Chapter Content
Okay, so chapter two… the trouble with Miami. And it starts off with this insane quote, right? “He would smoke a blunt, and then between eight and, say, noon he would launder upwards of a million dollars.” Like, what?!
So, the chapter kind of opens with this courtroom scene. This guy, Philip Esformes, is standing before the judge, like totally broken. He's saying how he's lost everything, destroyed his marriage, scarred his kids, you know, the whole nine yards. Blaming only himself, of course.
Apparently, the guy’s, like, lost a ton of weight since he was locked up. He's talking about his feet, his knees, some skin condition. He hasn’t seen the sun in, like, forever. And this is all because the jury found him guilty in, like, one of the biggest Medicare fraud cases ever. The government investigation took years, the trial was like, eight weeks long. They heard about bribery, fake invoices, kickbacks, money laundering, like, a gazillion bank accounts, shady doctors, the whole shebang. And apparently, some of his own people, you know, his closest associates, wore a wire and taped him basically directing his massive empire.
And, uh, apparently, these tapes paint him as this guy who’s willing to cut corners, who doesn't care about the rules, who’s, like, unappreciative of everything he has. Anyway, he says he takes responsibility for everything he's done. And, then, get this, he just starts weeping.
Okay, so the writer then goes on to say that someone, someday, is gonna make a great movie out of this whole Esformes thing. It's got everything Hollywood wants, right? You got Esformes himself, who’s apparently, like, super handsome, looks like Paul Newman. He drove a crazy expensive Ferrari, wore an even more expensive watch, flew around in a private jet. And the jury, of course, heard about all the beautiful women in luxury hotels, the screaming fits, the early morning phone calls, his insistence on calling cash "fettuccine." Seriously? One of his own lawyers described him as obsessive and probably bipolar, someone who drives people crazy, complains about everything, the whole shebang.
And get this, he'd keep the Sabbath and then at midnight, when, like, the religious prohibition on working was lifted, he would, like, go check on his nursing homes to make sure everything was running to his satisfaction. He even pushed his son, against all, like, athletic expectations, to become a college basketball star. You can even find videos on YouTube of his son doing drills under the watchful eye of coaches.
One of his lawyers, Roy Black, said he drove his kids, like, you wouldn't believe. Said he was obsessed with it, traveled with them, found hotels near synagogues. Black, who's represented all sorts of, you know, criminals, drug dealers, fraudsters, didn't seem to enjoy his experience with Esformes.
He said that Esformes wanted to run the defense, which they obviously didn't let him do. He was just so intense, you know? Black said he'd talk to him for hours, and he’d leave the lockup soaking wet, needing a shower and a Valium.
And apparently, Philip’s dad, Morris, was a legend. A rabbi who built a huge nursing home empire, donated millions to charity. He even programmed the horn on his car to play The Godfather theme music, wore Lakers uniforms with matching yarmulkes! Supposedly, he even told reporters that a council of rabbis in Israel had agreed to absolve him of any spiritual consequences if anything happened to them during their investigation.
One of Esformes's lawyers said that Philip wanted to prove himself to his father, who he lived in the shadow of. It’s a pretty crazy story. So, there were also stories about orgies, trips to Vegas, a wannabe Victoria’s Secret model. Oh, and he supposedly bribed the basketball coach at the University of Pennsylvania to recruit his son with bags of cash. It's just wild.
You know, it just goes on and on about the details of the fraud, how they were handing out hundreds of thousands of dollars in cash in kickbacks, needing tons of envelopes, you know?
But, honestly, if you spend enough time with the case, you might start to think that Esformes wasn't all bad. He would actually check on his facilities on Saturdays, hug the patients, dance with them.
So, what happened? Why did he throw his life away? At the sentencing hearing, this rabbi who had known the family for years, Sholom Lipskar, gave some pretty powerful testimony. He visited Esformes fifty times in prison. He said Esformes’s soul has been shattered, his heart broken, his personality changed.
Lipskar even said that there are bad people who do bad things and good people who make mistakes. He described Esformes as coming from an extraordinary family in Chicago, supporting all the institutions there, and then going to Miami and becoming a ruined individual.
