Roger Wilkinson reports on arrests of gang members allegedly behind the largest Medicare fraud case in history.
An Armenian-led ring of criminals has used non-existent clinics and identity theft to file fraudulent claims, bilking the US government medical insurance programme Medicare out of $163m, US authorities say.
The network’s operations represent the largest single Medicare fraud by one criminal enterprise in the programme’s history.
Federal prosecutors have brought charges against 73 people, most of whom were capture during raids Wednesday morning in New York City and Los Angeles.
There were additional arrests in three other states.
The extent and complexity of the alleged scam “puts the traditional Mafia to shame,” US attorney Preet Bharara said. He said the group ran “a veritable fraud franchise’.’
Armenian ‘godfather’ arrested
The gang operated under the protection of an Armenian crime boss, known in the former Soviet Union as a “vor”, prosecutors said. Armen Kazarian, the ring’s reputed boss, was in custody in Los Angeles.
Bharara said Kazarian’s arrest was the first a a vor, which he described as “the rough equivalent of a traditional godfather”, had been charged in a US racketeering case.
Kazarian, 46, of California, and two other alleged leaders – Davit Mirzoyan, 34, also of California, and Robert Terdjanian, 35, of Brooklyn – were named in an indictment unsealed in Manhattan.
Most of the defendants were to appear in court later Wednesday on charges including racketeering conspiracy, bank fraud, money laundering and identity theft.
The New York-based investigation began after information on 2,900 Medicare patients in the state – including Social Security numbers and dates of birth – was reported stolen.
Also stolen were the identities of doctors. The gang members set up 118 phantom clinics in 25 states, authorities said, and the stolen identities were used to submit fake bills for treatment that was never given.
Some of the phony paperwork was apparently a giveaway: It showed eye doctors doing bladder tests, ear, nose and throat specialists performing pregnancy ultrasounds, obstetricians testing for skin allergies and dermatologists billing for heart exams.
Investigators said that in New York alone, more than $100m in fraudulent bills were submitted and Medicare paid out at least $35m, sometimes by wiring it to the clinics’ banks accounts.
Most of the defendants “were Armenian nationals or immigrants and many maintained substantial ties to Armenia” and criminals there, the indictment said. Couriers would often carry cash proceeds from the fraud back to Armenia, it added. The ring was also allegedly involved in other crimes, including credit card theft and drug distribution.
Armenia says it will co-operate with the US in the investigation, and Tigran Balayan, Armenia’s foreign ministry spokesman, said that his nation was “sorry” for what had happened.
Prosecutors were seeking forfeiture of real estate in Las Vegas; Palm Springs, California; and elsewhere, as well as of a 2007 Maserati and a 2006 Jaguar.