Largest Alleged Medicare Fraud Scheme in DOJ History

October 14, 2010

Seventy-three individuals, including a number of alleged members and associates of an Armenian-American organized crime enterprise, were charged in indictments unsealed today in five judicial districts with various health care fraud-related crimes involving more than $163 million in fraudulent billing, announced Acting Deputy Attorney General Gary G. Grindler, FBI Assistant Director of the Criminal Investigative Division Kevin Perkins, and Health and Human Services Inspector General Daniel R. Levinson.

In this national, multi-agency investigation, more than 50 were arrested yesterday by FBI agents in the largest alleged Medicare fraud scheme ever perpetrated by a single criminal enterprise and charged by the Department of Justice.

The individuals are charged with allegedly engaging in numerous fraud activities, including highly-organized, multi-million dollar schemes to defraud Medicare and insurance companies by submitting fraudulent bills for medically unnecessary treatments or treatments that were never performed. According to the indictments, the individuals allegedly stole the identities of doctors and thousands of Medicare beneficiaries and operated at least 118 different phony clinics in 25 states for the purposes of submitting Medicare reimbursements. The government believes the enterprise behind the alleged fraud is the international group known as the Mirzoyan-Terdjanian.

Forty-four individuals were charged in two indictments unsealed today in the Southern District of New York with racketeering conspiracy and conspiracy to commit the following acts: health care fraud, bank fraud, money laundering, fraud in connection with identity theft, credit card fraud, and immigration fraud. In addition, seven individuals were charged in the District of New Mexico with health care fraud, mail fraud, wire fraud, money laundering conspiracy, money laundering, forfeiture, and aggravated identity theft. Six individuals were charged in the Southern District of Georgia with health care fraud, conspiracy to commit health care fraud, money laundering conspiracy, and aggravated identity theft. Six individuals were charged in the Northern District of Ohio with health care fraud, mail fraud, conspiracy to commit mail fraud, wire fraud, conspiracy to commit money laundering, and aggravated identity theft. Lastly, ten individuals were charged in two indictments in the Central District of California with conspiracy to commit bank fraud, bank fraud, money laundering, conspiracy to launder monetary instruments, criminal forfeiture, aggravated identity theft, aiding and abetting, and causing an act to be done.

According to the charges filed in U.S. District Court in the Southern District of New York, the Mirzoyan-Terdjanian Organization is named for its alleged principal leaders, Davit Mirzoyan and Robert Terdjanian. Allegedly, the leadership of the organization is based in Los Angeles and New York, and its operations extend throughout the United States and internationally. Among the individuals charged with racketeering is Armen Kazarian, who is alleged to be a “Vor,” a term translated as “Thief-in-Law” and refers to a member of a select group of high-level criminals from Russia and the countries that has been part of the former Soviet Union, including Armenia. This is the first time an alleged Vor has ever been charged for a racketeering offense, and the first time since 1996 that a Vor has been arrested on any federal charge.

The racketeering charges carry a maximum penalty of life in prison and a $250,000 fine. The health care fraud and conspiracy to commit health care fraud charges each carry a maximum penalty of 10 years in prison and a $250,000 fine. The conspiracy to commit bank fraud charges each carry a maximum penalty of 30 years in prison and a fine of $1 million. The conspiracy to commit money laundering charges each carry a maximum penalty of 25 years in prison and a $500,000 fine. The conspiracy to commit money laundering charges each carry maximum penalties of 20 years in prison and a $500,000 fine. The conspiracy to commit fraud in connection with identity theft charges carry a maximum penalty of five years in prison and a $250,000 fine. The aggravated identity theft charges each carry a required two-year consecutive prison sentence to any other sentence imposed, the conspiracy to commit credit card fraud charges carry a maximum penalty of 10 years in prison and a $250,000 fine. The conspiracy to commit immigration fraud charges carry a maximum penalty of five years in prison and a $250,000 fine.

The charges announced today are merely allegations, and individuals are presumed innocent unless proven guilty in a court of law.

The individuals charged in each district will be prosecuted by Assistant U.S. Attorneys from each of the respective districts in which the cases were charged. The cases were investigated by special agents from the FBI’s Los Angeles and New York field offices.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Ohio Man Indicted for Marijuana, Obstruction of Justice and Money Laundering Charges

June 22, 2010

A federal grand jury has returned a 13-count indictment charging Kevin L. Burton, 49, of Lucasville with conspiracy, manufacturing marijuana, obstruction of justice, and money laundering.

Burton was arrested on June 15 based on the allegations in the indictment. U.S. Magistrate Judge Elizabeth Preston Deavers ordered Burton held without bond after a detention hearing in federal court in Columbus on June 17. Burton is scheduled for trial on August 23, 2010 before Senior U.S. District Judge James L. Graham.

The indictment alleges that Burton and Anna L. Montgomery, 46, of Lucasville conspired since 1995 to manufacture 1,000 or more marijuana plants. Burton and Montgomery allegedly obtained properties in his name or in the names of others and set up rooms in residences and outbuildings to use as locations to grow the marijuana. If convicted of this crime, Burton and Montgomery face a minimum sentence of 10 years in federal prison and the possibility of life imprisonment.

Montgomery was placed on home confinement pending trial.

The indictment also charges Burton and Montgomery with one count of conspiracy to obstruct justice and one count of obstruction of justice for knowingly attempting to intimidate, threaten, influence, delay and corruptly persuade witnesses before a federal grand jury investigating the case. Each crime is punishable by up to 20 years imprisonment.

Burton is also charged with one count of maintaining a place to manufacture marijuana and nine counts of money laundering. Each count is punishable by up to 20 years imprisonment. The indictment also seeks forfeiture of three pieces of real estate and more than $413,000 in cash.

The indictment alleges that Burton laundered $293,221.16 in proceeds from the sale of marijuana through the sale of the Rubber Duck Car Wash in Jackson, Ohio.

An indictment is only an allegation. The accused are innocent until proven guilty beyond a reasonable doubt.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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