Owner of Suburban Chicago Medical Supply Company Convicted in Procurement Fraud Scheme at U.S. Department of Veterans Affairs

CHICAGO - The owner of a suburban Chicago medical supply company has been convicted of federal fraud charges for paying kickbacks to a U.S. Department of Veterans Affairs employee in exchange for procuring orders of medical equipment.

After a week-long trial in U.S. District Court in Chicago, the jury on Monday found DARREN A. SMITH, 59, of Hazel Crest, Ill., guilty of all eight wire fraud counts against him. Each count is punishable by up to 20 years in federal prison. U.S. District Judge Edmond E. Chang set sentencing for Sept. 10, 2024.

Smith operated a medical distribution company based in Bolingbrook, Ill. Evidence at trial revealed that Smith schemed with a procurement clerk in the Veterans Health Administration Prosthetics Service in Chicago to have the VA order costly medical equipment from Smith's company in exchange for concealed kickbacks to the clerk. The orders placed by the clerk involved unnecessary and more expensive rentals of certain medical equipment from Smith's company instead of purchasing the equipment outright, as VA physicians had instructed. From 2017 to 2020, the VA spent more than $2.7 million at Smith's company and fraudulently overpaid it by more than $1.3 million. In exchange, the clerk pocketed kickbacks from Smith of at least $220,000.

The VA procurement clerk, ANDREW LEE, 68, of Chicago, pleaded guilty to a wire fraud charge prior to trial. He is awaiting sentencing.

Smith's conviction was announced by Morris Pasqual, Acting United States Attorney for the Northern District of Illinois, and Gregory Billingsley, Special Agent-in-Charge of the Department of Veterans Affairs, Office of Inspector General, Central Field Office. The government is represented by Assistant U.S. Attorney Heidi Manschreck and Special Assistant U.S. Attorney Benjamin Christenson.