Family Tradition: Keaton Langston pleads guilty in $51 million Medicare fraud

• A new trail of healthcare corruption that stretches from Mississippi to the mafia raises questions about the Biden family’s involvement in related businesses.

In 2008, Joey Langston pled guilty for his role in an effort to bribe Hinds County District Court Judge Bobby DeLaughter to rule in favor of Dickie Scruggs in a dispute over $15 million in attorneys’ fees.

Langston, along with Scruggs, who was also convicted in a separate judicial bribery scandal involving $26.5 million in attorneys’ fees, would both lose their law licenses and serve time in prison.

This week, Langston’s son, Keaton Langston, pled guilty for his part in a sprawling conspiracy to defraud Medicare to the tune of $51 million. The Boonville, Mississippi native faces up to 10 years in prison, plus restitution. He will be sentenced on October 1, 2024 in a federal court in Newark, New Jersey.

Court filings in Keaton Langston’s case indicate he and a bevy of co-conspirators devised a fraudulent kickback scheme that resulted in medically unnecessary laboratory testing, orthotics prescriptions, and compound pharmaceuticals being paid for by Medicare and other government health providers.

Among the co-conspirators are Thomas Farese, a Florida businessman and the once reputed consigliere of the Colombo crime family, and Patsy Truglia, a known Colombo crime family associate.

If the convergence of John Grisham and Mario Puzo-style storylines did not create enough intrigue, President Joe Biden’s brother, Jim Biden, finds himself on the periphery of the scandal.

Jim Biden’s Mississippi connections have become a focal point for the U.S. House Oversight Committee’s investigation into whether the President’s influence has been peddled by Biden family members for improper financial gain.

The Medicare Conspiracy

In the spring of 2019, federal law enforcement agencies announced “Operation Brace Yourself.” The operation eventually exposed over $1.2 billion in healthcare fraud across the nation.

Among those ensnared in the FBI’s wide web were Keaton Langston and co-conspirators who took part in a complex three-part scheme to defraud Medicare.

The many indictments and criminal informations filed in the Langston conspiracy provide insight into how the scheme worked. The first step involved identifying Medicare beneficiaries, and through the operation of call centers, soliciting senior citizens to seek out orthotic braces, compound drug prescriptions, and at-home lab tests that they did not need.

The second step involved the setup of telehealth providers who would facilitate obtaining prescriptions for these items by paying physicians what amounted to bribes.

The third and final step was the sale of the orthotics, pharmaceuticals, and at-home genetic lab tests through conspirator-owned businesses.

The cost of the unnecessary treatments and testing were paid by Medicare, TRICARE (a health program of the Department of Defense), or CHAMPVA (The Civilian Health and Medical Program of the Department of Veterans Affairs). The proceeds from the sales were divided among conspirators at each of the three stages of the scheme.

Goodfellas & the Unnamed Conspirator

In April of 2021, the Department of Justice brought charges against Thomas Farese of Delray Beach, Florida, Patsy Truglia of Parkland, Florida, Christopher Cirri and Nicholas DeFonte of Toms River, New Jersey, and Domenic Gatto of Palm Beach Gardens, Florida, for their roles in the scheme.

Farese, Truglia, and Gatto all had hidden ownership interests in the orthotic stores supplying the unnecessary braces. Truglia, along with Cirri and DeFonte, also operated the call centers that would solicit Medicare beneficiaries. Cirri and DeFonte were further involved in the setup of implicated telehealth providers.

At least two of the men had ties to organized crime. Farese was identified as the consigliere of the Colombo crime family in 2012 when he faced federal money laundering charges. He also served as the head of the family’s Florida operations. The Colombo family is one of the five original New York families in the mafia, or La Cosa Nostra. Truglia was identified as an associate of the Colombo crime family in the same 2012 money laundering case against Farese.

Truglia, Cirri, and DeFonte pled guilty in November of 2021 for their role in the conspiracy. Days later, a criminal indictment was filed against Thomas Farese and Domenic Gatto. The indictment named several additional co-conspirators, but kept the identity of one co-conspirator hidden. Known only as “Co-conspirator-1” or “CC-1,” this individual stood out not only for his anonymity, but because he was not a resident of Florida or New Jersey, but rather, Mississippi.

On March 14 of this year, federal prosecutors, in a legal brief related to the charges against Farese and Gatto, identified Keaton Langston as CC-1. It is unclear why Langston was not identified earlier with the rest of his co-conspirators. Sometimes criminal defendants remain anonymous because of cooperation, or because identifying them could alert additional criminal targets to cover their tracks.

