2010 Medicaid fraud
Encyclopedia
The 2010 Medicaid fraud was a case of Medicaid
fraud
allegedly carried out by an Armenian-American
organized crime
group operating in the United States.
and other healthcare programs such as Medicare
, providing health care to senior citizens and elderly, in the amounts totalling $163 million, more than 50 ethnic Armenians
living in the United States
were arrested on October 13, 2010. The operation was run by more than 400 FBI agents. In additional to FBI, IRS and local enforcement agencies in California, Georgia, New Mexico, New York and Ohio were involved in the probe. The Justice Department already indicted 73 individuals in New York
and four other states. 44 defendants were indicted in New York, along with 10 in California, seven in New Mexico, six in Ohio and six in Georgia. According to the authorities, the Armenian-American organized crime group operated across 25 states.
enterprise run by Armen Kazarian (nicknamed "Pzo"), 46, a political asylum holder who arrived in the US in 1996 and resided in Glendale, California
. The other alleged ringleaders, Davit Mirzoyan, 34, also from Glendale and Robert Terdjanian, 35, from Brooklyn
were also indicted. The authorities said most members of the organization were Armenian nationals or immigrants, and many maintained substantial ties to Armenia
. The suspects have been allegedly laundering the stolen money. Kazarian was allegedly on top of maintaining the criminal organization and its activities. He used conventional extortion
and racketeering methods. Prosecutors said that Kazarian travelled to New York to erase a $200,000 debt of one associate to another. When the second associate was unable to pay the fee of $100,000 for that service, his yacht was seized by Kazarian.
Kazarian was in close relations with the top government officials in Armenia. In 2008, Kazarian presented a Mercedes Benz automobile to Armen Yeritsyan who was the vice-chief of Armenian police and is currently the Minister of Emergency Situations of Armenia. As well, he had close ties with Gagik Tsarukyan, the chairman of Prosperous Armenia Party
, who arranged Kazarian's safe entry to Armenia. Kazarian had also a joint business with Sashik Sargsyan who is the brother of president of Armenia Serzh Sargsyan. He was seen attending the wedding of son of former president of Armenia Robert Kocharian
.
In the state of Georgia
, six people, Arthur Manasarian, 58; Gegham Sargsyan, 56; Khoren Gasparian, 27; Sahak Tumanyan, 43, and his wife, Hasmik Tumanyan, 38; and Toni R. Lowery, 27, five of them being ethnic Armenians were indicted for opening, operating and filing false claims to defraud Medicaid from five fake clinics in Brunswick
, Savannah
and Macon
such as "Brunswick Medical Supply Inc". Sargsyan and Gasparian have escaped and believed to have possibly left the country.
One of the highest amounts of the stolen taxpayer money is attributed to the state of Ohio
, where the criminals of the organization billed the state for $44 million of which $20 million was paid out. All six charged with the crime by Ohio authorities are ethnic Armenians: Karen Chilyan, Eduard Oganesyan and Arus Gyulbudakyan aka Fina Markova the leader of Ohio ring have already been apprehended while Lilit Galstyan, Julieta Ghazaryan and Marine Movsisyan are still at-large. Lead Special Agent Figliuzzi with the FBI said, "They're ripping off our grandparents, our parents, and ultimately, all of us who will be involved in the Medicare system."
s of 2,900 Medicare patients in upstate New York. The government claimed the group billed Medicare from phantom clinics for unnecessary medical services, or for services which were never performed, by stealing identities of both doctors and patients. According to officials, about $35 million of the bills claimed by the network was paid out by Medicaid already. A total of 118 medical clinics in 25 states were used to defraud the US health insurance program. One of the fake clinics was run from a small office over Coney Island
auto body shop. Two Queens doctors and a worker at the Lutheran Hospital
in Brooklyn
were part of the gangster network. The U.S. District Attorney for the Southern District of New York, Preet Bharara
, declared that the Mirzoyan–Terdjanian organization, an Armenian-run syndicate in New York and Los Angeles
, used threats, intimidation and violence, operating in classic mafia style. Bharara said "This Armenian group allegedly employed a raft of rackets, extortion, credit-card fraud, identity theft, immigration fraud, and even distribution of contraband cigarettes and stolen Viagra"
The penalties range from 10 years to life in prison. The defendants will be tried in the states where they have been indicted.
