Over $163 Million Medicare Fraud Scheme in USA by Post-Soviet Mafia

Preet Bharara, the United States Attorney for the Southern District of New York next to the schematic image of the “historical” fraud of Post-Soviet mafia. Credit:runyweb.comIn the United States the trial against the gang, which consisted of immigrants from the former Soviet Union and engaged in fraudulent health insurance program Medicare, is nearing the fianl stage. DAVIT MIRZOYAN, the leader of Medicare Fraud Scheme and other organized crime group members were pleaded guilty in Manhattan Federal Court to racketeering and other crimes. In 10 years from the American healthcare system $163 mln has been drained by the Post-Soviet mafia.

Preet Bharara, the United States Attorney for the Southern District of New York, announced last Friday that DAVIT MIRZOYAN pled guilty in Manhattan Federal Court to racketeering and other crimes in connection with his involvement in an Armenian-American criminal organization involved in a wide range of criminal activity, including a massive Medicare fraud. MIRZOYAN pled guilty before United States Magistrate Judge Henry B. Pitman.

Manhattan U.S. Attorney Preet Bharara said: “Davit Mirzoyan was a criminal parasite feeding on a grand scale off our country’s health care system for personal financial gain and draining Medicare of needed funds. His guilty plea today ensures he will be held to account for his actions.”

According to the Indictment and other documents filed in this case:

From 2006 to 2010, DAVIT MIRZOYAN led a nationwide Medicare scam that fraudulently billed Medicare for over $163 million. MIRZOYAN and others created dozens of “phantom clinics,” health care providers that existed only on paper. These clinics did not have any doctors and treated no patients. At least 118 fraudulent Medicare providers, located in approximately 25 states, submitted fraudulent bills to Medicare totaling approximately $100 million, and received approximately $35.7 million.

MIRZOYAN pled guilty to one count of participating in a racketeering conspiracy, and one count each of conspiracies to commit healthcare fraud, bank fraud, money laundering, and identity theft. He faces a maximum penalty of 75 years in prison.

MIRZOYAN is scheduled to be sentenced on February 6, 2013, at 10:00 a.m. before United States District Court Judge Paul G. Gardephe.

The organization is alleged to have operated with assistance from and under the protection of ARMEN KAZARIAN, who is alleged to be a "Vor," a term translated as "Thief-in-Law." The term "Vor" refers to a member of a select group of high-level criminals from Russia and the countries that had been part of the former Soviet Union, including Armenia. This is the first time a Vor has ever been charged and arrested for federal racketeering crimes.

The crimes were connected to the operation of an Armenian-American organized crime ring referred to as the Mirzoyan-Terdjanian Organization. The Mirzoyan-Terdjanian Organization is alleged to be a nationwide criminal enterprise with strong ties to Armenia. The leadership of the organization is based in New York and Los Angeles, and its operations extend throughout the United States and internationally.

List of accused consists mainly of immigrants from Armenia, but there are the former Russian, Ukrainian and a Kazakh citizen among the criminal group. 

The Medicare Fraud Scheme

New York FBI agents work in the processing room Photo credit: FBI

The Mirzoyan-Terdjanian Organization is charged with engaging in numerous fraud schemes including a massive, highlyorganized scheme to defraud Medicare. According to the Racketeering Indictment, the organization stole the identities of legitimate doctors and filed applications to bill Medicare in the names of these doctors, often providing a clinic address on the application that was in fact simply the location of a mailbox. The organization then obtained the stolen identities of thousands of real Medicare beneficiaries, including the identities of approximately 2,900 Medicare patients treated at the Orange Regional Medical Center.

With the stolen identities of doctors and patients in hand, the organization billed Medicare for over $100 million dollars for treatments no doctor ever performed, and no patient ever received. Suspicions of fraud have occurred after the officers they drew attention to the confusion in the accounts submitted. For example:

-  Forensic pathologists billed for live office visits;

-  Eye doctors billed for bladder tests;

-  Ear, nose, and throat specialists billed for performing pregnancy ultrasounds; and

-  Obstetricians tested for skin allergies.

Although Medicare identified and shut down the phony clinics after several months, in many cases Medicare had already paid out millions of dollars—more than $35 million in total—and that money had already been withdrawn by the defendants and sometimes transferred overseas. The organization, aware that each clinic had a limited shelf life, then simply turned to another fraudulent clinic, operating at least 118 different phony clinics in 25 states during the course of the scheme.
The American authorities announced that it was the largest fraud in the field of health insurance.

WKT citing www.justice.gov