Casino employees get cosmetic surgery in insurance fraud scheme

Angie Wagner

Thursday, May 4, 2000 | 2:28 a.m.

For two years, several cocktail waitresses and dealers at a Strip casino were dealing in more than just drink tips and gambling chips. They also were getting breast implants and tummy tucks by defrauding the company's insurance plan.

Authorities have uncovered a widespread health-care fraud scheme in which workers at the MGM Grand hotel-casino and other Las Vegas casinos were recruited to have plastic surgery.

"One might say that it's sort of a slice of Las Vegas Americana," Marc Garber, assistant U.S. attorney, said Wednesday. "It's seems apropos to this city."

On Wednesday, Sophia Dao Stack, 51, of Anaheim, Calif., became the fourth person to plead guilty in the scheme. The FBI alleges she recruited the employees for cosmetic surgery. Stack pleaded guilty to conspiracy.

MGM employee Joan Heubsch, Lee Newman, the Beverly Hills, Calif., doctor who performed some of the surgeries, and Suzi Alter, the owner of the California clinic where the procedures were done, also have pleaded guilty in the scheme. Newman faces up to five years in prison and the others could be sentenced from six to 14 months in addition to paying fines.

The FBI says the scheme worked like this: Beginning in February 1996, Stack and an MGM employee, who authorities decline to name, began recruiting MGM workers to have breast implants, liposuction and tummy tucks at the Moreno Valley Ambulatory Surgical Center in Moreno Valley, Calif. The surgical procedures are not covered by the casino's health insurance plan, Mutual of Omaha.

Joseph Dickey, an FBI special agent, said the investigation has identified 12 to 16 employees of the MGM and other casinos as being involved in the scam. Cocktail waitresses, dealers and other workers received cosmetic surgery.

"It was a pretty widespread conspiracy," he said, adding that investigators believe "multiple doctors" and many more casino employees and patients outside the casino industry were involved.

Newman, Alter, 44, and the employees agreed that the surgeries would be fraudulently documented and billed, authorities said. Newman, 60, is accused of submitting bills to Mutual of Omaha for medically necessary procedures instead of cosmetic surgeries.

The insurance company paid at least $21,513 to Newman.

The FBI said the scam continued until March 1998, when either the MGM or Mutual of Omaha began questioning some of the insurance claims. MGM officials and Mutual of Omaha officials would not comment Wednesday, citing the ongoing investigation.

Workers at the medical clinic said no one was available to comment Wednesday.

Authorities also claim Newman and Alter told patients to mislead the FBI about the investigation.

Stack and the unnamed MGM employee were paid kickbacks by the clinic of about $500 a patient and the patients paid them referral fees from $750 to $2,500 for sending them to the medical center.

Authorities claim Heubsch, 46, paid $3,000 to Stack and the MGM employee to arrange for cosmetic surgery at the clinic in March 1997. A source close to the investigation said Heubsch received breast implants.

Heubsch is the only MGM employee who has been charged, but Dickey said the investigation is continuing, and workers at other casinos also are involved.

"The sex appeal of this case is that these people were committing fraud in order to get breast implants and tummy tucks," Garber said.

"It's perfect for this place. It is a cosmetic city to begin with."