On July 8, 2011, the leader of the criminal network Armen Kazarian pleaded guilty to racketeering charges. He could face up to 20 years in prison. Sentencing is scheduled for 6 October 2011.
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
allegedly carried out by an Armenian-American
Armenian-American
Armenian Americans are citizens of the United States whose ancestry originates wholly or partly in Armenia. During the United States 2000 Census, 385,488 respondents indicated either full or partial Armenian ancestry...
organized crime
Organized crime
Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...
group operating in the United States.
The crackdown
In a scandal involving a case to defraud the MedicaidMedicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
and other healthcare programs such as Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
, providing health care to senior citizens and elderly, in the amounts totalling $163 million, more than 50 ethnic Armenians
Armenians
Armenian people or Armenians are a nation and ethnic group native to the Armenian Highland.The largest concentration is in Armenia having a nearly-homogeneous population with 97.9% or 3,145,354 being ethnic Armenian....
living in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
were arrested on October 13, 2010. The operation was run by more than 400 FBI agents. In additional to FBI, IRS and local enforcement agencies in California, Georgia, New Mexico, New York and Ohio were involved in the probe. The Justice Department already indicted 73 individuals in New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
and four other states. 44 defendants were indicted in New York, along with 10 in California, seven in New Mexico, six in Ohio and six in Georgia. According to the authorities, the Armenian-American organized crime group operated across 25 states.
Leadership and members of the organization
According to the authorities, the individuals acted within an organized crimeOrganized crime
Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...
enterprise run by Armen Kazarian (nicknamed "Pzo"), 46, a political asylum holder who arrived in the US in 1996 and resided in Glendale, California
Glendale, California
Glendale is a city in Los Angeles County, California, United States. As of the 2010 Census, the city population is 191,719, down from 194,973 at the 2000 census. making it the third largest city in Los Angeles County and the 22nd largest city in the state of California...
. The other alleged ringleaders, Davit Mirzoyan, 34, also from Glendale and Robert Terdjanian, 35, from Brooklyn
Brooklyn
Brooklyn is the most populous of New York City's five boroughs, with nearly 2.6 million residents, and the second-largest in area. Since 1896, Brooklyn has had the same boundaries as Kings County, which is now the most populous county in New York State and the second-most densely populated...
were also indicted. The authorities said most members of the organization were Armenian nationals or immigrants, and many maintained substantial ties to Armenia
Armenia
Armenia , officially the Republic of Armenia , is a landlocked mountainous country in the Caucasus region of Eurasia...
. The suspects have been allegedly laundering the stolen money. Kazarian was allegedly on top of maintaining the criminal organization and its activities. He used conventional extortion
Extortion
Extortion is a criminal offence which occurs when a person unlawfully obtains either money, property or services from a person, entity, or institution, through coercion. Refraining from doing harm is sometimes euphemistically called protection. Extortion is commonly practiced by organized crime...
and racketeering methods. Prosecutors said that Kazarian travelled to New York to erase a $200,000 debt of one associate to another. When the second associate was unable to pay the fee of $100,000 for that service, his yacht was seized by Kazarian.
Kazarian was in close relations with the top government officials in Armenia. In 2008, Kazarian presented a Mercedes Benz automobile to Armen Yeritsyan who was the vice-chief of Armenian police and is currently the Minister of Emergency Situations of Armenia. As well, he had close ties with Gagik Tsarukyan, the chairman of Prosperous Armenia Party
Prosperous Armenia
Prosperous Armenia is a political party in Armenia. It was founded by Gagik Tsarukian, a wealthy businessman, in late 2005. It debuted in the 2007 Armenian parliamentary elections, winning 18 seats and 14.68% of the votes, making it the second largest political party in parliament.-External...
, who arranged Kazarian's safe entry to Armenia. Kazarian had also a joint business with Sashik Sargsyan who is the brother of president of Armenia Serzh Sargsyan. He was seen attending the wedding of son of former president of Armenia Robert Kocharian
Robert Kocharian
Robert Kocharyan was the second President of Armenia, serving from 1998 till 2008. He was previously President of Nagorno-Karabakh from 1994 to 1997 and Prime Minister of Armenia from 1997 to 1998.-Biography:...
.
