“Prolonged cocaine abuse most seriously impacts the cognitive domains controlling attention, impulsivity,” a court document filed last month pointed out.
“Cocaine abuse also can impact a person’s assessment of risk and reward.”
Alexandra Gehrke, one half of Scottsdale’s “glam-flam couple” who fraudulently billed insurance companies more than $1 billion, faces two decades in prison when a federal judge rules on her case this week.
Gehrke’s attorney is begging for a reduced sentence, as “Ms. Gehrke has struggled with mental health, disability, and substance abuse issues for her entire life.”
A federal prosecutor counters Gehrke deserves a heavy-handed sentence for running “one of the most financially impactful health care fraud schemes in American history.”
Gehrke is to be sentenced Wednesday, Sept. 24, at Sandra Day O’Connor United States Courthouse in downtown Phoenix. Jeffrey King, the DJ-turned-fraudster who is the other half of the glamorous Scottsdale couple, will be sentenced Oct. 7.
The two were married in early 2024; in less than a year, the newlyweds went from saying “I do” to “I did.”
On June 17, 2024, either prepared for a hard-earned honeymoon or ready to run, they waited to board a London flight, adjusting gold bracelets and $30,000 watches.
They walked out of Phoenix Sky Harbor International Airport in steel bracelets.
After first insisting they were innocent, by the end of 2024 each admitted guilt to healthcare fraud in the face of a growing mountain of evidence.
Gehrke, 39, and King, 50, individually admitted to “targeting elderly Medicare patients, many of whom were terminally ill in hospice care, for medically unnecessary wound grafts.”
Billing nearly twice as much, the deviant duo settled for a massive payout: “Medicare and other health care benefit programs paid over $600 million based on the false and fraudulent claims they submitted for these vulnerable beneficiaries,” according to the U.S. Attorney’s Office.
According to the original indictment, Gehrke and King started their skin-graft scheme at the end of 2022 – stealing hundreds of millions from insurance companies in barely more than a year.
Many of the patients they targeted through a seedy sales force and kickback-pocketing nurses were hospice patients on their deathbeds.
Aversions, anxiety, abuse
On Aug. 26, Joshua Lowther, Gehrke’s Atlanta-based attorney, filed a “motion for downward variance” – asking the federal court to chop a recommended 15-and-a-half year sentence to 10 years.
He argues various factors led his client to make poor decisions.
“Ms. Gehrke, while emphasizing again that she makes no excuses for her criminal conduct, submits that her prolonged drug abuse impacted her ability to assess risks, and to plan her actions according to those risks, thereby contributing—at least in part—to her unwillingness to terminate (or even avoid) that conduct,” Lowther wrote.
It won’t happen again, the defense attorney promised:
“(Gehrke) is confident, based on her now-specific awareness of the need to address her mental health and drug addiction issues meaningfully and to maintain her mental health and sobriety, that she will be able to conduct herself in a law-abiding manner in the future.”
The attorney stated Gehrke’s “struggles with mental health and disability began during her childhood. Her undiagnosed Autism Spectrum Disorder, which she suffered along with Attention-Deficit Disorder, severe anxiety, and depression, colored her interactions with her family and peers.”
Gehrke’s autism symptoms “first appeared in preschool, where she showed extreme aversions to persons who were in her presence, and anxiety based on her perceived lack of control of her environment,” according to Lowther.
“She also had severe aversions to touch, including any physical affection from her parents, which contributed to her mother and father’s confusion at the time.”
Throughout her childhood, the condition “exacerbated her being bullied and suffering social isolation.”
An emotionally-absent father made her more detached, according to the lawyer.
“Ms. Gehrke’s father’s actions did not alleviate her childhood struggles: although he provided for her and her mother financially, he showed little patience with Ms. Gehrke and spent very little of his time with her.
“He often remarked that he never wanted children.”
Gehrke’s mother “exerted her best efforts to help Ms. Gehrke emotionally,” but “misunderstood Ms. Gehrke’s emotional needs and the actual extent of Ms. Gehrke’s mental anguish that resulted from her undiagnosed disability.”
Plagued by “severely-low self-esteem, anxiety, and depression … Ms. Gehrke used alcohol and controlled substances in an effort to cope with her emotional suffering.”
Her drinking and drug use started in her teen years, “continuing through a date shortly before her arrest.”
Though her attorney says Gehrke stopped drinking and snorting cocaine after completing an alcohol-rehabilitation program, “she was unable to maintain sobriety from cocaine, relapsing in 2019.
“With the exception of her having attended a seven-day detoxification program in 2021, she continued to use the drug to varying degrees (but for substantial periods of time, daily) until a short time before her arrest.”
Lowther’s underscored note to U.S. Judge Roslyn Silver: “A person’s use of cocaine has well-documented, negative impacts on that person’s ability to function cognitively.”
‘The most vulnerable’
Don’t buy that, sneers Shane Butland, a U.S. attorney.
In his memorandum of sentencing filed Aug. 4, Butland comes out swinging:
“Gehrke not only executed the largest health care fraud scheme in the history of Arizona … but she did so by targeting the most vulnerable population – dying seniors in hospice care – because, in her words, that was “where the most money (was) at.”
