Spinal Device Company CFO Pleads Guilty to Kickback Scheme

SpineFrontier Inc.’s chief financial officer (CFO) this week admitted in federal court to bribing orthopedic surgeons to use company products in exchange for sham consulting fees.

Aditya Humad, 41, of Cambridge, Mass., pleaded guilty to one count of conspiracy to violate the Anti-Kickback Statute. Humad was charged in September 2021 along with SpineFrontier and the company’s former Founder/President/CEO Dr. Kingsley R. Chin, who is now Founder/CEO/Partner at KIC, a private equity and strategic investment firm focused on artificial intelligence, proprietary technologies, and global capital markets.

According to U.S. prosecutors, Humad paid and conspired to pay more than $540,000 in bribes to surgeons through sham consulting fees for work they never performed. Humad and Chin bribed surgeons to use SpineFrontier’s products, and in turn, SpineFrontier received millions of dollars in revenue from procedures the surgeons performed, the U.S. Justice Department charged.

Humad negotiated contracts with surgeons that awarded them between $250 and $1,000 per hour for purported consulting work for SpineFrontier. However, Humad and Chin were actually paying the surgeons for using SpineFrontier’s products, prosecutors said. Although the surgeon-consulting program was reportedly directed at gathering technical feedback about SpineFrontier’s products, Humad used the bribes pursuant to that program to induce surgeons to use the company’s products in surgeries that covered by federal healthcare programs such as Medicare, Medicaid, and the Veterans Health Administration. Additionally, the surgeons frequently spent only a small fraction of their reported time, if any, performing actual consulting, authorities charged.

Humad previously agreed to pay more than $150,000, including interest, under a civil settlement agreement and may also be required to make additional payments tied to his annual income.

Chin pleaded guilty last May to making false statements to the Centers for Medicare & Medicaid Services. He was subsequently sentenced in August by U.S. District Court Judge Indira Talwani to one year of supervised release with the first six months to be served in home confinement. Chin was also fined $9,500 in addition to $40,000 he personally agreed to pay as part of a related civil settlement and $855,000 his wholly-owned company agreed to pay as part of the same settlement.

This plea also follows two guilty pleas in related criminal prosecutions. In August 2020, surgeon Jason Montone, 50, of Lawson, Miss., pleaded guilty to conspiracy to violate the Anti-Kickback Statute and obstruction. Medical device distributor John Balzer, 48, of Lenexa, Kan., pleaded guilty to conspiracy to violate the Anti-Kickback Statute and one count of witness tampering. Montone and Balzer are scheduled to be sentenced in September.    

Humad’s sentencing is scheduled for Aug. 6; he faces a maximum five-year prison term, three years of supervised release, a $250,000 fine (or twice the gross gain or gross loss resulting from the offense, whichever is greater), forfeiture, and restitution.

Earlier this week, Humad announced he is stepping down from his roles as president and CFO of KIC Ventures, KIC’s healthcare and medical technology investment platform, to “focus on investment strategy, capital formation, and emerging technology initiatives at KIC,” a news release stated. Humad will focus his efforts at KIC on investment strategy, institutional partnerships, AI initiatives, special purpose vehicle (SPV) structures, and broader global investment opportunities.

United States Attorney Leah B. Foley; Roberto Coviello, Special Agent in Charge of the U.S. Department of Health & Human Services’ Office of the Inspector General; Ted E. Docks, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Special Agent in Charge Christopher Algieri, Veterans Affairs Office of Inspector General, Northeast Field Office; and Jason Buckley, Acting Inspector in Charge of the U.S. Postal Inspection Service’s Boston Division announced Humad’s guilty plea. Assistant U.S. Attorneys Abraham R. George, Christopher R. Looney and Mackenzie A. Queenin are prosecuting the case.