Langston’s identification came just a few weeks after his father, Joey Langston, and President Biden’s brother, Jim Biden, gave testimony to the U.S. House Oversight Committee about their business dealings together.

The Criminal Information filed in conjunction with Keaton Langston’s guilty plea sheds more light on his expansive role in the $51 million fraudulent scheme.

Langston, along with another co-conspirator, Daniel Hurt, owned and operated the “subject laboratory” that performed medically unnecessary CGx tests — a genetic test intended to determine a patient’s hereditary predisposition for cancer. Lab kits were sent to solicited Medicare beneficiaries, who would then swab their cheeks, and return the swab to the lab. Reimbursement rates for these tests can exceed $8,000 a test, according to the Criminal Information.

Hurt pled guilty for his role in the fraud in July of 2022. Earlier this month he was sentenced to ten years in prison, and yesterday, the Department of Justice announced he would pay $27 million in restitution.

In addition to his ownership interest in the laboratory that performed the CGx testing, Langston’s Criminal Information indicates he had ownership interest, along with Domenic Gatto, in two of the orthotic brace companies implicated in the scandal — one in New Jersey and one in Florida. It also indicates Langston had ownership interest in the pharmacies filling the manufactured compound drug orders that were being pushed by the telemarketing efforts of Cirri, DeFonte, and Gatto, as early as April 2017.

Langston’s Criminal Information alleges he personally received over $10 million of the $51.16 million in improper payments.

The Langstons, Jim Biden & Americore

In May of 2017, just one month after Keaton Langston allegedly began the compound pharmacy fraud, he incorporated Fountain Health, LLC (Fountain Health), in Mississippi. Langston was identified as the sole member of the laboratory testing company. His CGx laboratory co-conspirator, Daniel Hurt, owned a separate company called Fountain Health Services, LLC, among others.

The same month that Keaton formed Fountain Health, he, Joey Langston, and Jim Biden, traveled to meet with Grant White, the founder of Americore Health, LLC. Americore was, itself, recently founded, with a business model built around the purchase of distressed rural hospitals.

According to detailed investigative reporting by Politico’s Ben Schreckinger, the Langston/Biden trio pitched White on outsourcing to Fountain Health the laboratory testing of a hopsital Americore was purchasing in Pennsylvania. By June, Americore and Fountain Health entered into a contract for those services at the “Ellwood City Medical Center.”

Documents obtained by Politico indicated that on July 12, 2017, Joey Langston emailed Jim Biden, Keaton Langston, and White to schedule a “meeting for Fountain Health partners.” The email offered some detail about work Jim Biden and Keaton had performed in discussions with Blue Cross/Blue Shield and union representatives on behalf of Fountain Health.

According to Schreckinger, in a separate email, Joey Langston said once the acquisition went through, Fountain Health could dramatically increase the samples it sent to Ellwood City Medical Center for lab testing.

However, before the proposed meeting could be held, the acquisition of the Ellwood City Medical Center faced a regulatory challenge. The deal to purchase the hospital had to be approved by Pennsylvania’s attorney general. There were some issues related to the performance of Americore hospitals in other states working against the approval. At the time, Pennsylvania’s AG was Josh Shapiro, a Democrat who now serves as governor. In 2016, then-Vice President Joe Biden supported Shapiro’s bid for AG.

White brought Jim Biden to the hearing held by Shapiro on the Ellwood City acquisition and introduced him as a “strategic partner.” Shapiro ultimately greenlit the deal.

An Americore investor slide identified Jim Biden as a “partner” and led with his relationship with Joe Biden. White, Jim, and Hunter Biden reportedly met to discuss potential investors in Americore affiliated with CEFC, a Chinese Energy Corporation, and Jim made moves in hopes of securing investments from the Middle East.

A draft of a letter from Jim Biden that appeared on the now infamous Hunter Biden laptop was addressed to Khaled Sultan Al Rabban, an official at the Qatar Investment Authority. Jim allegedly wrote “My family could provide a wealth of introductions and business opportunities at the highest levels that I believe would be worthy of the interest of His Excellency.” (Emphasis added). The letter described Jim’s outreach as being “on behalf of the Biden family,” but stopped short of naming Joe Biden.

Much of the anticipated foreign investment in Americore did not materialize. Jim Biden helped to secure a series of loans, beginning in January of 2018, from Michael Lewitt’s Third Friday Management Fund, LLC, totaling $19 million. Lewitt is currently facing Security and Exchange Commission charges for making these loans to a distressed business using investor funds designated for the S&P 500.

