‘Criminally greedy’ Medicare fraudster ordered to pay $615 million

PHOENIX (CN) — Phoenix valley woman Alexandra Gehrke will spend 15 years behind bars after pleading guilty to scamming $1.2 billion out of Medicare and other health care and insurance companies.`

A Former Scottsdale socialite and medical entrepreneur, Gehrke and DJ Jeffrey King, locally known as Scottsdale’s “glam-fam couple,” orchestrated a massive scheme to submit fraudulent medical claims for “expensive, medically unnecessary” wound grafts for elderly and terminally ill patients, many of whom died in hospice care.

Tuesday afternoon, more than a year after Gehrke pleaded guilty to one count of conspiracy to commit health care fraud and wire fraud, U.S. District Judge Roslyn Silver handed the socialite a 186-month prison sentence and ordered restitution payments totaling nearly $615 million dollars.

Before delivering her sentence, the Bill Clinton appointee thanked Gehrke for her honesty throughout the legal process.

“What you were and how you are is exactly how you’ve defined yourself,” Silver said. “And congratulations on doing that. What you are is greedy. Criminally greedy.”

Gehrke took responsibility in a statement read to the court, claiming to have single-handedly roped her husband into the scheme.

“I wish I could take back all the damage I’ve done, but I know this is impossible,” she said. “I crossed lines that I never should have approached.” She turned to her mother sitting in the gallery behind her. “Mom, I’m sorry I let you down, and I’m sorry your life is harder because of me.”

Her husband, Jeffrey King, is scheduled to be sentenced Friday afternoon in the same Phoenix courtroom.

Gehrke operated two companies, Apex Medical LLC and Viking Medical Consultants LLC, that contracted with medically untrained “sales representatives” to locate elderly patients, including hospice patients, who had wounds at any stage and order amniotic wound grafts from a specific graft distributor. Gehrke told sales representatives in a meeting to target hospice facilities because that was “where the most money is at,” according to the indictment.

She instructed and incentivized the sales representatives to order grafts only in sizes 4x6 centimeters or larger, even if the wound was much smaller, in order to maximize health insurance reimbursement. Through her companies, Gehrke received over $279 million in illegal kickbacks from the distributor of the grafts in exchange for the orders. In turn, she paid the sales representatives tens of millions of dollars in unlawful kickbacks.

Gehrke then referred the patients to a company co-owned by King, which contracted with nurse practitioners to apply the grafts. King’s company fraudulently billed Medicare; TRICARE, for service members and their families; CHAMPVA, for spouses and children of permanently disabled veterans; and commercial insurance plans for the grafts.

With no medical training, the couple directed the nurse practitioners to suspend their own medical judgment and apply all grafts ordered by the sales representatives, even when medically unreasonable and unnecessary, resulting in the application of grafts to infected wounds, wounds that had already healed, and wounds that were not responding to the grafts.

From November 2022 through May 2024, the couple submitted $1,212,005,778 in false and fraudulent claims to health insurance plans. This included over $960 million in false and fraudulent claims to Medicare, TRICARE and CHAMPVA. The federal and private health care insurers paid $614,990,420 based on the false and fraudulent claims.

Phoenix Police arrested the couple at the Sky Harbor International Airport before they could board a plane wearing gold bracelets and $30,000 watches. Federal agents raided and seized their $6.2 million Scottsdale mansion and second home in Tempe, Arizona, confiscating a Ferrari, three Mercedes-Benz vehicles, gold bars and silver coins, Rolex watches, a $10,000 Cartier cigarette lighter. The feds also seized the couples’ various bank accounts totaling nearly $60 million.

The first 90 minutes of Gehrke’s sentencing happened under seal, but Roslyn later said she would reduce Gehrke’s sentence by 30 months from the government’s recommendation based in part on what was discussed behind closed doors and in part on Gehrke’ remorse and family support.

Defense attorney Joshua Lowther asked for an additional downward variance because of Gehrke’s struggles with substance abuse, depression and was recently diagnosed with Autism Spectrum Disorder.

Silver said she understood Gehrke’s position, but refused to concede, saying Gehrke’s crimes didn’t happen because of “Asperger’s or depression.”

“It is unmitigated greed,” she said.

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