Ken Paxton

Monday, June 23, 2008

Former Children's Rehab Clinic Founder in McAllen Sentenced to 10 Years in Scheme Defrauding Medicaid

AUSTIN The former president and primary stockholder of McAllen-based Just for Kids rehabilitation center was sentenced today to 10 years in prison for defrauding Medicaid and misapplication of fiduciary property. Eliseo Sandoval, 38, was also sentenced to two years in prison on two counts of tampering with a government document. The sentences will run concurrently.

Sandoval pleaded guilty to Medicaid fraud in April after he admitted to filing inflated cost reports with the program in order to receive more tax-payer funded reimbursements than he was owed. The defendant used proceeds from his illegal scheme to support a lavish lifestyle and fund personal business ventures, including real estate and sporting goods enterprises.

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Eliseo Sandoval

Sandoval admitted that he used more than $4 million in fraudulent, inflated Medicaid reimbursements to acquire a Brooks County ranch, a McAllen office building, several sports cars, a motorcycle and high-end sport utility vehicles. He also used the ill-gotten Medicaid funds to cover mortgage payments and construction costs on his McAllen office building, which doubled as a rehabilitation center for children.

This defendant was sentenced to 10 years in prison for defrauding the taxpayers, Attorney General Abbott said. By lying about his qualifications and the services he rendered Medicaid patients, the defendant funded a luxurious lifestyle at taxpayers’ expense. The Office of the Attorney General will continue aggressively cracking down on waste, fraud and abuse in the Medicaid system.

Attorney General Abbott added, We are grateful to the Travis County District Attorney’s Office for their assistance with this case.

The Sandoval investigation and prosecution was a joint effort between Attorney General Abbott’s Medicaid Fraud Control Unit and the Travis County District Attorney’s Public Integrity Unit. Auditors with the Texas Health and Human Services Commission’s Office of Inspector General uncovered the defendant’s fraudulent Medicaid cost-report scheme.

Sandoval pleaded guilty to three separate charges, including misapplying Medicaid funds through his business; filing false, excessive cost reports with Medicaid for salary compensation; and falsely claiming college degrees from the University of Texas Pan American and St. Edwards University. According to investigators, Sandoval claimed two college degrees in order to illegally profit from a Medicaid provision entitling multiple degree-holders to higher reimbursement rates.

In July 2004, the Just for Kids pediatric rehabilitation center filed for bankruptcy, despite having received more than $10 million annually from Medicaid payments. Shortly after Sandoval completed construction of the $3 million rehabilitation center, he filed for personal bankruptcy and sought bankruptcy protection for other businesses he controlled.

These businesses included Fishing Properties, which owned the building leased to Sandoval’s McAllen sporting goods enterprise, Rio Grande Outfitters. Sandoval also owned Genesis Pediatric Development, a real estate company that owned the Just for Kids rehabilitation office complex. Just for Kids, in turn, paid rent to Genesis and Sandoval. The defendant also profited from a Medicaid billing company that exclusively serviced Just for Kids, charging the organization 15 percent of its Medicaid-billed amounts for its billing service.

In 2006 alone, Texas spent more than $17 billion to fund its portion of the Medicaid program. To save taxpayer dollars and protect Texas seniors, Attorney General Abbott dramatically expanded the Medicaid Fraud Control Unit.

The unit has established field offices in Corpus Christi, Dallas, El Paso, Houston, Lubbock, McAllen, San Antonio and Tyler through authorization and funding from the 78th Legislature. It works with federal, state and local agencies across the state to identify and prosecute those who defraud the Medicaid program.

To obtain more information about the Attorney General’s efforts to fight Medicaid fraud, access the agency’s Web site at