I say, if you are going to commit a crime, make sure it is a whopper….

Fraud Ring, With Three Clinics in Brooklyn and Queens, Paid Kickbacks to Individuals to Undergo Medically Unnecessary Tests

Preet Bharara, the United States Attorney for the Southern District of New York, announced that EDUARD ZAVALUNOV, a manager of two health care clinics in Queens, New York, pled guilty today before U.S. District Judge Ronnie Abrams to conspiracy to commit wire fraud, mail fraud, and health care fraud, for his role in a massive health care fraud scheme through which three medical clinics in Brooklyn and Queens submitted over $70 million in fraudulent claims to Medicaid and Medicare. 

Manhattan U.S. Attorney Preet Bharara said:  “Eduard Zavalunov has admitted to his role in this $70 million health care fraud  conspiracy.  Zavalunov and his conspirators recruited people from soup kitchens and welfare offices and arranged for them to get medically unnecessary procedures, all so that they could falsely bill Medicaid, Medicare and private insurers.”

According to the Superseding Indictment to which ZAVALUNOV pled guilty, and other publicly filed information in this case:

The Heath Care Fraud Scheme

From 2005 to November 2014, ZAVALUNOV, Victor Lipkin, Vadim Zubkov, Nokoloz Chochiev, Anatoliy Fatkhov, Mariana Swaffar, Jacqueline Pinez, Jonathan Oliver, Jason Brissett, Gilbert Trotman, and Giorgi Buleishvili engaged in a scheme to operate three medical clinics in Brooklyn and Queens, through which they recruited financially disadvantaged and homeless people insured by Medicare and/or Medicaid (the “Phony Patients”) to undergo unnecessary medical tests, typically performed by unlicensed personnel, at the clinics in exchange for cash, and then billed the insurers for administering those unnecessary tests.  Beginning in or about 2005, Lipkin and Zubkov recruited and paid a particular licensed physician (the “Doctor”) to act as the nominal owner and/or physician under whose name three purported medical clinics would bill Medicare, Medicaid, and private insurance providers (the “Insurance Providers”) for unnecessary services and tests – including sleep tests and stress tests – performed at the clinics. The clinics were located on Avenue V in Brooklyn, New York, and on Hillside Avenue and Elmhurst Avenue, respectively, in Queens, New York.  Lipkin and Zubkov were, in fact, the beneficial owners of the clinics, but they concealed their ownership through the Doctor’s nominal affiliation with the clinics, and by laundering the proceeds of the clinics’ operation through shell companies that they owned and controlled.  ZAVALUNOV, Lipkin, Zubkov, and Buleishvili operated and controlled the clinics, and ran the clinics’ day-to-day operations, despite the fact that they were not licensed physicians, as required by New York law.

At the direction of ZAVALUNOV, Lipkin, Zubkov, Buleishvili, and other members of the scheme, including Oliver, Brissett, and Trotman (the “Runners”), as well as Chochiev, recruited financially disadvantaged individuals with Medicaid and/or Medicare insurance to act as Phony Patients and undergo unnecessary medical tests at the clinics in exchange for cash payments.  The Runners often recruited such individuals from soup kitchens and local welfare offices, and coached them on what to say on various medical forms in order to make it falsely appear that the medical tests to which the defendants intended to subject them were medically necessary.  In furtherance of the scheme, Chochiev also made threats of physical violence to individuals who Chochiev believed owed money to the scheme members. 

Also in furtherance of the scheme, before the medically unnecessary tests were performed on the Phony Patients, Swaffar and Pinez obtained the Phony Patients’ Medicaid and/or Medicare insurance information, and then contacted the Insurance Providers to confirm that the Insurance Providers would reimburse for the tests.  Swaffar and Pinez engaged in such conduct knowing that the Phony Patients were being recruited and paid by the Runners to undergo the tests.  Once they determined that a particular Phony Patient’s insurance would pay out claims made by the clinic for the planned medical tests, Swaffar and Pinez notified the Runners that the individuals were eligible and could be brought to the clinic to undergo such tests.

After the Phony Patients had been recruited, confirmed to be Medicare and/or Medicaid eligible, and transported to one of the clinics by the Runners or Chochiev, in many instances certain individuals who were not physicians administered a host of unnecessary medical tests to them.  In particular, for example, Fatakhov administered unnecessary medical tests, including stress tests, to the Phony Patients of the Elmhurst Avenue Clinic.  Fatakhov administered these tests outside the presence and supervision of the Doctor or other licensed physician, despite knowing that the presence or supervision of a licensed physician was required.  After the unnecessary medical tests were administered, the Phony Patients were paid cash kickbacks.  The defendants, through the clinics, then submitted fraudulent claims to Medicaid and Medicare seeking reimbursement for the unnecessary medical tests.  In total, in the course of the scheme, the defendants fraudulently billed over $70 million to Medicaid and Medicare, for which they received over $25 million in reimbursements. 

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ZAVALUNOV, 36, pled guilty to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.

Victor Lipkin, 52, pled guilty on August 3, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.

Vadim Zubkov, 49, pled guilty on January 13, 2017, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.

Nikoloz Chochiev, 42, pled guilty on August 11, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.

Anatoliy Fatakhov, 60, pled guilty on July 28, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.

Mariana Swaffar, 52, pled guilty on August 15, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.

Jacqueline Pinez, 33, pled guilty on July 11, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.

Jonathan Oliver, 54, pled guilty on September 6, 2016, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.

Giorgi Buleishvili, 42, pled guilty on January 31, 2017, to one count of conspiracy to commit wire fraud, mail fraud, and health care fraud.

Conspiracy to commit wire fraud, mail fraud, and health care fraud carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentences for the defendants will be determined by the judge.

Mr. Bharara praised the outstanding investigative work of the Federal Bureau of Investigation and the Department of Health and Human Services. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Daniel Tehrani, Patrick Egan, and Timothy T. Howard are in charge of the prosecution.

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