Brothers Enter Guilty Pleas in Massive Insurance Fraud

In a surprising turn in what prosecutors charged is the largest medical insurance fraud in history, entrepreneur Michael Smushkevich pleaded guilty Tuesday to nine federal counts of mail fraud, money laundering and other crimes, admitting to bilking companies of at least $80 million.

Smushkevich had maintained his innocence since his indictment in 1991 on more than 150 fraud and racketeering counts.

He changed his plea after his brother, David, pleaded guilty under an agreement made with the prosecution last month. Neither the prosecution nor David Smushkevich’s attorney revealed the agreement until Tuesday, citing a judge’s gag order.

The brothers allegedly ran several hundred medical clinics and mobile labs that promised free physicals in telemarketing pitches. Then they billed insurance companies for unnecessary tests, prosecutors said.

David Smushkevich, who emigrated from the Soviet Union in 1975, helped his brother come to America four years later and helped him start medical businesses. But their relationship has apparently been rocky.

Michael Smushkevich said he pleaded guilty to avoid having his brother testify against him, said Nicholas Micelli, an attorney for another defendant, William Kuperschmidt. As Michael left the courtroom, he said to David’s attorney, Mary Gibbons: “It’s because of you and my brother. I would never do it, you understand.”

Four other defendants have changed to guilty please since David Smushkevich’s deal. On Tuesday, Bogich Jovovich, a doctor who worked with the brothers, pleaded guilty on seven fraud-related counts and clinic manager Art Lucero pleaded guilty on one count.

Michael Smushkevich and the other defendants did not change their innocent pleas on racketeering charges. Three others accused in the scheme are fugitives.

Kuperschmidt, a Palos Verdes doctor who is the sole defendant to maintain his innocence, is set to be tried starting April 13.