Healthcare executive gets nearly 10 years in prison for $56.5M fraud scheme

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Sreedhar Potarazu, MD, founder, president and CEO of McLean, Va.-based VitalSpring Technology, was sentenced July 19 to 119 months and 29 days in prison for defrauding VitalSpring's shareholders and failing to pay employment taxes, according to the Department of Justice.

Dr. Potarazu pleaded guilty to shareholder and employment fraud in December 2016. He admitted providing false and misleading information to VitalSpring's shareholders to get them to make more than $49 million in capital investments in the company. For example, he told investors in 2014 that VitalSpring's 2013 revenues were about $12.9 million when the company's actual revenues for that year were less than $1 million. He also admitted concealing from shareholders that he failed to pay more than $7.5 million in employment taxes.

In May, VitalSpring, which provided data analysis and services related to healthcare expenditures, and its subsidiary Enziime filed for Chapter 7 bankruptcy.

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