Seventy-three organized crime figures, others, indicted for major health care fraud crimes.

Fraud and Organized Crime Intersect

Eurasian Enterprise Targeted

10/13/10

FBI New York Assistant Director in Charge Janice

Fedarcyk, along with U.S. Attorney Preet Bharara,

Southern District of New York (left), and New York

Police Commissioner Ray Kelly, announce the

indictment of 44 members and associates of an

Armenian-American organized crime enterprise

in a $100 million Medicare fraud, among other crimes.



It was the largest Medicare fraud scheme ever committed by a single enterprise and criminally charged by the Department of Justice. Today, 73 defendants—including members and associates of an Armenian-American organized crime enterprise—were publicly named in federal indictments announced in five states. They were charged with various health care fraud-related crimes involving more than $163 million in fraudulent billings.

Of those indicted, 55 were arrested early this morning in a nationwide takedown carefully planned and carried out by the FBI and our federal, state, and local partners. More than two dozen search warrants were also executed at the same time.

According to the indictments, the Armenian-American organized crime ring behind the scheme is the Mirzoyan-Terdjanian Organization—named after its principal leaders Davit Mirzoyan and Robert Terdjanian. Although headquartered in New York City and Los Angeles, the group operates throughout the U.S. and around the world. And like many criminal enterprises, members of the organization are alleged to have used violence and threats of violence to ensure respect for and payments to its leadership.

Among those charged today in New York was Armen Kazarian, the so-called “Thief-in-Law,” a member of a select group of high-level criminals from Russian and former Soviet nations. The New York indictment also included charges that the organization operated a multi-million-dollar scheme to defraud private insurance companies. Other locations where Medicare fraud indictments were announced and arrests made today included California, Georgia, New Mexico, and Ohio.

How the Medicare scheme worked. The lynchpin of the scheme—no matter where it was carried out—was stolen identities. Some of the subjects allegedly stole the identities of thousands of Medicare beneficiaries from around the country, as well as the identities of doctors who were usually licensed to practice in more than one state. Other subjects leased office space and opened phony clinics—or, in some instances, simply rented a post office box. And still other subjects opened bank accounts to receive Medicare funds—often in the name of the doctor whose identity they stole—and submitted applications to Medicare to become Medicare providers.

Once becoming approved Medicare providers, the subjects—who had extensive knowledge of the Medicare system, including what codes to use—would start to bill Medicare for services never provided, using the stolen beneficiary information. And as soon as the funds were directly deposited by Medicare into the designated bank accounts set up to receive them, the money was withdrawn and laundered and sometimes sent overseas.

In many instances, even though Medicare would identify and shut down the phony clinics after several months, members of the criminal enterprise would simply open up another fraudulent clinic somewhere else, usually in another state. All told, the investigation uncovered at least 118 phony clinics in 25 states.

Eventually, with the dedicated assistance of our partners, we gathered the evidence needed to shut these operators down. In doing so, we combined our expertise in uncovering major health care fraud with our experience in dismantling major criminal enterprises to target a national threat.

Resources:

- National press release

- Albuquerque press release

- Atlanta press release

- Cleveland press release

- Los Angeles press release

- New York press release | Second fugitive surrenders

- More on FBI’s efforts to combat health care fraud





