Morris County Chiropractor Ran ‘Criminal Enterprise’: Prosecutor

KINNELON, NJ — A former chiropractor from Kinnelon who was stripped of his license to practice more than a decade ago pleaded guilty Thursday to running a medical fraud ring that bilked nearly $4 million from numerous insurance carriers.

The insurance fraud ring included five others defendants, including an attorney from Montclair and residents of East Orange and Irvington, according to the New Jersey Office of the Attorney General.

On Thursday, the "mastermind" of the operation, Philip Potacco, 65, of Kinnelon, pleaded guilty to money laundering and official misconduct in the second degree, and to third-degree practicing chiropractic without a license in a hearing before Judge Michael Critchley in Morris County Superior Court. The state agreed to recommend a prison sentence not to exceed 10 years when Potacco is sentenced on March 2, 2018, prosecutors said.

Potacco will also be required to pay $3.5 million in restitution to the various affected insurance companies.

Five others defendants, including an attorney and a chiropractor, previously pleaded guilty in the criminal enterprise that centered around Potacco’s South Orange Trauma and Rehab Center (SOTC) from 2010 to 2015.

Attorney General Christopher Porrino called Potacco the “mastermind” of the “elaborate criminal enterprise.”

“Despite being stripped of his chiropractic license, Philip Potacco ran a medical practice that served as a front to steal millions of dollars from numerous insurance companies,” Porrino said.

Potacco, whose chiropractic license was revoked in 2002, admitted he hired a licensed chiropractor to act as a straw owner of SOTC while he ran it covertly, prosecutors said.

An OIFP investigation revealed that Potacco used illegal “runners” to recruit accident patients to the facility, including people who had staged their crashes. He then fraudulently submitted insurance claims for those patients, using the billing information of the licensed chiropractor he had hired, the investigation revealed, prosecutors said.

Over a five-year period, Potacco funneled approximately $3,991,812 in claim money into SOTC’s account. He then laundered the lion’s share of that money through a shell company called Medical Consulting Group LLC, (MCG). Once he transferred the money into the MCG account, Potacco used the account for personal use, withdrew thousands of dollars in cash, and wrote checks to deposit in his own name and his wife's name, prosecutors stated.

The investigation further revealed that Potacco collected money for referring SOTC patients to a South Orange personal injury attorney who filed insurance claims on their behalf, the investigation revealed. Potacco, under the name of SOTC’s straw owner, provided falsified medical reports to support those claims, prosecutors said.

The chiropractor who acted as the front man for SOTC, John Langeraap, of Sparta, has pleaded guilty to second degree conspiracy to commit insurance fraud and is awaiting sentencing.

The attorney who paid for SOTC referrals, Mark Gertner, of Montclair, has pleaded guilty to third-degree criminal running and is awaiting sentencing.

Other defendants in the case who pleaded guilty to third-degree running are Anulet Josaphat of Union, who was sentenced to probation; and Wilguere Rezan, of Irvington, who is awaiting sentencing. Andre J. Richemond, of East Orange pleaded guilty to obstructing the administration of law, a disorderly persons offense, for his role in the scheme and is awaiting sentencing.

Charges are pending against a sixth defendant, Jude M. DiManche of East Orange, who is charged with two counts of third-degree criminal running.

In 2006 Potacco was sentenced to serve three years’ probation and to pay more than $48,000 in restitution after pleading guilty to theft by deception. In pleading guilty, Potacco admitted he continued to see patients after the state Board of Chiropractic Examiners revoked his license for misconduct in 2002. He also admitted he submitted nearly $100,000 in billings to insurance companies for medical services and treatments provided to patients while his license was revoked, prosecutors said.

Reporting by Eric Kiefer, Patch Staff

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