obama super PAC Priorities USA Action.

One year before that, then-Assemblyman and Assembly Insurance Committee Chairman Jose Solorio (D-Santa Ana) sponsored a bill to stop workers comp profiteering through “drug compounding,” which involves using multiple medications to create a chemical remedy specifically for one patient. It is labor intensive, costly and, according to Solorio's legislation, devastating to California's already bloated workers comp system.

“Drug compounding–a legal but rarely necessary practice–has exploded as a physician profit-center in workers comp,” Solorio said at the time. “That practice must be stopped.”

Before Governor Jerry Brown signed Solorio's bill into law in October 2011, the legislation withstood heavy lobbying from Ahmed's Ontario-based company, Landmark Medical Management. The firm's former vice president, Bruce Curnick, took credit for gathering opposition to the bill, convincing all Republicans in the State Senate to oppose it so there would not be enough votes for it to advance to the governor and helping hammer out a more industry-palatable version for Brown to sign after the Assembly-Senate negotiations.

Curnick is quite a character. As reported by Talking Points Memo, he received three years probation after pleading guilty to battery and disturbing the peace in a plea agreement stemming from his arrest for trying to have sex with his 17-year-old babysitter in December 1997. The State Bar disbarred Curnick in 2000 for misappropriating about $40,000 of client funds, disregarding the welfare of seven clients, acts of moral turpitude and 15 other violations of professional rules.

Curnick mentioned to Talking Points Memo that Solorio's bill as signed into law was essentially toothless because doctors could get around restrictions by administering the compounds themselves in their offices.

Speaking of offices, it was Ahmed's that were raided in October of last year by the Orange County District Attorney's office, which produced the evidence that led to the grand jury indicting 15 people, including Ahmed, for an alleged multi-million dollar workers comp fraud scheme. The indictment specifically accuses ringleader Ahmed of:

– hiring pharmacists to produce three “compounded transdermal cream;”

– paying kickbacks to several physicians and chiropractors who prescribed the creams to their workers' compensation patients (to the tune of $25 million between June 15, 2010, and Dec. 31, 2012);

– conspiring with the doctors to submit fraudulent workers compensation claims.

Ahmed, Dr. Andrew Jarminski, who has offices in Long Beach and Lawndale, and Michael Rudolph, owner of Tustin Community Pharmacy, are also charged with the manslaughter of a baby. 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,” reads the indictment.

Landmark Medical Management has released this statement on behalf of its embattled CEO: “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.”
[
UPDATE NO. 1, JUNE 25, 1:39 P.M.: A hearing just resumed at Orange County Superior Court in Santa Ana, where defense attorneys are asking Judge Thomas Goethals to lift a freeze on the assets of 15 doctors, pharmacists and other medical professionals–including Kareem Ahmed–indicted in an alleged $25 million kickback scheme.

Orange County prosecutors, who want the freeze to be maintained, have tied the alleged workers comp fraud scheme to the death of a 5-month-old boy in Los Angeles County.

UPDATE NO. 2, JUNE 25, 6:08 P.M.: Judge Goethals agreed with the defense and lifted the freeze on the assets of Kareem Ahmed and 14 doctors, pharmacists and other medical professionals indicted in an alleged workers compensation kickback scheme.

However, he ordered all the defendants to post $1 million bonds expect Ahmed, who was slapped with a $5 million bond. That's in addition to Ahmed's $5 million bail, by the way. Proceeds from the bonds will go toward restitution should prosecutors win convictions. Ahmed's four homes and Landmark Medical Management are also on the hook.

That's because, as City News Service reports, that the amount of losses from the scheme ballooned in court today to $106 million. Goethals indicated he wants to create a $40 million fund, and that's partly why he lifted the freeze on assets. The judge needs the physicians and pharmacists to continue generating money from their practices. Defense attorneys for some had indicated they would not be able to make payroll Friday if their assets remained frozen.

More about a baby's death at the center of the case was also revealed in court today. As previously reported, the alleged kickback scheme involved a pain-relief cream that Ladmark developed and got physicians and chiropractors to dispense in exchange for kickbacks while defrauding insurance companies with workers compensation claims. Priscilla Lujan, a patient who was given the cream, used her fingers as a pacifier for her infant son, unwittingly exposing the boy to the ointment he ingested before dying. Lujan sued Dr. Andrew Jarminski because, she claimed, there was no warning with the cream. Her son's February 2012 death is the basis for the involuntary manslaughter charge against Ahmed, Jarminski and pharmacist Michael Rudolph.

Ahmed and three other defendants devised the cream in 2009 and then recruited physicians who would prescribe it for workers comp patients, according to the indictment, which indicates Rudolph, owner of Tustin Community Pharmacy, manufactured the medication that was dispensed.

But Ahmed's attorney Richard Moss told City News Service's Paul Anderson the manslaughter allegation is “outrageous” and that there is “no basis in law to support any criminal liability this case.”

Attorney Mark Werksman, who represents defendant Dr. Arsalan Pourteymour, claimed the prosecution's allegations were “spun out of thin air.”

Email: mc****@oc******.com. Twitter: @MatthewTCoker. Follow OC Weekly on Twitter @ocweekly or on Facebook!