Perjury charges added in new indictment against pharma rep in fraud case

Jul. 5—An indicted former pharmaceutical rep who has said he can't afford to pay for a new round of legal defense costs now faces additional charges that his public defender will have to deal with: lying about his money.

A federal grand jury indicted Michael W. Luehrsen on three perjury charges for allegedly not fully disclosing his financial gains.

The new indictment includes the conspiracy to commit health care fraud charge and 11 money laundering counts that were in his initial indictment. In addition to the three perjury charges, the new indictment adds three money laundering counts. So Luehrsen faces 18 counts in all.

Luehrsen waived personally appearing at his arraignment Wednesday, pleading not guilty to all the charges in a signed form he submitted to the court.

U.S. Magistrate Judge Jeremiah J. McCarthy on Wednesday set deadlines for motions and scheduled oral arguments for Nov. 1.

In 2020, the government seized most of Luehrsen's assets, taking between $4 million and $5 million worth, he estimated. And it also filed claims on three waterfront properties in Buffalo and Miami. In 2021, a grand jury indicted him on nearly two dozen counts of health care fraud, money laundering and evidence tampering.

In March 2022, jurors found Luehrsen not guilty of eight money laundering charges that dealt with concealing transactions, and they also acquitted him of two evidence-tampering charges over deleted emails. But jurors remained deadlocked on the fraud charge, and they could not reach a verdict on 11 other money laundering charges having to do with transactions involving money allegedly derived from unlawful activity. So U.S. District Judge Lawrence Vilardo declared a mistrial on those counts as well.

Prosecutors raised concerns about Luehrsen's truthfulness in October 2022 when Luehrsen asked the court to release a portion of the seized assets to cover his upcoming legal costs for a second trial. He said he sold his ownership interest in a Chippewa Street nightclub and borrowed $400,000 from his parents to cover the $680,000 legal bill for his first trial and could not afford that kind of cost again. Vilardo allowed the defense lawyers from the first trial to withdraw from the case, and he appointed a public defender to represent Luehrsen.

But prosecutors at the time said the court should be "highly skeptical of Luehrsen's claim to be destitute."

The government learned that Luehrsen failed to disclose an interest he owned in Rec Room, the Chippewa Street nightclub, that prosecutors say Luehrsen sold in September 2021 for $420,000.

"The affidavit Luehrsen submitted as part of his current (motion to get back seized funds) now acknowledges that he sold his interest in Rec Room in 2021, but he reports that he sold the interest for $150,000, rather than $420,000," Assistant U.S. Attorneys Charles Kruly and Grace Carducci said in a court filing at the time. Luehrsen's failure to identify an asset worth $420,000 in his first affidavit — and to then claim it is worth $150,000 in his present affidavit — shows that he is not forthcoming regarding his assets. Given that Luehrsen has made two materially false statements about his assets, the court should not simply defer to Luehrsen's claim to be unable to afford an attorney."

The perjury charges stem from what Luehrsen allegedly said of his financial gains from the nightclub.

According to the new indictment, Luehrsen allegedly lied:

In September 2022 when he said he sold his ownership interest in the nightclub for approximately $150,000. He sold it for $420,000.

In August 2021 when he told the court, "I do not have access to any other funds." He received weekly distributions of $5,000 from the nightclub.

In August 2021 when he said, "I do not possess any other significant assets." He owned an interest in the nightclub.

Like the previous indictment, Luehrsen is accused of generating millions of dollars in wrongful insurance reimbursements through his company, MedHype, by orchestrating a pyramid operation to get prescriptions for non-narcotic, custom-made creams for scars, wounds and pain. The compound medications that included highly priced ingredients were prescribed without doctors even seeing many of the patients, according to the new indictment.

He and others received exorbitant reimbursements from insurers — sometimes as much as $16,000 or more for each tube of compound medical cream, prosecutors say.

Prosecutors say Luehrsen recruited others to look for patients with certain insurance coverages and doctors willing to sign prescriptions for custom medications, even if the patients didn't need them.

In one case cited by prosecutors, non-narcotic creams for scars, wounds and pain sent to one family cost an insurance plan more than $2.8 million.

One doctor signed 147 compound medication prescriptions for 19 patients but only examined two of the patients. The prescriptions were filled 519 times resulting in more than $8.7 million in reimbursements, according to the new indictment.

From 2014 through 2016, Luehrsen received more than $3.3 million in health care fraud proceeds, according to prosecutors. The total amount in the alleged money laundering offenses is $5.2 million.

Luehrsen's lawyers during his first trial told jurors that the health insurance companies — not Luehrsen — set the prices for the compound medications.

"The health insurance companies, who are the alleged victims here, decided what they were willing to pay for different compound medications," defense attorney A. Lee Bentley III told jurors during his opening statement. "They set the prices. They were perfectly free at any time to discontinue coverage."

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