Kusserow’s Corner: Update on Health Care Fraud by Armenian Organized Crime

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On August 16, 2013, Robert Terdjanian, who had earlier plead to racketeering charges, was sentenced to 125 months in prison, three years of supervised release, and forfeiture of $1,169.680.55 for his role in a huge Medicare fraud scheme that included extortion and immigration fraud. This is the latest chapter in the investigation of a nationwide Medicare scam that fraudulently billed Medicare for over $100 million, where he and others created “phantom clinic” health care providers that existed only on paper, had no doctors, and treated no patients. The total scheme involved at least 118 fraudulent Medicare providers that were located in approximately 25 states. Terdjanian directed the New York-based members of the enterprise in this scheme and other criminal conduct, including no-fault insurance fraud and access device fraud.

The scandal first broke in 2010 in a case to defraud the Medicaid and Medicare programs in the amounts estimated at $163 million. The investigation was initiated upon receipt of reports about theft of personal information, including Social Security numbers, of 2,900 Medicare patients in upstate New York. The government investigation uncovered subjects who billed Medicare from phantom clinics for unnecessary medical services, or for services which were never performed, by stealing identities of both doctors and patients. More than 50 ethnic Armenians living in the United States were arrested on October 13, 2010 in an operation was run by more than 400 Federal Agents. The Department of Justice (DOJ) subsequently indicted 73 individuals in New York and four other states. The organized crime enterprise was run by Armenian gangster, Armen Kazarian, a political asylum holder in California, who masterminded an Armenian-American organized crime group that operated across 25 states. Kazarian used conventional extortion and racketeering methods. Other ringleaders were Davit Mirzoyan and Robert Terdjanian.

To date 20 defendants in the case have now been sentenced. Four others have pled guilty and are awaiting sentencing. Charges have been dismissed against two defendants, and remain pending against two defendants. The DOJ noted this has been a joint investigation involving the FBI, HHS Office of Inspector General, US Immigration and Customs Enforcement, and New York City Police Department.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC. Published with permission.