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Eight Charged in Alleged $150M Genetic Testing Fraud Scheme

NEW YORK – The US Attorney for the Middle District of Tennessee said last week that a federal grand jury in Nashville has indicted eight people in an alleged Medicaid and Medicare fraud conspiracy.

According to the US Department of Justice, the eight individuals operated a genetic testing fraud scheme that improperly billed Medicare and Medicaid for more than $150 million between 2016 and July 2021. They have been indicted in a 40-count second superseding indictment on charges including healthcare fraud, conspiracy to commit healthcare fraud, and conspiracy to violate and violations of the Anti-Kickback Statute.

At the center of the conspiracy was Crestar Labs, a group of laboratories based in Spring Hill, Tennessee owned by Fadel Alshalabi. According to prosecutors, Alshalabi and his seven co-conspirators ran a scheme in which marketers targeted federal healthcare program beneficiaries for unnecessary genetic testing, which was then approved by telemedicine doctors, with Alshalabi and co-conspirators paying illegal kickbacks and bribes in exchange for these test orders.

Alshalabi, who is CEO of Crestar, was originally charged in July 2021 with conspiracy and violation of the Anti-Kickback Statute. He is also charged with money laundering.

Others charged in the second superseding indictment are Edward Klapp, the former vice president of sales for Crestar; Melissa Chastain, the owner and CEO of Genetix, a marketing company that contracted with Crestar; Roger Allison president of Genetix; Dakota White, the former director of client services and vice president of operations for Crestar; Robert Alan Richardson, a principal of Freedom Medical Labs, a marketing company that contracted with Crestar; Edward Burch, also a principal of Freedom Medical Labs; and Samuel Harris, the owner of Secure Health, also a marketing company that contracted with Crestar. Klapp and Chastain were originally charged in a first superseding indictment in October 2021.

If convicted, Alshalabi faces up to 10 years on the money laundering charges, and all defendants face up to 10 years in prison on the healthcare fraud and Anti-Kickback Statute charges, and up to five years on the charge of conspiracy to violate the Anti-Kickback Statute.