In the state of Georgia
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
, six people, Arthur Manasarian, 58; Gegham Sargsyan, 56; Khoren Gasparian, 27; Sahak Tumanyan, 43, and his wife, Hasmik Tumanyan, 38; and Toni R. Lowery, 27, five of them being ethnic Armenians were indicted for opening, operating and filing false claims to defraud Medicaid from five fake clinics in Brunswick
Brunswick, Georgia
Brunswick is the major urban and economic center in southeastern Georgia in the United States. The municipality is located on a harbor near the Atlantic Ocean, approximately 30 miles north of Florida and 70 miles south of South Carolina. Brunswick is bordered on the east by the Atlantic...
, Savannah
Savannah, Georgia
Savannah is the largest city and the county seat of Chatham County, in the U.S. state of Georgia. Established in 1733, the city of Savannah was the colonial capital of the Province of Georgia and later the first state capital of Georgia. Today Savannah is an industrial center and an important...
and Macon
Macon, Georgia
Macon is a city located in central Georgia, US. Founded at the fall line of the Ocmulgee River, it is part of the Macon metropolitan area, and the county seat of Bibb County. A small portion of the city extends into Jones County. Macon is the biggest city in central Georgia...
such as "Brunswick Medical Supply Inc". Sargsyan and Gasparian have escaped and believed to have possibly left the country.
One of the highest amounts of the stolen taxpayer money is attributed to the state of Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
, where the criminals of the organization billed the state for $44 million of which $20 million was paid out. All six charged with the crime by Ohio authorities are ethnic Armenians: Karen Chilyan, Eduard Oganesyan and Arus Gyulbudakyan aka Fina Markova the leader of Ohio ring have already been apprehended while Lilit Galstyan, Julieta Ghazaryan and Marine Movsisyan are still at-large. Lead Special Agent Figliuzzi with the FBI said, "They're ripping off our grandparents, our parents, and ultimately, all of us who will be involved in the Medicare system."
Charges
According to authorities, the investigation started after they received reports about theft of personal information, including Social Security numberSocial Security number
In the United States, a Social Security number is a nine-digit number issued to U.S. citizens, permanent residents, and temporary residents under section 205 of the Social Security Act, codified as . The number is issued to an individual by the Social Security Administration, an independent...
s of 2,900 Medicare patients in upstate New York. The government claimed the group billed Medicare from phantom clinics for unnecessary medical services, or for services which were never performed, by stealing identities of both doctors and patients. According to officials, about $35 million of the bills claimed by the network was paid out by Medicaid already. A total of 118 medical clinics in 25 states were used to defraud the US health insurance program. One of the fake clinics was run from a small office over Coney Island
Coney Island
Coney Island is a peninsula and beach on the Atlantic Ocean in southern Brooklyn, New York, United States. The site was formerly an outer barrier island, but became partially connected to the mainland by landfill....
auto body shop. Two Queens doctors and a worker at the Lutheran Hospital
Lutheran Hospital
Lutheran Hospital may refer to:*Lutheran Hospital of Indiana, in Fort Wayne, Indiana*Iowa Lutheran Hospital, a hospital in Iowa*Lutheran Hospital of Maryland, former use of the Hebrew Orphan Asylum institution in Baltimore, Maryland...
in Brooklyn
Brooklyn
Brooklyn is the most populous of New York City's five boroughs, with nearly 2.6 million residents, and the second-largest in area. Since 1896, Brooklyn has had the same boundaries as Kings County, which is now the most populous county in New York State and the second-most densely populated...
were part of the gangster network. The U.S. District Attorney for the Southern District of New York, Preet Bharara
Preet Bharara
Preetinder S. Bharara , commonly known as Preet Bharara, is U.S. Attorney for the Southern District of New York.-Early life and education:Bharara was born in 1968 in Firozpur, Punjab, India, to a Sikh father and Hindu mother...
, declared that the Mirzoyan–Terdjanian organization, an Armenian-run syndicate in New York and Los Angeles
Los Ángeles
Los Ángeles is the capital of the province of Biobío, in the commune of the same name, in Region VIII , in the center-south of Chile. It is located between the Laja and Biobío rivers. The population is 123,445 inhabitants...
, used threats, intimidation and violence, operating in classic mafia style. Bharara said "This Armenian group allegedly employed a raft of rackets, extortion, credit-card fraud, identity theft, immigration fraud, and even distribution of contraband cigarettes and stolen Viagra"
The penalties range from 10 years to life in prison. The defendants will be tried in the states where they have been indicted.
On July 8, 2011, the leader of the criminal network Armen Kazarian pleaded guilty to racketeering charges. He could face up to 20 years in prison. Sentencing is scheduled for 6 October 2011.