2 More Men Admit Roles In Scam To Bribe NJ Drug Addicts: Feds

RED BANK, NJ – Two Maryland men recently admitted their roles in a patient brokering scheme that bribed New Jersey residents suffering from drug addiction to seek out certain drug rehab centers in California and elsewhere in exchange for referral fees from the treatment clinics, U.S. Attorney Craig Carpenito announced.

Maryland residents Seth Logan Welsh, 26 and John C. Devlin, 33, both pleaded guilty via teleconference in federal court on Tuesday on one count of conspiracy to commit healthcare fraud.

Red Bank resident Peter Costas, 26, pleaded guilty to the same charge in May. Read more: Red Bank Man Bribed NJ Drug Addicts To Use Clinics, Feds Say

Welsh and Devlin owned and operated a marketing company in California, which was used to orchestrate bribes in New Jersey, Maryland, California and other states. Conspirators, including Costas, would bribe potential patients with drug addiction and “robust” health insurance to enter drug rehabilitation centers so that Welsh, Devlin and conspirators could generate referral fees.

The facilities typically paid Welsh’s and Devlin’s marketing company a fee of $5,000 to $10,000 per patient referral, with Welsh, Devlin, and other conspirators sharing the money. Costas and other recruiters received approximately half of the referral fee amount for each patient they recruited. According to the U.S. Attorney’s Office, Welsh, Devlin, and conspirators brokered dozens of patients to drug treatment facilities around the country in a conspiracy that caused millions of dollars of losses for health insurers.

The marketing company engaged with a nationwide network of recruiters that would bribe individuals with as much as several thousand dollars, according to authorities. The company also maintained contractual relationships with drug treatment facilities around the country.

The conspirators would often send patients to different rehabilitation facilities month after month to generate multiple referral payments without regard to whether the substance abuse treatment was medically necessary or effective, according to the U.S. Attorney’s Office.

The group also knowingly sent patients to facilities that provided ineffective drug treatment or actually fostered drug use on their premises. After sending one patient to a drug treatment facility in Los Angeles, the patient reported to Costas that “everyone’s high” that “it’s a flop”. When that information was sent to Devlin in a text message, he responded with “Lol.”

Days later, Welsh texted Devlin and Costas to report that the same patient was “smoking meth” at one drug treatment facility. Costas replied, “Yes. [The patient is] freaking out at me. [He] said out of the 10 ppl. [people] in [the drug treatment facility] only 4 are sober. The rest are smoking meth and dope . . . . [The patient] said everyone’s high and it’s a complete flop and [he] tried to stay sober around it without ‘ratting’ as long as he could.”

Welsh and Devlin face a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for Jan. 11, 2021.

Costas is facing a maximum of 10 years in prison and is scheduled to be sentenced on Sept. 29.

Have a news tip? Email nicole.rosenthal@patch.com.

Click here to get Patch email notifications, or get breaking news alerts sent right to your phone with our app, download here. Follow Red Bank Patch on Facebook.