Miami, that's what Lipskar thought, you know? He thought the problems started when he left his hometown.
So, the writer compares it to, you know, what people say at sentencing hearings, that it wasn't really their fault. But then the writer says that Lipskar’s argument sounds familiar because patterns of behavior attach themselves to places. He was making a small area variation argument, and it’s just really interesting.
Lipskar said that Esformes lost himself, went down the wrong path, dropped to the bottom of the abyss. He was Philip of Chicago, an honorable businessman, until he became Philip of Miami.
So then, the writer goes back to the Waldorf schools thing to talk about how a community can cast a spell over its members. How, you know, if you have multiple children at a Waldorf school, your next children would have fewer vaccinations. They get this “superhero complex” which can lead them to wander off in some strange directions. It gives them confidence to sort through subjects for themselves, and encourages people not to trust the judgment of experts.
She gives an example from a blogger who calls herself The Waldorf Mom, who didn’t vaccinate her children, and they got chicken pox and whooping cough, but, you know, her kids had Waldorf Education on their side so everything’s fine. Basically, the Waldorf spell is powerful.
The writer then moves on to cardiac catheterization. Basically, depending on where you are, they're used way more or less. Like, if you have a heart attack in Boulder, Colorado, you're way more likely to get a catheter than if you had one in Buffalo, New York. But then they point out that a cardiologist who moves from Boulder to Buffalo, turns into a Buffalo cardiologist. It all happens really fast. This isn’t really about learning, it’s more about the influences of your environment.
So, when the rabbi said that something happened to Esformes when he moved to Miami, he was saying that his friend was the equivalent of the cardiologist who showed up in Buffalo or the parent who enrolled their child in a Waldorf school. The writer then concludes that communities have their own stories and those stories are contagious, and calls it an "overstory," like the upper layer of foliage in a forest, that affects the behavior of everyone below. And now we’re left with the question, what’s the Miami overstory that cast its spell on Esformes? And where did it come from?
So, the next section starts talking about Medicare fraud, how it covers millions of people and spends billions of dollars a year. It was created in 1965, and it didn’t take long for criminals to realize the opportunity.
Getting to be a Medicare provider is, surprisingly, not that hard. You apply online for a number, you certify that you'll follow the rules. It's a trust based system. And the writer then goes on to talk about how you need patients, medical professionals, and files.
The world of Medicare fraud is basically a series of variations on this fake patients/doctors/files combo. Doctors are in on it, or you steal a doctor's ID off the internet. You bill for something more extravagant, or you don't bother at all. You recruit patients, send them to a doctor for a kickback, and fake medical records, and it's just, like, crazy.
If Medicare gets suspicious, you put someone else's name on the form, and they're out of the country. You give the drug dealer a cut of the business for infusions of cash.
And then there's telemedicine, where you don’t even need to meet a patient. Medicare fraud took to the streets to sing hallelujahs during COVID. The writer then goes on to say that the total amount of Medicare fraud is estimated to be around a hundred billion dollars a year. And the ground zero for this criminal activity is Miami.
The writer then quotes someone who grew up in Miami, comparing it to growing up in the Alps if you want to be a downhill skier. Apparently, the government formed special "strike forces" to crack down on Medicare fraud, and the first one was in Miami.
So, why Miami? The writer uses this chart to show how much Medicare spent, per enrollee, on durable medical equipment. And compared to everywhere else, Miami’s number is just outrageous. All the other cities are in the $200 range, but Miami? $1,234.73.
Then the chapter asks where the Miami overstory comes from, and proposes the 1980 theory, from this book "The Year of Dangerous Days."
This theory basically says that Miami used to be a small, sleepy Southern city. But three things happened in 1980 to change it. The first was drug money. The cocaine trade just exploded, and the underground economy was worth billions. A ton of real estate deals were all cash, and IRS agents estimated that people were depositing tons of money in Miami banks. The key thing is how quickly American institutions are undermined by drug money. The city's banking system became an accomplice to international drug cartels. The criminal justice system got corrupted, the homicide rate skyrocketed. And in the spring of 1980, Fidel Castro decided to open his country’s borders.
