Encino Businessman Sentenced in Multimillion-Dollar Health-Care Fraud Scheme

An Encino man who owned a medical supply company was sentenced to 51 months in federal prison Tuesday after pleading guilty to tax and health-care fraud charges.

According to court records, 73-year-old Eli Gichon was a certified public accountant who operated Airport Medical Supply (AMS) from within the premises of Eli’s Airport Cleaners, a dry cleaning business he owned and operated in Van Nuys.

Gichon was ordered to pay restitution of nearly $5 million for organizing a health-care and tax fraud scheme. He was also ordered by U.S. District Judge Manuel L. Real to serve three years of supervised release after serving his prison sentence, City News Service reported.   

From January 2003 through March 2009, Gichon obtained beneficiary information needed to bill Medicare for durable medical equipment, CNS reported. In his plea agreement, Gichon admitted that he employed co-defendants Christopher Hill and Feliciano Dy to work as marketers and recruit beneficiaries for the medical supply company.

Hill and Dy were each indicted on multiple counts of health-care fraud, CNS reported. According to the Internal Revenue Service, Gichon’s scheme resulted in a total loss to Medicare of about $5 million. 

Gichon also admitted that, for the years 2004, 2005 and 2006, he received more than $3.8 million in receipts from Medicare through AMS that he did not report on his personal income tax returns, according to the IRS. Gichon's failure to report the income to the IRS resulted in taxes due of more than $1.4 million, CNS reported.  

Dy was sentenced in September to five years probation and ordered to pay restitution of about $193,000. 

At the conclusion of Tuesday’s sentencing hearing, Real ordered Gichon to begin serving his sentence on March 14.

City News Service contributed to this report.