ASCs can be great investments for physicians. Oh, as long as they are real.
But if all they are are rainbows, unicorns, and clear blue sky, then you’d better stay away.
The problem, of course, is telling the difference.
Some seem to have a hard time doing so.
Late last month, three members of a family, the promoters of a fake surgery center scheme, pleaded guilty for their roles in defrauding investors.
But wait, the story gets better. The three initially settled a civil suit brought by the New Jersey Bureau of Securities that they defrauded 26 investors in an ASC scam. How much money they took is unclear, but the facility itself was never built. The trio agreed to pay $5.5 million to settle, $4 million of which was in investor restitution.
No sooner than the ink dried on the settlement, the family then conned 15 of the same investors out of $3 million in a second scam!
This time, the scamsters were charged criminally and, eventually, pleaded guilty. Two are facing years behind bars and one is to receive probation.
One thing’s for sure, their ASC has a 0% infection rate. Or, maybe it’s 100%. I guess it all depends on what exactly we’re measuring.
Simply warning you to do due diligence in connection with any ASC investment seems trite, but this case, which is humorous only because neither you nor I was one of the conned investors, illustrates why it’s not.
You might say it’s anecdotal, but in my practice I’ve seen multiple forms of ASC scams, from fake surgeries and fake patients, to patients who had surgery but didn’t require it, to surgery center promoters who, as did the defendants in the above scam, used surgery center proceeds to pay for items for their personal use.
The bottom line for you, as an ASC investor, is to carefully investigate the deal, and its promoters, on the way in, and on a periodic basis after the investment is made.
If you don’t, then don’t be surprised that some of the investment is sitting in the promoter’s garage. It’s that red Ferrari F430 Spider parked next to the blue Bentley Continental GTC Speed.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss