Red Bank Man Bribed NJ Drug Addicts To Use Clinics, Feds Say

RED BANK, NJ — On Tuesday, a Red Bank man admitted in federal court that he bribed New Jersey residents addicted to drugs to certain drug rehab centers in California and elsewhere, in exchange for referral fees from the treatment clinics, U.S. Attorney Craig Carpenito announced.

Peter Costas, 26, of Red Bank, pleaded guilty to one count of conspiracy to commit health care fraud.

Federal prosecutors say Costas bribed individuals addicted to heroin and other drugs to enter into drug rehabilitation centers so Costas and his conspirators could generate referral fees from those facilities.

Costas worked with several marketing companies to carry out the scheme, but one marketing company in California run by Costas’s conspirators was pivotal, say the feds. The marketing company maintained contractual relationships with drug treatment facilities around the country.

Costas was engaged by the marketing company to recruit potential patients, all of whom were addicted to heroin or other drugs and who had robust private health insurance.

To convince drug-addicted individuals to travel to and enroll in rehabilitation when they otherwise would not have, Costas offered to bribe them — often as much as several thousand dollars. Once they agreed to enroll in drug rehabilitation in exchange for the offered bribe, Costas and the owners of the marketing company would arrange and pay for cross-country travel to the drug treatment centers in California and other states.

It wasn't about them getting clean, say the feds: Costas would stay in touch with the New Jersey patients at the facilities and specifically instruct them to stay at the facilities just long enough to generate referral payments.

Costas and the marketing company sent patients to facilities in California and other states that they knew provided ineffective drug treatment or actually fostered drug use on their premises.

Federal prosecutors say Costas did this without regard to whether the substance abuse treatment was medically necessary or effective.

The facilities typically paid the marketing company a fee of $5,000 to $10,000 per patient referral, and Costas and other brokers received approximately half that amount for each patient they brokered. During the scheme, Costas brokered dozens of patients on behalf of marketing companies around the country, and the conspiracy caused millions of dollars of losses for health insurers.

In a conversation over Facebook, one patient told Costas that if Costas made good on his promise to pay the patient a bribe, the patient would enroll in additional facilities to trigger additional referral payments and bribes: “[J]ust get us [sic] grab the dough and put us in another place. . . . Get paid some more feel me. . . . I’ll keep this up all year wit[h] you. As long as you do us right.” When the patient later expressed doubt that Costas would pay the bribe, Costas responded, “Don’t worry. . . . I do this with SO MANY PPL [people].”

He is facing a maximum of 10 years in prison and will be sentenced Sept. 29.