A Tennessee man has been sentenced to 8 years in prison for fleecing patients with cancer out of almost $700,000, according to documentation from the United States Attorney’s Office.
Howard L. Young, aged 75 and founder of a Nashville-based holistic wellness business called Integrative Medical Services (IMS), was also ordered to pay $693,128.66 in restitution for operating a Ponzi scheme he used to dupe over 80 patients, financial institutions, and investor
He was charged in October 2020 with four counts of bank fraud, six counts of wire fraud, and aggravated identity theft, and he pleaded guilty to charges in December.
The US Securities and Exchange Commission (SEC) defines a Ponzi scheme as an investment scam in which existing investors are paid with funds collected from new investors. High returns with little or no risk are often promised, but the schemes have no legitimate earnings and collapse when new money stops coming in and/or large numbers of existing investors cash out.
The charging documents alleged that Young founded IMS in 2015, which he claimed was a holistic wellness business. Young claimed that he was a naturopath, but did not hold a degree or have any medical license.
Required Upfront Payment
Around 2017, Young began reaching out to patients with cancer, as well as investors and employees, and told them that he had received a $2 million grant from Vanderbilt University to study patients with cancer as well as others with chronic medical conditions. He said that Vanderbilt had awarded him the grant because he had personally cured himself of cancer using naturopathic methods. Patients were promised that, as study participants, they would receive nutritional supplements, blood tests, and nutrition as well as exercise coaching, gym memberships, massages, and acupuncture. A total of 80 patients with cancer were involved in the scheme.
To participate in the so-called study, patients were told that an up-front payment of $10,000 was required by Vanderbilt University, but the money would be returned to them after 1 year. If this was beyond the means of the patient, they were required to secure a CareCredit credit card or open a Health Credit Services account. Each of these products is designed to help patients pay for medical treatments. They function like a revolving line of credit or an unsecured installment loan and require the patient to make monthly installment payments.
Young allegedly told patients that the funds would be held in escrow and he would make all monthly payments to the account and would pay off all existing balances. This was the plan as long as the patient abided by all study protocols.
Game of Fraud
However, Vanderbilt had never awarded any grants to Young or IMS.
According to the Department of Justice, Young lied to the patients about having a grant from Vanderbilt and that his intention was to induce patients to apply for and obtain credit and loan accounts at Synchrony Bank, MetaBank, and Cross River Bank.
He also wanted to “induce investors to give him funds for his fraudulent scheme and to induce employees to help him solicit additional patients to participate in his fraudulent scheme.” One person even transferred the title of his house to him in order to participate.
The money was not held in escrow as promised, and in fact, Young used some of the funds for his own personal use, made payments to his personal credit cards, and made minimum payments on account holders’ credit accounts and loan accounts. The patients did not routinely receive the nutritional supplements that they had been promised or any of the other products and services.
Young also allegedly attempted to further conceal his fraudulent activity by changing the mailing addresses for patients’ accounts at CareCredit and HCS so that the monthly account statements went to a post office box he controlled. He made minimum payments on the CareCredit and HCS accounts to further conceal the fraud, according to the Department of Justice, and to keep it going so that he would be able to continue recruiting patients.
An investigation by the FBI found that IMS generated very little revenue, with most of the funds that he deposited drawn from CareCredit accounts and HCS loan accounts. By July 2019, Young had received a total of approximately $669,470 from CareCredit and HCS.
The US Attorney’s Office has not issued a statement and declined to comment. Young’s attorney did not respond to a request for comment.
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