Within days of receiving the first loan payment of $2 million, Americore wired Jim Biden $400,000. A second payment of $200,000 was made on March 1, 2018. On the same day Jim Biden received the second payment, he wrote Joe Biden a $200,000 check for “loan repayment.”

In December of 2019, Americore declared bankruptcy. A month later, the FBI raided Ellwood City Medical Center. Keaton Langston’s business associate, Daniel Hurt, ultimately pled guilty to using Ellwood City Medical Center as a front for fraudulent CGx lab testing. A Department of Justice press release announcing Hurt’s plea described the scheme involving Ellwood City:

Hurt subsequently caused CGx specimens to be sent to Ellwood City Medical Center (ECMC), a hospital located in Ellwood City, Pennsylvania. Hurt further used ECMC as the billing entity for Medicare purposes despite the fact that the facility did not possess properly validated equipment to conduct any CGx testing onsite and, as such, ECMC staff were required, at Hurt’s direction, to repackage the samples and send them to third-party reference laboratories that were capable of completing the testing.

As a reminder, Ellwood City Medical Center is the same hospital Jim Biden helped Americore acquire in Pennsylvania and the same hospital Joey Langston, father of Keaton, suggested they could send more lab samples to for testing. It’s not clear what lab tests Joey Langston was proposing to increase to Ellwood City Medical Center when he sent his email in the summer of 2017, or if he was aware of the equipment limitations of ECMC’s lab testing.

Neither Joey Langston nor Jim Biden have been accused of or charged with any crimes related to Americore or fraudulent lab testing at Ellwood City Medical Center. President Joe Biden has consistently denied any knowledge of or involvement in his brother’s business dealings.

Jim Biden was sued by the Americore bankruptcy trustee for the payments made by Americore due to bank records which reflected the $600,000 in payments as “loans.” In his prepared statement to the U.S. House Oversight Committee, Biden disputed the characterization of the payments as loans, but noted that he ultimately settled with the bankruptcy trustee for $350,000.

In the same statement, Jim Biden acknowledged: (1) the initial meeting between he, Joey Langston, Keaton Langston and Americore founder Grant White in 2017; (2) his role in securing funding from Third Friday, and (3) the amount and timing of payments received from Americore. Biden claims he told White in July of 2019, approximately five months before the declared bankruptcy, that he no longer wanted to be associated with Americore.

In his testimony before the U.S. House Oversight Committee, Joey Langston indicated he gave Jim Biden approximately $800,000 in loans. Langston testified that he made four loans in 2016 and one more in 2017. He indicated that he had been repaid $400,000.

Not the First Rodeo

Joey Langston’s and Jim Biden’s engagement with Americore was not their first foray into healthcare together. Both Langston and Biden had been affiliated with California-based Trina Healthcare, a company that promoted a diabetes treatment called “artificial pancrease.”

Trina Healthcare opened three clinics in Alabama between 2014-2015. Blue Cross/Blue Shield refused to cover the artificial pancrease treatment, so Trina Healthcare founder Ford Gilbert devised a plan to get the Alabama Legislature to force insurers to cover the treatment. The plan involved bribing Alabama House Majority Leader Micky Hammon, along with other legislators. Gilbert was ultimately caught, charged with conspiracy to commit bribery, pled guilty, and sentenced to one-year in prison.

Neither Joey Langston nor Jim Biden were accused of or charged with any wrongdoing related to the Trina Healthcare scandal.

Deep Mississippi Roots & Corruption Adjacency

Long before Fountain Health, Americore, or Trina Healthcare, the Biden family had established deep roots in Mississippi with a cabal of trial lawyers and Democratic politicos, many of whom would later find themselves at the center of the Dickie Scruggs’ judicial bribery scandal.

Last December, The Washington Post delved into the origins of the bond between the Bidens and Mississippi. A freshman U.S. senator in 1973, Joe Biden struck up a friendship with Sen. John Stennis (D-MS), and by extension, a Stennis aide named Steve Patterson. Patterson would eventually become the Mississippi Democratic Party Chairman and the Southern coordinator for Biden’s ill-fated 1988 presidential run.

Patterson claimed in an interview “Biden wouldn’t have known anybody in Mississippi if not for me. That’s just a fact. I take ownership of that.” Patterson’s relationship with Joe Biden brought him into contact with Biden’s brother, Jim.

Patterson also introduced the Bidens to his friends, including Dickie Scruggs and Joey Langston, who formed their own friendships with the President Biden and Jim.

