3 Held in Theft of Saudi Money

Three people were arrested Thursday on charges of bilking as much as $20 million from the Saudi Arabian government’s health insurance plan for its students who live overseas.

Valliollah Raoufi, 37, of Bel-Air and Syed Daneshfar, 26, of Laguna Niguel were accused of fabricating the names of medical offices and clinics and submitting bogus bills in the name of Saudi citizens studying at colleges throughout the United States.

Charged with helping them was Fedaa Zaqzouq, 30, of Great Falls, Va., an employee of Saudi Arabia’s cultural affairs mission in Washington, D.C., which processed the medical claims for the country’s Ministry of Higher Education. A fourth suspect identified only as Jonathan Mendoza was being sought.

Federal prosecutors said some Saudi students received kickbacks for allowing their names to be used.

Raoufi, who lives in a $2.7-million Bel-Air home with his wife and three children, appeared Thursday afternoon before U.S. Magistrate Judge Stephen Hillman, who ordered him held without bail as a flight risk.

Assistant U.S. Atty. Matthew Umhofer told the judge that the losses to the Saudi insurance plan were being calculated but appeared to range from about $7 million to $20 million.

He said that Raoufi, an Iranian national, recently had withdrawn large amounts of cash from bank accounts in the United States and had sent other large sums abroad. He suggested that Raoufi might try to flee to Iran, where a sister of his lives. The United States has no extradition arrangement with Iran.

Raoufi’s attorney, Robert A. Van Hoy, argued unsuccessfully that his client had strong ties to Southern California and was prepared to surrender his passport and post his home as collateral for bail.

Questioned outside the hearing, Van Hoy said his client was “in the healthcare business,” but he declined to elaborate.

According to an FBI affidavit, Raoufi rented private mailboxes and opened telephone answering service and fax forwarding accounts in the names of nearly 25 nonexistent medical facilities, most of them with addresses in Colorado and Southern California.

Callers to some of the answering service numbers were greeted with the announcement, “Dr. Rafi’s office.”

In many cases, the affidavit said, the defendants used the names of real doctors to bill the Saudi health service for expensive surgeries and other medical procedures that never were performed.

Raoufi, Daneshfar and Zaqzouq are to be tried in Denver, where they were charged with scheming to defraud a healthcare program, a crime punishable by a maximum 10 years in prison.

John Suthers, the U.S. attorney in Denver, said the case “demonstrates that the United States government is not the only victim when it comes to healthcare fraud.”

He said the three defendants “preyed upon the goodwill of a foreign government committed to ensuring the health of their citizens studying in this country.”