Federal prosecutors say a pair of former Colorado medical-device executives turned routine pain-management supplies into a cash gusher worth hundreds of millions of dollars, and now they are facing a criminal reckoning.
A Rhode Island grand jury has unsealed an indictment accusing Zynex founder and former CEO Thomas Sandgaard and former chief commercial officer Anna Lucsok of running a multiyear billing scheme that allegedly soaked health insurers, patients, and investors. Former employees have already spoken on camera about internal concerns, and the news lands as Zynex is trying to steady itself under Chapter 11. The company says both individuals are gone and that a new leadership team is cooperating with investigators.
What prosecutors allege
According to the U.S. Department of Justice, a federal grand jury returned an indictment charging Sandgaard and Lucsok with conspiracy to commit health care fraud, mail fraud, and securities fraud, along with multiple counts of health care fraud, mail fraud, and aggravated identity theft.
Prosecutors say the scheme ran from at least 2017 through late 2025 and helped Zynex pull in more than $873 million in revenue, including over $600 million allegedly tied to unnecessary supplies. Court filings describe shipments that sometimes hit 32, 64, or even 128 electrode pairs per patient each month, far beyond what many patients say they needed or wanted.
The indictment also recounts dozens of patient complaints and says employees objected internally to the company’s billing and fulfillment practices, only to see the same tactics continue. Those internal warnings are now front and center in the government’s narrative about how the alleged scheme stayed alive for years.
Voices from Colorado
Former Zynex staffers have begun speaking publicly about what they say they saw inside the company. In a segment on CBS Colorado, ex-employees described long-running frustration over billing and how patient complaints were handled.
Local coverage has also pulled specific consumer stories into the spotlight, including patients who said they received bills months after shipments and others who told the company to stop sending supplies but kept getting boxes anyway. Those accounts, documented by Colorado Public Radio, dovetail with prosecutors’ claims that internal objections and consumer pushback were not enough to halt the alleged practices.
Company response and governance changes
In a filing with the SEC, Zynex reported that its board removed Sandgaard from all positions and canceled his unvested equity awards along with cash compensation tied to those roles.
The company added in a statement from Zynex that new leadership has overhauled compliance and billing practices and is cooperating with investigators. Zynex also noted it has not been charged in any criminal or civil enforcement matters as it continues through a court-supervised restructuring.
Bankruptcy and investor fallout
Zynex filed for Chapter 11 protection in mid-December 2025 as it pursues a court-supervised restructuring, a development reflected in public filing summaries and coverage of the bankruptcy docket. That move came as financial pressure mounted on several fronts.
Investors have launched class-action claims, and law firms have filed notice documents on behalf of shareholders. Insurers, including Allstate, have brought civil complaints accusing the company of false or improper billing practices. Those lawsuits, along with disrupted relationships with major payers, have piled onto Zynex’s balance-sheet stress even before the indictment was unsealed.
Legal implications and next steps
Federal prosecutors have asked the court to freeze assets they say are tied to the defendants, including luxury vehicles, real estate, bank accounts, and a Gulfstream jet, according to court notices and Justice Department filings. The indictment’s aggravated identity theft counts add another layer of potential prison time if there are convictions.
Prosecutors allege that fraudulent billings were used to inflate Zynex’s reported revenues and stock price, which in turn attracted investors. At the same time, the U.S. Department Of Justice stresses the basic ground rule of any criminal case: A federal criminal indictment is merely an accusation. A defendant is presumed innocent unless and until proven guilty.
The case is expected to move through federal arraignment and pretrial proceedings in the coming months, with more details likely to spill out in court filings and hearings.
What this means for patients and investors
The indictment underscores the risk for patients who say they ended up with unsolicited equipment or surprise bills. The HHS Office of Inspector General and other federal partners assisted with the investigation and continue to offer resources for consumers wrestling with disputed medical charges.
Investors, meanwhile, are glued to the bankruptcy docket and the parallel civil suits for any sign of potential recoveries. Regulators and litigators may also lean on former employees and whistleblowers for testimony as they sort out who knew what, and when.
As the criminal case and civil battles unfold, Colorado patients, clinicians, and markets will be tracking court calendars alongside Zynex’s restructuring filings to see how much of the company survives, and who is ultimately held responsible for what prosecutors say was a massive, years-long fraud.
