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Document and Benefit Fraud

17 individuals charged and 12 locations searched in major health care fraud and money laundering prosecution

BROOKLYN, N.Y. - U. S. Attorney Loretta E. Lynch announced today four separate indictments charging 17 individuals for their participation in health care fraud and money laundering schemes in the Eastern District of New York. In addition, agents of U.S. Immigration and Customs Enforcement (ICE), the FBI and Internal Revenue Service (IRS) searched offices of 12 durable medical equipment retail companies located in South Brooklyn that were operated by the defendants and seized assets from bank accounts maintained by the defendants' retail companies.

According to the indictments, the defendants filed fraudulent claims with private insurance companies with no-fault insurance plans. Specifically, the defendants - through their retail companies - allegedly submitted false invoices to the insurance companies for reimbursable expenses for durable medical equipment at prices well in excess of the price paid by the defendants, as well as for durable medical equipment that was never obtained. The indictments allege that it was also part of the defendants' schemes to engage in financial transactions to conceal the identity, source, and destination of the fraudulent proceeds by "laundering" them through checks they issued to the same wholesale companies. The checks were then negotiated at check cashing stores and the resulting cash was delivered back to the defendants.

"The charges announced today, which have resulted in the arrests of several operators of medical equipment companies that allegedly engaged in schemes to defraud insurance companies, are the product of a coordinated effort by federal and local law enforcement agencies," stated Lynch. "Those who engage in such schemes are on notice that they will be met with the full force of law enforcement."

"The type of health care fraud and money laundering scheme these individuals allegedly constructed and engaged in affects all Americans and directly impacts America's health care system," said James T. Hayes, Jr., special agent in charge of ICE's Homeland Security Investigations in New York. "Our office is determined to find criminals who seek to illegally profit from fraud no matter how sophisticated the scheme."

FBI Acting Assistant Director in Charge George C. Venizelos stated, "Health care fraud is a multibillion-dollar plague on the U.S. economy annually, and it affects the cost and availability of private and public insurance for everyone. Durable medical equipment fraud is a large part of the problem. The cure is the continuing commitment by the FBI and our partners to ferret out those who engage in these frauds, whose prognosis is a possible 20-year prison term."

IRS (New York) Special Agent in Charge Charles R. Pine stated, "IRS Criminal Investigation investigates health care fraud perpetrated against the federal and state governments, as well as private insurance companies. We investigate money laundering when either illegally obtained funds from health care fraud are used to purchase assets or when the perpetrators of the schemes devise elaborate methods to conceal their fraudulent proceeds.

Money laundering occurs in a wide range of fraudulent health care schemes, including durable medical equipment fraud. Typical health care fraud investigations are lengthy, labor intensive, and involve complex issues. To assist in combating health care fraud, IRS CI participates with multiple agencies by documenting that the perpetrators of these schemes financially benefitted from their fraudulent activities. IRS CI will continue to participate in all types of health care fraud investigations. If there is a money trail, we will follow it."

If convicted, each of the defendants faces up to 20 years' incarceration.

The government's case is being prosecuted by Assistant U. S. Attorneys Daniel Brownell and Evan Weitz.