David Weinstein, Wire Fraud, New Jersey 2021

A Texas man has admitted to defrauding business opportunity buyers of more than $5 million in connection with the sale of medical-related business opportunities, Acting U.S. Attorney Rachael A. Honig announced.

David Weinstein, 62, formerly of Cherry Hill, New Jersey, and now of Dallas, Texas, pleaded guilty before U.S. District Judge Robert B. Kugler to an information charging him with one count of conspiracy to commit wire fraud and one count of money laundering.

According to documents filed in this case and statements made in court, Weinstein and his conspirators, Vijay Reddy and Kevin Brown, advertised business opportunities for sale on various websites. They purported to sell ‘blocks’ of contracts with medical providers who allegedly wanted to outsource their medical billing, collections, appeals, answering, credentialing, or transcription functions. The buyers would then provide the contracted services to the medical providers and earn a profit. The conspirators promised to deliver a specified number of providers and pledged that their proprietary marketing efforts would provide a guaranteed client base to the buyers.

To induce buyers to purchase the business opportunities, the conspirators created fake references purporting to be buyers who vouched for their prior business purchases from the conspirators. In fact, the references were Weinstein, Reddy, and their friends and family members, and they used aliases and disguised phone numbers to speak with potential buyers.

After agreeing to purchase the blocks of medical providers, victims entered contracts with companies represented by Weinstein or Reddy and wired down payments ranging from $15,000 to $240,000 to accounts controlled by Weinstein or Brown. The remainder of each purchase price was payable when the conspirators fulfilled the contract by delivering the agreed-upon number of providers.

Brown acted as the business broker for most of the transactions and received a commission for the sales he brokered. Weinstein or Reddy acted as the seller and signed the contracts with the victims. At least 77 victims sent more than $5 million to accounts controlled by the conspirators. The conspirators spent the victims’ money on personal expenses, including a travel, jewelry, real estate, a wedding, a college education, and other business investments.

The wire fraud conspiracy count is punishable by a maximum of 20 years in prison, and the money laundering count is punishable by a maximum of 10 years in prison. In addition, both counts are punishable by a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater. As part of his plea agreement, Weinstein agreed to make restitution in excess of $5 million. Sentencing is scheduled for October 25, 2021.

Related Federal Cases