The imprisoned former owner of Pacific Hospital in Long Beach, who engineered a kickback scheme that generated more than $500 million in medical bills, was found Monday by a federal judge to have breached his plea deal with prosecutors, leaving him vulnerable to further prosecution and more years behind bars.
Michael D. Drobot, 74, was sentenced last January to 63 months in federal prison by U.S. District Judge Josephine Staton, who ruled Monday that the defendant has failed to pay $10 million he owes as part of the plea deal he struck with prosecutors in February 2014.
Assistant U.S. Attorney Joseph McNally said robot helped prosecute multiple co-defendants in the scheme, but he fell short when it came time to paying restitution.
In a written ruling, Staton said Drobot was ordered to sell his 1965 Aston Martin, 1958 Porsche and 1971 Mercedes-Benz, but he “diverted the proceeds from the sale of (the Aston Martin and Mercedes Benz) to bank accounts that he controlled and ultimately used the funds for personal purposes.”
He also failed to sell the Porsche and hand over the proceeds to the government, according to the judge, who wrote that she “rejects (Drobot’s) claim that he was entitled to credit against the forfeiture amount for his waiver of accounts receivable in his civil settlements.”
“Rather, the evidence unequivocally establishes that (Drobot) fully understood in advance of entering into any agreement and entering his plea, that he would not receive any such credit for waived accounts receivable,” Staton wrote. “This agreement was breached because (Drobot) made a conscious and deliberate choice to breach it by diverting forfeited funds to himself for his own personal use.”
Drobot used some of the money from an auction of two of the cars to catch up on past mortgage payments, and he continues to own a Newport Beach home, which is worth about $1 million and is on the market, McNally said.
“Our position is he made millions of dollars in a kickback scheme and this was an agreed-upon forfeiture… and he disobeyed the court’s order and deceived us when we were going to get the money,” the prosecutor said.
In the plea agreement, prosecutors agreed to not pursue charges of mail fraud, money laundering and obstruction of justice against Drobot. But in light of the judge’s latest ruling, he could face those charges again, McNally said. “And he’s basically in contempt of the court’s order, which is a crime in and of itself,” the prosecutor said.
Prosecutors will now move to accelerate the sale of Drobot’s home in Newport Beach to recover the proceeds.
At his sentencing, Drobot said he was facing more than 40 civil lawsuits, some related to allegations that counterfeit “screws” were implanted in some of his patients, but he denied having anything to do with the alleged counterfeit spinal surgery equipment.
Drobot used surgeons, attorneys and chiropractors and many others in the healthcare chain in the kickback scheme.