South Orange Chiropractor Masterminded $4M Insurance Fraud Ring: Prosecutors

Authorities have charged an Essex County-based chiropractor – who was stripped of his license more than a decade ago – with masterminding a medical fraud ring that allegedly bilked nearly $4 million from numerous insurance carriers.

According to the NJ Office of the Attorney General, Philip Potacco was charged with conspiracy, money laundering and a “host of other crimes” in connection with a scheme he allegedly ran from the South Orange Medical Facility Consulting Group from 2010 to 2015.

Prosecutors allege that Potacco, whose chiropractic license was revoked in 2002, hired a licensed chiropractor to act as a straw owner of SOTC while he ran it covertly.

Potacco allegedly 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, prosecutors said.

Some of those claims were for services that were never rendered, according to prosecutors.

Authorities allege that Potacco funneled approximately $3,991,812 in claim money into SOTC’s account. He then allegedly laundered the lion’s share of that money through a shell company called Medical Consulting Group. Once he transferred the money into the MCG account, Potacco allegedly 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.

Potacco also allegedly acted as a runner, collecting money for referring SOTC patients to a South Orange personal injury attorney who filed insurance claims on their behalf, prosecutors said.

Potacco, under the name of SOTC’s straw owner, provided falsified medical reports to support those claims, prosecutors charge.

“This was an elaborate web of lies and deceit allegedly spun by one disgraced medical practitioner who cloaked himself in the identity of a licensed practitioner to steal millions of dollars from insurance companies,” said Acting Attorney General Lougy. “It is especially disturbing that this bad apple was able to entice professionals in good standing to join his criminal endeavors.”

The chiropractor who acted as the front man for SOTC, John Langeraap, 37, of Sparta, has pleaded guilty to second degree conspiracy to commit insurance fraud.

The attorney who paid for SOTC referrals, Mark Gertner, 66, of Montclair, has pleaded guilty to third-degree criminal running.

Also pleading guilty to third-degree running in the case were Anulet Josaphat, 62, of Union, and Wilguere Rezan, 44, of Irvington.

The defendants charged in this indictment were:

• Philip Potacco, 62, of Kinnelon
• Jude M. DiManche, 41, of East Orange
• Andre J. Richemond, 41, of East Orange
• South Orange Trauma & Rehab, LLC
• Medical Consulting Group, LLC

Potacco, SOTC, and MCG were all charged with conspiracy (1st degree), three counts of money laundering (1st degree), theft by deception (2nd degree), health care claims fraud (2nd degree), and insurance fraud (2nd degree), and criminal running (3rd degree). Potacco and MCG were also charged with falsifying medical records (4th degree). Potacco was also charged official misconduct (2nd degree), and unlicensed practice of chiropractic (3rd degree).

DiManche was charged with two counts of criminal running (3rd degree).

Richemond was charged with one count of criminal running (3rd degree).

According to prosecutors, 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.

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