FBI accuses diabetic shoemaker of fraud

Sunday, October 8, 2006

MEQUON, Wisc. - Federal officials have accused a diabetic shoe manufacturer of obtaining Medicare approval for one product but selling another, defrauding the agency of $18 million.

In an affidavit unsealed Oct. 3, former CEO David Schlaegeter told FBI agents that, over a period of 18 months, Dr. Comfort sold heat-molded shoe inserts that did not meet new Medicare standards, according to a news report.

Schlaegeter's testimony-given in exchange for immunity- led to a March 23 search of Dr. Comfort Shoes' three locations. Federal agents seized records relating to the heat-molded shoe inserts and transactions from Jan. 1, 2004 to the present. They also seized information regarding billing practices and Medicare reimbursements for the shoe inserts, including income and expense reports, balance sheets, receipts, bank account and loan information, copies of tax returns, company communication records and the shoe inserts themselves.

Schlageter told the FBI that roughly 90% of the end-users of Dr. Comfort's products are Medicare beneficiaries.