Noting this is “the first prosecution in the country involving fraudulent Medicare claims for amniotic wound allografts,” Butland paints Gehrke as the mastermind behind the operation:
“Gehrke set up companies to facilitate her illegal referrals, wooed co-conspirators with promises of immediate riches, and devised a business model that rewarded greed at the expense of patient care.”
After targeting nursing homes and hospice facilities, “Because Medicare paid per square centimeter for these allografts, Gehrke directed the sales representatives to order the largest sizes of allografts available, even for small and unserious wounds.”
Gehrke juggled companies to create “the illusion of independence between the marketing entity (Apex) and the medical practice (APX).”
Gehrke’s scheme was fueled by massive payouts to her untrained but greedy sales force, according to Butland:
“At least 12 sales representatives received over $1 million in less than a year and four received over $5 million each.”
She also contracted nurse practitioners and paid them “between $500 and $1,000 each time they applied allografts to a patient.”
The billing trail is grisly.
“Medicare claims data reflects that APX billed over $16 million for allografts applied to a single patient, APX billed over $1 million for allografts applied to another 272 patients.”
The topper: “APX submitted claims for allografts applied to seven patients on the dates of their death.”
The U.S. Attorney’s Office urges the federal judge to ignore Lowther’s teary tale.
“Nothing about Gehrke’s personal history or characteristics warrants a downward departure or variance from her Guidelines range for this serious, prolonged and unprecedentedly egregious fraud offense,” Butland wrote.
Indeed, compared to the modern-day Dickensian drama penned by Gehrke’s defense attorney, Butland paints a pretty portrait.
“Gehrke had a pleasant childhood,” Butland countered. “Gehrke reports that she was an only child raised by both parents and enjoyed a childhood free from abuse, neglect, and serious family conflict.”
The prosecutor noted “her father was an attorney who owned a law practice in Scottsdale and her mother, with whom she has maintained a close relationship, was a homemaker.”
Gehrke graduated from Arcadia High School, then attended the Fashion Institute of Design and Merchandising in Los Angeles.
After graduating from Arizona State University, her profile describes her as “Owner and Curator of two successful Art Galleries in Downtown Los Angeles” from 2008-12.
Gehrke stated on LinkedIn she worked as a legal aid for three years before becoming an associate with the real estate firm Marcus and Millichap, where she said she was a real estate broker “specializing in medical office properties.”
Ever active on social media, Gehrke proudly posted “moved to central Scottsdale” in 2017.
Subsequent posts show her traveling, playing golf and attending Women’s Enterprise Foundation events.
Another Facebook post tracked her employment:
“Started New Job at APEX Medical, 2022 — Co-Founder.”
Butland stresses Gehrke “had extensive employment history in medical sales and earned $7,000 per month prior to her arrest managing a building that she owned.
“But despite abundant family support, healthy surroundings, educational opportunities, ownership of real property, and gainful and lawful employment earning over $80,000 per year, Gehrke opted to take a different path.”
No sob stories here, the feds say:
“Unlike many defendants who commit federal felonies, Gehrke had every advantage and every opportunity to live a comfortable and law-abiding life. Instead, she used her intelligence and savvy to unlawfully enrich herself at the expense of others.”
Rather than the Department of Probation’s recommendation of 186 months’ imprisonment, Butland insists “a more significant sentence is warranted to reflect the seriousness of Gehrke’s conduct, promote respect for the law, and provide adequate deterrence.”
Though his sentencing memo does not provide a specific number of years requested, Butland provided the federal judge with examples of three others convicted of Medicare fraud between $66 and $746 million.
Those three each received 20-year sentences.
Millions seized
Last summer, federal agents raided the sprawling Gehrke-King Scottsdale home – a chip shot from the Phoenician.
The feds seized $350,000 in cash from safe deposit boxes at the house, as well as gold bars, coins and jewelry with an estimated value of $525,000.
Using money they later admitted they obtained fraudulently, the couple apparently went on a wild spending spree for nearly two years.
Most of the loot, they will never see again.
According to a federal court filing, homes, accounts and luxury vehicles “subject to forfeiture because it is property, real or personal, involved in the offenses of conviction, or property traceable to such property involved in the offenses” include:
- A 5,200-square foot Scottsdale mansion – valued by Zillow at $6.2 million – at 6246 East Hillcrest Blvd.;
- A $645,000 home registered to King at 1637 North Sunset Drive, Tempe;
- A $230,000 2016 Ferrari 488 Spider;
- Three Mercedes-Benz vehicles, valued between $50,000 and $180,000;
- A $13.5 million U.S. Bank account;
- Various other bank accounts totaling nearly $40 million;
- Two Charles Swab accounts totaling $4.5 million:
- Gold bars and silver coins;
- A $10,000 gold Cartier cigarette lighter;
- Two $8 million life insurance policies;
- Multiple $10,000-plus Rolex watches;
- Gold bracelets and other high-end jewelry.