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Federal authorities have just made arrests that bring to an end to the largest fraud in the history of Medicare. On October 13, prosecuting attorneys charged members of an organization of Armenian gangsters with using phantom health clinics and other methods to run a major Medicare scam operation. Many of the defendants were caught in raids in New York City and Los Angeles. Other arrests were made in areas as disparate as New Mexico, Georgia and Ohio. In all, 73 suspects were taken into custody.
According to the Associated Press, the scope of the Medicare scam would put the "mafia to shame." According to Janice Fedarcyk, head of the FBI's New York office, the fraud went far beyond the usual scheme of false claims made through doctors. Each entire claim was completely false: "The whole doctor-patient interaction was a mirage."
The AP reports that the fraud operation was run under the auspices of a boss or "vor," prosecutors said. The alleged vor in the case is Armen Kazarian, who was taken into custody in Los Angeles. This will be the first time a vor has been charged in a racketeering case, so often the M.O. of the vor's counterpart, the godfather.
The charges against the defendants include racketeering conspiracy, bank fraud, money laundering and identity theft. Racketeering is a federal and a state charge (i.e. RICO statutes) often used by prosecutors to bring in organized crime. The law makes it a crime for criminal organizations to profit from any legitimate business operations. Many of these laws will allow for the seizure of the criminal organization's legitimate enterprise assets. In recent years, however, the charge has also been used in civil cases against legitimate business such as tobacco companies.
The investigation began in New York, reports the AP, when information on 2,900 Medicare patients in upstate (including Social Security numbers and dates of birth) were reported stolen. The New York defendants are alleged to have also stolen the identities of doctors and set up 118 phantom clinics in 25 states, authorities said. The names were then used to submit fake bills.
However, like the faulty taillight that nabs a murderer, it was the details that did the gangsters in. On the fake paperwork, statements showed eye doctors doing bladder tests; ear, nose and throat specialists performing uterine ultrasounds and OB/GYNs testing for skin allergies. In crime, as in other things, God is in the details.
The fraud must have been profitable. The AP writes prosecutors are seeking forfeiture of real estate in Las Vegas; Palm Springs, and elsewhere, and of a 2007 Maserati and a 2006 Jaguar.