Anthony Giovanni Montanelli, 34, and his father, Steven John Montanelli, 63, each pleaded guilty to one count of conspiracy to commit mail fraud in connection with a scheme to divert medical equipment owned by Kaiser Foundation Hospitals and Health Plan, Inc. (Kaiser) for use in their own San Jose-based company. According to the plea agreements, the defendants worked as biomedical engineers at Kaiser, responsible for repairing and servicing Kaiser ultrasound systems used at its medical facilities located throughout the Bay Area. The defendants used their positions at Kaiser to order new ultrasound parts that were supposed to be used to repair, replace, and/or maintain Kaiser’s medical equipment, but instead were diverted to their own business, Pacific Coast Imaging (PCI). They then sold the diverted equipment through PCI for their own profit. The father and son also admitted operating their scheme and business, which they did not disclose to Kaiser, while being paid by Kaiser to service Kaiser-owned equipment.
The defendants admitted that, beginning February 2010 and continuing through about April 2018, they worked together to defraud Kaiser. Specifically, the defendants rented storage units in which they stockpiled new, used, and decommissioned Kaiser-owned ultrasound systems and parts. Some of the Kaiser inventory they ordered through Kaiser became PCI inventory, which they sold and leased to PCI customers. The defendants acknowledged that for years they caused Kaiser’s procurement specialists to process, order, and have mailed to them an unknown number of ultrasound parts which they diverted to PCI. Further, the defendants admitted that they recorded parts and systems as decommissioned when, in fact, the equipment was diverted to PCI. In sum, the defendants both admitted they diverted Kaiser-owned equipment to PCI, operated PCI while employed by Kaiser, and used work hours paid for by Kaiser to operate PCI. The defendants admitted that the loss to Kaiser resulting from the conspiracy exceeded $1,500,000.