So, Miami's demographics changed overnight. It turned into a majority Latin city. All these events shook the city to its foundations. All these events took all these institutions that had anchored the city for generations and shook them to their foundations.
So, if you moved to Miami before 1980, you're just moving to another generic Southern city. But if you moved in 1980? You're moving to a place where institutional authority is shattered.
The chapter then talks about a money launderer who would deposit millions of dollars in cash into a Miami bank every day, that the bank had to hire five people to work through the night to count the money.
The writer then asks if that behavior would directly lead to Medicare fraud thirty years later, and wonders, is it just that having poorly built institutions becomes part of the game?
And it's everywhere down here. The writer says, the police officer will even tell you not to pay speeding tickets, and instead pay their cousin’s ticket clinic for a lower rate, with no points.
So the next part starts with the writer visiting the Medicare Fraud Strike Force headquarters in North Miami, and talking with the people who run the Miami office. They describe the criminals as having a mix of amusement and moral incredulity.
They tell this story about a money launderer who would smoke a blunt in the morning and then launder upwards of a million dollars before noon. One of his shell companies was, get this, literally upstairs from the Strike Force whose job it was to shut down his fronts!
Apparently, they caught him at the Biltmore Hotel in the Al Capone suite, of course. There's a certain characteristic shamelessness that sets Miami apart. One time, they found a "nominee owner" locked in a tiny room with a steel gate. Another time, scammers were rounding up homeless people and injecting them with vitamin B-12, and telling Medicare that it was expensive antiviral medicine. The Miami overstory is, apparently, just use your imagination.
So, the agents show the writer some of their favorite hot spots. They go to this unassuming neighborhood near the airport. They pull into the parking lot of an office building. Inside, the floor plan looks like a maze, a rat's warren of small spaces, carved and sublet into even smaller spaces. There's a home health agency the size of a child's bedroom, a medical center the size of a large closet, a doctor's office, a rehab facility. No patients to be seen, though. In each of the offices, there's just one person.
The building management put up posters with inspirational lines like, "Believe and succeed. Courage does not always roar."
The agents find the posters hilarious. They said the Medicare claim approvers say "and they do" to the office's motivational messages!
The writer and Strike Force team then head to a merchandise mart attached to a hotel. It's a two-story indoor mall that has a health care mall. They stop in front of an empty office with posters taped to the windows advertising medical-rehab services. The office has some furniture and a printer, but nothing’s connected. On the walls are cheap reproduction prints. There's also the firm’s paperwork and an organizational chart listing the directors, the administrator, corporate compliance officer, and office manager as the same person. They were every bit as brazen as they were at the office plaza.
Apparently, there are turnkey operations. You can tell them what type of industry you're interested in, and they'll set it up for you.
The writer says, "We've been to offices that have a monitor, a desktop, a mouse, and a keyboard. But nothing's connected. It's just all the cables are hanging."
The Strike Force asked the woman manning the reception desk in what advertised itself as a medical services company what she was doing there, and she said she had no idea.
The Strike Force agent had been to the merchandise mart almost as many times as he'd been to the office plaza. "I'm surprised they don't have our picture up somewhere: 'If you see these guys coming, don't let them in.'"
The Strike Force looked up the Medicare billing numbers for the firm with the nineteenth-century prints on the wall. They billed five million and were paid 1.2 million in the first and second quarter.
"No billing since," they said, "They left. They pulled up their stakes and went down to the next one." And they couldn't even be bothered to pack up their office.
The Strike Force agent says he runs the state, and the offices in other areas of Florida have different schemes. It’s much more blatant in South Florida.
The writer then asks the agent about Rick Scott, but they don’t answer, because of course, it's too sensitive, but the writer can tell what they were thinking. They're wondering about the impact that people like Rick Scott had on people like Philip Esformes.
