Medical entrepreneur and her DJ husband arrested over $900m healthcare fraud scheme

A wealthy power couple from Arizona found themselves in handcuffs just months after getting married, for their role in a $900 million Medicare fraud scheme, according to the Department of Justice.

Alexandra “Lexie” Gehrke, 38, and Jeffrey King, 49, were preparing to depart for their honeymoon at the Phoenix Sky Harbor International Airport last month when federal prosecutors arrested them on charges of conspiracy, health care fraud, receiving kickbacks and money laundering in connection to a years-long scheme.

The government claims Gehrke and King targeted “elderly Medicare patients, many of whom were terminally ill in hospice care” to get “medically unnecessary” expensive wound grafts and then fraudulently billed Medicare more than $900m over a year and a half.

Prosecutors say they did this to “fund their lavish and opulent lifestyles” which included purchasing expensive cars, multi-million dollar homes and more than $520,000 in gold bars, gold coins and jewelry.

“It does not matter if you are a trafficker in a drug cartel or a corporate executive or medical professional employed by a health care company, if you profit from the unlawful distribution of controlled substances, you will be held accountable,” Attorney General Merrick Garland said in a press release. 

Federal prosecutors allege that Gehrke and King used four companies they owned or co-owned to bill Medicare $900m for “highly expensive” but unnecessary wound grafts to be used “indiscriminately” on patients without coordinating with patients’ treating physicians.

These wound grafts, known as allografts, are made from human placental tissue. They are only covered by Medicare if the grafts are medically reasonable, necessary for treatment and not procured through illegal kickbacks.

To do so, the two allegedly paid “medically untrained sales representatives” to recommend the expensive grafts to patients, specifically those in nursing homes, assisted living facilities or hospice facilities.

Gehrke and King then allegedly paid nurse practitioners a flat rate to order and apply the expensive wound grafts to patients.

Gehrke allegedly told sales reps to order larger grafts even if the wound on a patient was “the size of [her] little fingernail”.

Through lucrative kickbacks, the couple allegedly purchased a $300,000 Ferrari, a $230,000 Mercedes-Benz, a $5.3m home, a $640,000 house and more.

In just sixteen months, the defendants allegedly received more than $330m in illegal kickbacks from the graft distributor. Between November 2022 and May 2024, Gehrke and King allegedly submitted more than $900m in false or fraudulent claims to Medicare, commercial insurers, or two other federal healthcare programs.

Medicare paid them more than $600m as a result of the scheme.

Upon being arrested, investigators seized “significant assets” including bank accounts totaling more than $70m, four luxury vehicles, more than $500k in gold bars, coins and jewelry, two properties and more.

Both Gehrke and King have pleaded not guilty to the charges. The Independent has contacted attorneys for Gehrke and King for comment on the accusations.