The owners of several Arizona wound graft companies have been sentenced in federal court for orchestrating a massive Medicare fraud scheme that generated more than $1.2 billion in false claims.
Alexandra Gehrke was sentenced to 15 1/2 years in prison, and her husband, Jeffrey King, was sentenced to 14 years in prison after pleading guilty to conspiracy to commit healthcare fraud and wire fraud, according to the Justice Department.
The Phoenix couple ran a large-scale operation from late 2022 through mid-2024 that targeted elderly and terminally ill patients, many of them in hospice care, with medically unnecessary wound grafts ordered through illegal kickbacks.
Prosecutors said Gehrke owned and controlled multiple wound care companies that relied on medically untrained sales representatives to identify Medicare beneficiaries with wounds, regardless of severity or medical need.
Once patients were identified, the companies ordered expensive bioengineered skin grafts made from human placental tissue, often requiring only the largest sizes available, even when the treatment was not appropriate or reasonable.
Nurse practitioners contracted to apply the grafts were instructed to follow the sales orders rather than their own medical judgment, resulting in large grafts placed on small wounds, multiple grafts applied to single wounds, grafts applied to nonexistent wounds, and treatments given to terminally ill patients receiving palliative care.
Some patients died the same day or within days of receiving the grafts, according to court filings.
Over 18 months, prosecutors said the scheme generated more than $960 million in false claims to Medicare and other federal healthcare programs, with insurers paying more than $614 million before the fraud was detected.
ABC15 in Phoenix highlighted the lavish lifestyle investigators say Gehrke and King built using proceeds from the scheme, including luxury vehicles, gold and silver bars, millions held across dozens of bank accounts and a home valued at nearly $6 million.
Gehrke and King were arrested at Phoenix Sky Harbor Airport in June 2024 as they attempted to board a flight to London, after investigators concluded they were preparing to flee the country.
Investigators found books in their home and packed luggage that focused on disappearing, erasing digital footprints and navigating the criminal justice system, which prosecutors cited as evidence that the couple anticipated criminal charges.
The case was charged during the Biden administration as part of a nationwide healthcare fraud enforcement effort and was carried through to sentencing during the Trump administration.
The DOJ said the ongoing investigation tied to the case involves hundreds of defendants nationwide, with total alleged false claims across related prosecutions approaching $30 billion.
Jim Mishler ✉
Jim Mishler, a seasoned reporter, anchor and news director, has decades of experience covering crime, politics and environmental issues.
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