West Palm Beach, Florida – Two South Florida men admitted their roles earlier this week in a complex health care fraud scheme involving the distribution of adulterated and misbranded diabetic test strips, leading to approximately $12 million in fraudulent proceeds. This case has highlighted significant vulnerabilities in the health care supply chain and raised concerns about patient safety.
The Scheme Unraveled
Howard Neil Frank, 60, from Marco Island, Florida, and Perfecto Fermin Hallon, 77, from Miramar, Florida, were deeply involved in a deceptive operation manipulating the diabetic test strip market. Frank, the owner of two wholesale diabetic test strip businesses, Wholesale Diabetic Supplies Inc and HMF Distributing Inc, along with Hallon, the former president of Medical Care Supplies Inc, orchestrated a fraud that deceived patients, pharmacies, and healthcare benefit programs alike.
The fraudulent activity centered around the acquisition and sale of non-retail or international diabetic test strips. These strips, intended by manufacturers for distribution only outside the United States, were illegally imported, sometimes stolen, or purchased from patients who had originally obtained them via prescription but opted to sell rather than use them. Frank and Hallon then sold these strips to licensed retail pharmacies—some of which they owned—as if they were legitimate retail products. These pharmacies, in turn, sold the compromised test strips to unsuspecting patients and subsequently billed private and government health benefit plans as if they were dispensing approved retail products.
Manipulation and Deception
To further their scheme and evade detection, Frank and Hallon went to great lengths to alter documentation and misrepresent the origin and quality of the test strips. They manipulated invoices, purchase orders, and shipping records. Moreover, they counterfeited National Drug Code (NDC) numbers, barcodes, and accompanying labeling to mimic those of legitimate manufacturers. This subterfuge was designed to deceive auditors and inspectors, ensuring that their illicit activities could continue without interruption.
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Legal Repercussions
The consequences of their actions have now caught up with them. Hallon is scheduled for a sentencing hearing on May 29 in West Palm Beach, facing up to 10 years in prison. Similarly, Frank awaits his sentencing on August 2, also facing a potential decade behind bars. These cases are part of a broader crackdown that has so far seen four defendants indicted.
In related proceedings, Mohamed Mokbel was charged in 2021 with conspiracy to commit health care fraud, with his trial set for October in West Palm Beach. Mokbel also faces charges of health care fraud and money laundering in the Southern District of Texas, with that trial scheduled for August. Meanwhile, Jason Grama, another accomplice, pleaded guilty in 2022 and was sentenced to three years of supervised release and ordered to pay nearly $300,000 in restitution.
Ongoing Investigation and Prosecution
U.S. Attorney Markenzy Lapointe for the Southern District of Florida and Special Agent in Charge Justin C. Fielder of the U.S. Food and Drug Administration, Office of Criminal Investigations, Miami Field Office, announced the guilty pleas. Assistant U.S. Attorney Laurence M. Bardfeld is leading the prosecution, with Assistant U.S. Attorney Daren Grove handling asset forfeiture.
