Baldwin Lab Owner Pleads Guilty to Multimillion-dollar COVID-19 Fraud

MOBILE, Alas. (VALA) – A Spanish Fort laboratory owner pleaded guilty Wednesday to conspiring to defraud Medicare of millions of dollars through fraudulent billings that included thousands of dead people.

James Matthews Thornton “Bo” Potter pleaded guilty to one count of conspiracy to violate the federal Anti-Kickback Statute. The maximum penalty is five years in prison, although prosecutors have agreed to recommend leniency. His sentencing is scheduled for April 30.

Potter’s attorney, Josh Briskman, said he expects sentencing guidelines to call for a prison term in the range of two and a half years and that he hopes for a lighter sentence. He said his client believes a guilty plea would be better for his family.

“This was a difficult decision for Mr. Potter,” he said. “It limits his exposure.”

According to Potter’s written plea agreement, he is a co-owner of the Spanish Fort and Birmingham laboratories. Although the guilty plea document identifies the businesses as “Lab-1” and “Lab-2”, the related forfeiture complaint identifies the Baldwin County facility as “Gulf Coast Molecular Laboratories.”

The plea document states that in late 2022 or early 2023, co-conspirator Brian Cotugno introduced Potter to a person identified as Individual-1. Even though Potter never met in person, he agreed to pay Cotugno kickbacks for the “bags of lead” that the conspirators used to bill Medicare through the two laboratories. According to court records, he and Man-1 transferred more than $8 million to a bank account controlled by Cotugno.

The forfeiture complaint states that Medicare reimbursements for the test kits amount to more than $13.8 million—99 percent of all Medicare reimbursements to the business. Federal authorities have launched an investigation into receiving thousands of complaints against Gulf Coast molecular laboratories from Medicare beneficiaries who said they received COVID-19 testing kits they didn’t ask for.

Cotugno, who has a criminal record, pleaded guilty in April to participating in the Baldwin County scheme. He is awaiting sentencing. He pleaded guilty in 1991 to a federal charge of cocaine possession and a judge sentenced him to 10 years and a month in prison, according to court records.

Prosecutors alleged that the defendants took advantage of a federal program to provide free COVID-19 testing kits (costing taxpayers $94.08 per kit) to Medicare beneficiaries. But the federal government has required beneficiaries to ask for the kits.

Each of the packages Potter received contained the name and personal information of a Medicare beneficiary, as well as an audio recording purporting to show the patient requesting a COVID-19 testing kit.

Neither the Spanish Fort lab nor the Birmingham lab billed children tested for COVD-19 until last year. However, Potter acknowledged that from February to May last year, his laboratories billed Medicare for test kits on behalf of more than 200,000 Medicare beneficiaries, including thousands who died.

Under the plea agreement, Medicare reimbursed the labs nearly $20 million for the test kits.

According to the guilty plea document, no one at both laboratories contacted any of the medical recipients to confirm that they had ordered COVID-19 testing kits, and no one even sent any of the child testers within the time frame specified in indictment. Instead, according to the plea agreement, Cotugno received a fee for arranging the distribution of experimental children. Some Medicare beneficiaries received them; others did not.

The plea document says Potter largely kept employees in the dark, telling them that “Brian” or another person they had never met would handle everything, according to court records.

Potter agreed to hand over more than $6.3 million in two bank accounts belonging to Gulf Coast Molecular Laboratories and more than $38,000 in a bank account belonging to the Birmingham laboratory.