A wealthy couple from Arizona, Alexandra “Lexie” Gehrke, 38, and Jeffrey King, 49, found themselves in handcuffs just months after their wedding, implicated in a $900 million Medicare fraud scheme, according to the Department of Justice.
Charges
Gehrke and King were preparing to depart for their honeymoon at Phoenix Sky Harbor International Airport last month when federal prosecutors arrested them. They face charges of conspiracy, healthcare fraud, receiving kickbacks, and money laundering in connection to a years-long scheme.
Allegations of fraud
The government claims that Gehrke and King targeted “elderly Medicare patients, many of whom were terminally ill in hospice care,” to obtain “medically unnecessary” expensive wound grafts. They then fraudulently billed Medicare over $900 million over a year and a half.
Prosecutors allege this was to “fund their lavish and opulent lifestyles,” including the purchase of luxury cars, multi-million dollar homes, and over $520,000 in gold bars, gold coins, and jewelry.
“It does not matter if you are a trafficker in a drug cartel or a corporate executive or medical professional employed by a healthcare company if you profit from the unlawful distribution of controlled substances, you will be held accountable,” Attorney General Merrick Garland stated in a press release.
Details of the scheme
Federal prosecutors allege that Gehrke and King used four companies they owned or co-owned to bill Medicare $900 million for “highly expensive” but unnecessary wound grafts. These grafts, known as allografts, are made from human placental tissue and are only covered by Medicare if they are medically reasonable, necessary for treatment, and not procured through illegal kickbacks.
To execute the scheme, the couple allegedly paid “medically untrained sales representatives” to recommend the expensive grafts to patients, particularly those in nursing homes, assisted living facilities, or hospice care. They also allegedly paid nurse practitioners a flat rate to order and apply these costly wound grafts. Gehrke reportedly instructed sales reps to order larger grafts even if a patient’s wound was “the size of [her] little fingernail.”
Through lucrative kickbacks, the couple allegedly purchased a $300,000 Ferrari, a $230,000 Mercedes-Benz, a $5.3 million home, a $640,000 house, and more.
Financial gains
In just sixteen months, Gehrke and King allegedly received over $330 million in illegal kickbacks from the graft distributor. Between November 2022 and May 2024, they allegedly submitted over $900 million in false or fraudulent claims to Medicare, commercial insurers, and other federal healthcare programs, with Medicare paying out more than $600 million as a result of the scheme.
Upon their arrest, investigators seized significant assets, including bank accounts totaling more than $70 million, four luxury vehicles, over $500,000 in gold bars, coins, and jewelry, and two properties. Both Gehrke and King have pleaded not guilty to the charges.
