Fayette County

Lexington executive to pay $4.5 million to settle fraud claims in federal grant requests

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A Lexington woman agreed to pay $4.5 million to settle claims she submitted false information to get federal grants for her medical-device companies and spent some of the money on personal items such as plastic surgery and jewelry.

The judgment is against Vesta Brue, 70, and two companies she heads, LifeTechniques Inc. and Care Team Solutions, court records show.

U.S. Attorney Kerry Harvey’s office announced the settlement Monday.

Brue’s companies received several federal grants between 2005 and 2013 to develop devices such as an electronic pill box and a monitoring system to help weight-loss patients stick to their post-surgery requirements, according to court records.

Court records list more than $5 million in grants to the two companies.

Authorities charged that Brue put false information in the applications for some grants.

In one case, for instance, she listed a company address associated with Tufts University even though she did not have an office there, according to court records.

The purpose was to add credibility to the application.

In another case, Brue cited the expertise of a consultant who didn’t work for her.

Brue also acknowledged giving federal regulators false information about how she spent grant money.

Employees said Brue directed them to list personal expenses such as groceries and restaurant meals as “supplies” in company ledgers, according to a federal complaint.

The alleged improper spending authorities cited included $13,080 for plastic surgery; $4,797 for dental work; $2,424 at pet stores; $2,326 at Trader Joe’s; and $2,162 to a jewelry store.

Brue also spent grant money at hair and nail salons and on a massage.

Brue violated rules by spending hundreds of thousands of dollars of grant money on travel and activities related to promoting her products, and by paying Chinese companies $200,000 to develop products even though all grant money was to be spent in the U.S., federal authorities said.

“In a prime example of audacious greed, Ms. Brue accepted sizable federal grants meant to fund the development of medical devices but instead diverted these taxpayer funds to pay for her personal and company expenses,” Derrick L. Jackson, special agent in charge of the U.S. Department of Health and Human Services Office of Inspector General, said in a news release.

The $4.5 million judgment announced Monday was in a civil proceeding.

In March, Brue pleaded guilty in a separate criminal case to making false statements.

U.S. District Judge Danny C. Reeves sentenced her to seven months in prison and seven months of home detention and ordered her to pay $222,037 in restitution, court records show.

Brue is in prison in Texas, scheduled for release in December.

That case involved false statements on behalf of a company called Telehealth Holdings owned by Jerome Hahn.

Hahn pleaded guilty and was sentenced to four months in jail. He is jointly liable with Brue for the restitution.