In 1991, Patterson was elected state auditor, but after winning re-election in 1995, a scandal over falsifying documents to evade county taxes led Patterson to plead guilty to a misdemeanor and resign his elected post as state auditor. The FBI was also allegedly investigating Patterson at this time in relation to a deputy auditor’s embezzlement of state funds.

In 1997, as Scruggs was preparing for the biggest score of his life through a tobacco settlement, he faced a hurdle. Because of antitrust laws, a national settlement Scruggs estimated to be worth $368 billion, required congressional approval. The Post reports that Joe Biden expressed unease with the deal, saying he was “not yet convinced the settlement is a good deal,” and that if it was not improved, it would go “down the tubes.”

At Patterson’s urging, Scruggs reached out to Jim Biden. Scruggs ultimately hired Lion Hall, a firm owned by Jim and his wife, Sara. He paid Lion Hall $100,000 for advice on how to obtain approval of the tobacco settlement.

In an interview with the Post, Scruggs conceded, “I probably wouldn’t have hired him if he wasn’t the senator’s brother. Jim was never untoward about his influence. He didn’t brag about it or talk about it. He didn’t have to. He was the man’s brother.”

A year after being critical of the proposed tobacco settlement, Joe Biden supported its approval in 1998. The effort to move Congress still failed, though, and Scruggs was forced to move to plan B, making individual deals with states.

But through the process, a friendship with Joe Biden had been cemented, one which brought about trips to Oxford for Ole Miss football games, flights on Scruggs’ jet, and political fundraising from a network of some of the most powerful trial lawyers in the country.

In 2006, despite not being a lawyer, Steve Patterson formed a law firm with Tim Balducci called Patterson Balducci, PLLC, in New Albany, Mississippi. Balducci had worked for Joey Langston out of law school and ran in similar circles. He and Patterson began talking to Jim Biden about a new consulting firm, “Patterson, Balducci and Biden, PLLC Law Group,” with offices in Oxford an Washington, D.C.

In 2007, as he kicked off a campaign for president, Joe Biden came to Oxford. Biden would lose the Democratic nomination to Illinois State Senator Barack Obama the following year, but go on to be selected as his running mate. While in Oxford, Biden gave a talk on his book “Promises to Keep” and then attended a fundraiser at the University Club hosted by Scruggs.

Within weeks of Joe Biden’s fundraiser, his friend Dickie Scruggs’ world would begin to unravel. As Scruggs faced the prospect of paying over $26 million in attorneys’ fees owed to another law firm, Balducci leaned on the judge overseeing the dispute to rule in Scruggs’ favor. He floated to Judge Henry Lackey the prospect of becoming a member of Balducci’s firm once Lackey retired from the bench. Lackey smelled something fishy and went to law enforcement.

On the same day Balducci delivered the first of two $20,000 payments to Lackey on behalf of Scruggs, he got on an FBI monitored call with Jim Biden. Neither party knew they were being surveilled. Balducci told Biden that he had just spoken to Scruggs about the formation of their new firm and Scruggs had expressed support.

I told him we had formalized our relationship with you guys. I told him about the real Washington presence…that this was a real deal, that Sara was coming on, you know, as a named partner, an equity share in the venture, that we were changing the name to include her…Hunter was going to be involved, and you were going to be involved.

In a second call the same day with Balducci, Jim Biden indicated that he had also talked to Scruggs and that Scruggs told him, “I think you can make a lot of money.”

But before the venture could get off the ground, Balducci was confronted by FBI agents about his payments to Lackey. He agreed to become an informant and wear a wire for conversations within the Scruggs’ law office. Those conversations elicited statements the government perceived as admission from Dickie Scruggs, his son Zach, and their law partner Sidney Backstrom. In time, all three would plead guilty.

Joey Langston, who initially helped to defend Scruggs, was soon himself embroiled as a defendant in the second judicial bribery scandal to break involving a multi-million dollar attorneys’ fee dispute in front of Judge Bobby DeLaughter. Scruggs was sentenced to 6 years for the two judicial bribery offenses. His son, Zach, received 14 months. Langston received 3 years. Patterson, also convicted on a charge of seeking to corruptly influence a judge, was sentenced to 2 years.

Jim Biden was not implicated in the underlying crimes. He just happened to be friends, and occasionally a business associate, with the criminal defendants — corruption adjacent. But the judicial bribery convictions also did not deter Jim’s relationships with some of the core players in the scandal, a fact which now has him corruption adjacent once more to a new generation of Langston felon.