Rick Scott used to be the CEO of a hospital chain, and his company was raided by federal agents. The agents were all from Florida! Scott wasn't charged, but he was forced to resign. And then his company pleaded guilty to felonies and paid millions in civil settlements.
Scott ended up moving to Florida, and then ran for governor of Florida. So, for years that Esformes ran his schemes, the governor was someone who had presided over a hospital system that also ran a billion-dollar scheme.
The writer concludes that the overstory is specific, it's tied to a place, it's powerful, and it shapes behavior.
So, the Medicare Fraud Strike Force stumbled upon Philip Esformes by accident. They found a pharmacy owner who was paying kickbacks to two brothers. The pharmacist told the Strike Force agent about the Delgado brothers.
The Delgado brothers were in the business of arranging ancillary services. The older brother got into the game just out of nursing school, when he took a job as a field nurse for a company, and she told him he could make extra money by signing visits that weren't really done.
So the writer continues on and describes the Delgado brother's testimony. It's a case study in how the Miami overstory is passed down from one generation to the next.
He didn’t look back and opened his own business with Dr. M, who was the medical director of assisted-living facilities, that he'd take prescriptions to, and he would just sign them off. The doctor didn’t even look at the prescriptions.
The Delgado brothers got bigger and bigger. They opened restaurants and cigar stores, and sold leftover oxycodone pills. Then they reunited with the nurse and her son. The son took doctors out to strip clubs and did a lot of cocaine, then took sleeping pills when he got home at 3 a.m., before starting again the next day.
So, the Delgado brothers were the connection that the Strike Force discovered. The brothers mentioned the name of a man they had been working with since the 2000s, after he and his father had moved down from Chicago: Philip Esformes.
Esformes had assembled a portfolio of nursing homes and assisted-living facilities. The Delgado brothers hatched a scheme to keep Esformes’s nursing homes at capacity. If a patient was hospitalized for at least three days, they were eligible for 100 days in a skilled nursing facility. So they found a hospital partner, the Larkin Community Hospital, whose criteria was very loose.
The people at Larkin would get kickbacks. In return, they would send patients to Esformes's nursing home, and then to his assisted-living facility, then the Delgado brothers would pick them up for ancillary services. Then the patients would be funneled back to Larkin. It's a perpetual-motion Medicare fraud machine. The machine ended up billing over a billion dollars to Medicare, fueled by bundles of cash, trips to Vegas, and doctors with loose pens.
Esformes was obsessive and demanding. He was a screamer. He called his assistant at 5 a.m. to give him his marching orders. He carried two phones, and would call his father to give him daily census counts. As the Strike Force closed in on him, Esformes grew paranoid. He had his assistant strip naked to meet with him in his pool, and gave lectures on the merits of the “empty chair defense.”
The assistant quoted him saying that if his brother goes away, he can just say whatever he wants, since the brother is gone. And then he said that his brother needs to redo his face with plastic surgery, and leave to Israel. Supposedly, the assistant said that the brother flipped out on him, saying, “Israel? You’re going to have me whacked when I get to Israel! You have ties there.”
The writer repeats that it would make a great movie. The handsome villain, Ferrari, girlfriends, barking orders, trying to keep his perpetual-motion machine going. But it only makes sense in Miami.
Even the trial itself, the point where order is supposed to take over, fell into a Miami-ness abyss. The prosecution and the defense got into a side battle over attorney-client privilege, which somehow wound its way up to the Supreme Court. Kim Kardashian tweeted about the whole mess. Morris Esformes wound up being thrown out of the trial for shouting things from the public gallery like “He’s a liar!”
Throughout his trial, Esformes insisted that he was innocent. He refused to consider a plea-bargain. He didn’t say a word to defend himself until the sentencing hearing. He just sat there, while the brothers dug a grave for him.
The assistant quoted Esformes saying he had an ace up his sleeve, connections to make things go away. And that he saw things go away.
According to the assistant, Esformes said that he had government connections and that he’d made a huge donation to a presidential campaign.
The writer then states that Esformes had his sentence commuted by Donald Trump. And where did Trump move after leaving the White House? South Florida, of course.