Boca man charged in $1.2B Medicare fraud has ties to ‘Wolf of Wall Street’

Palm Beach Post (FL)

April 13-- Apr. 13--WEST PALM BEACH -- A 56-year-old Boca Raton man who was charged this week in what prosecutors are calling one of the biggest health care fraud schemes in the nation's history has long and deep roots in the dark underbelly of the business world.

Elliot Loewenstern, who on Friday pledged his $2.1 million house as collateral on a $1.5 million bond so he could be released from the Palm Beach County jail, was close friends and business associates with Jordan Belfort, the notorious penny stock trader portrayed in the 2013 blockbuster movie, "Wolf of Wall Street."

Loewenstern wasn't specifically depicted in the movie that starred Leonardo DiCaprio. However, the scene-stealing "Rugrat," was based on a compilation of Loewenstern and two of Belfort's other associates, one of whom had an affinity for toupees, according to the Hollywood Reporter.

In his book, Belfort described Loewenstern as "a longtime friend." Growing up in Queens, the two made a fortune toting a 40-pound Styrofoam cooler to the beach and selling Italian ices to thirsty sunbathers, Belfort said of their first entrepreneurial venture.

"While our friends were either goofing off or working menial jobs for $2.59 an hour, we were earning $400 a day," Belfort wrote. "Each summer we would each save $20,000 and use it during the winter months to pay our way through college."

Later, the two teamed up in a pump-and-dump stock trading scheme that made both fabulously wealthy but eventually put them both on law enforcement's radar.

Belfort, who claims he made as much as $50 million a year operating the financial firm Stratton Oakmont out of offices on Long Island, pleaded guilty in 2003 to multiple charges, including money laundering. He served 22 months of a 42-month sentence and was ordered to pay $110 million in restitution.

At about the same time, Loewenstern pleaded guilty to similar charges -- but far fewer of them -- in connection with Biltmore Securities, an investment house he ran in Fort Lauderdale. He was sentenced to five years of probation and ordered to forfeit a house in Boca and $1 million, court records show.

Prosecutors said Loewenstern purchased securities from Stratton and then sold them to Biltmore customers at inflated prices. More than 350 people were identified as victims.

In his book, Belfort said he helped Loewenstern and another longtime friend form their own securities businesses and was rewarded handsomely.

"Both firms ... were doing phenomenally well, earning tens of millions a year, and they were each paying me a hidden royalty of $5 million a year just for setting them up," Belfort wrote.

"It was a hefty sum, $5 million, and in truth it had little to do with setting them up. In point of fact, they paid me out of loyalty, and out of respect," he said. "And at the very crux of it, what held it all together was the fact that they still considered themselves Strattonites. And I considered them such, too."

By all accounts, Belfort turned himself around when he left prison. He wrote the best-selling book and now works as a motivational speaker, touring the world giving speeches about how to achieve success. Prosecutors last year did haul him back to court, claiming he hadn't paid all of the court-ordered restitution.

Loewenstern, meanwhile, in 2016 was popped by the Federal Trade Commission for duping customers of his Delray Beach computer support business.

Investigators claimed his company used software to trick customers into believing something was wrong with their computer. Customers were then subjected to high-pressure, deceptive sales pitches to get them to pay for repairs or long-term maintenance contracts, FTC officials said.

To settle the claims, Loewenstern and other computer support companies agreed to each pay a share of a $236,000 fine. As part of the settlement, Loewenstern was barred from the tech support industry.

Loewenstern's latest run-in with the law involves allegations that he conspired with others to bilk Medicare out of $200 million. He and his partners in a telemedicine business are accused of paying kickbacks and bribes to get doctors to order unnecessary arm, wrist and knee braces for elderly and disabled people who were insured by Medicare Part B, which covers medical equipment.

The massive international scheme cost Medicare more than $1.2 billion, prosecutors said. Twenty-four people from California to New Jersey were charged this week.

Like his business partners, Loewenstern was indicted by a grand jury in New Jersey. After Loewenstern and his wife agreed to put up their home, his mother's $220,000 townhouse and a $450,000 investment account as collateral, U.S. Magistrate William Matthewman allowed Loewenstern to be released from jail on a $1.5 million bond.

He will be on house arrest until his charges of soliciting health care kickbacks and conspiracy to defraud the United States are resolved in New Jersey.

His attorneys, Mark Perry and Peter Patanzo, declined comment on Loewenstern's latest predicament.

Loewenstern, wearing a blue prison jumpsuit with his arms and legs shackled, said little at Friday's hearing. Asked if he understood the charges he was facing, he said: "More than ever."

___

Visit The Palm Beach Post (West Palm Beach, Fla.) at www.palmbeachpost.com

Distributed by Tribune Content Agency, LLC.