NEW YORK-LOS ANGELES (Combined Sources)—Federal law enforcement authorities have announced charges against dozens of members of a vast criminal syndicate that used phantom health care clinics and stolen identities to fraud Medicare out of $163 million, the US Department of Justice said Wednesday in a statement.
Prosecutors in New York and Los Angeles charged 73 people. The investigation, dubbed Diagnosis Dollars, resulted in the arrests of 52 people across the U.S. in what authorities described as “the largest Medicare fraud scheme ever perpetrated by a single criminal enterprise.”
Those arrested are being charged with credit card fraud, identity theft, federal racketeering, immigration fraud, and even distribution of contraband cigarettes and stolen Viagra.
Most of the defendants were captured during raids Wednesday morning in New York City and Los Angeles, but there were also arrests in New Mexico, Georgia and Ohio. In Los Angeles, authorities arrested more than two dozen Glendale-area residents early Wednesday for their alleged roles in the nationwide scheme to defraud Medicare.
The lead prosecutor in the case, U.S. attorney for the Southern District of New York, Preet Bharara, said the “Mirzoyan-Terdjanian” organization, named after its two alleged leaders, 35-year-old Davit Mirzoyan and 36-year-old Robert Terdjanian, employed threats, intimidation, and violence and operated in a classical mafia style.
The scheme’s scope and sophistication “puts the traditional Mafia to shame,” Bharara said at a Manhattan news conference. “They ran a veritable fraud franchise.”
The syndicate is accused of submitting the fraudulent claims to Medicare from at least 118 phantom medical clinics in 25 states. Investigators say the organization stole the identities of doctors and filed applications to bill Medicare in their names. Mirzoyan-Terdjanian is also alleged to have used stolen identities of approximately 2,900 Medicare patients treated at a New York hospital.
Unlike other cases involving crooked medical clinics bribing people to sign up for unneeded treatments, the operation was “completely notional,” Janice Fedarcyk, head of the FBI’s New York office, said in a statement.
“There were no real medical clinics behind the fraudulent billings, just stolen doctors’ identities. There were no colluding patients signing in at clinics for unneeded treatments, just stolen patient identities. The whole doctor-patient interaction was a mirage. But the money was real, while it lasted,” Fedarcyk said in the statement.
“The reach of this organization stretches clear across the country and well beyond our shores. And so in terms of profitability, geographic scope, and sheer ambition this emerging international organized crime syndicate would be the envy of any traditional mafia family,” Bharara said.
The indictment says most members of the organization were Armenian nationals or immigrants who maintained substantial ties to Armenia. In addition to regularly traveling there, they had criminal connections, transferred criminal proceeds to the country, and bought real estate and businesses with money from their illegal profits.
Kazarian, who immigrated to the United States in 1996, is identified in the indictment as “vor v zakone,” or a “thief in the law-code,” a powerful figure in the criminal underworld of the former Soviet Union.
Bharara said it was the first time a vor, which is “the rough equivalent of a traditional godfather,” had been charged in a U.S. racketeering case.
The indictment also accused Robert Terdjanian, 35, of Brooklyn and others of hatching other schemes involving stolen credit cards, untaxed cigarettes and counterfeit Viagra. It also alleged that during a meeting last year at a Brighton Beach restaurant, Terdjanian pulled a knife on someone who owed him money “and threatened to disembowel the individual if the debt was not paid.”
A judge jailed Terdjanian without bail on Wednesday at a brief hearing. Afterward, his attorney said his client denies the charges.
Kazarian and Mirzoyan were scheduled to appear in court Wednesday in Los Angeles.
Authorities began the New York-based investigation after the information of more than 2,900 Medicare patients at the Orange Regional Medical Center in upstate New York, including Social Security numbers and dates of birth, were reported stolen.
Some of the phony paperwork was a giveaway, investigators said. 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.
If convicted, the defendants face various sentences up to life imprisonment and up to $500,000 fine.
Meanwhile, an Armenia Foreign Ministry spokesman on Thursday said the country’s law enforcement authorities would cooperate with their US counterparts in the investigation