Doctors and Lawyers Implicated in $279M Insurance Fraud Scheme

By Mary Johnson on February 29, 2012 7:38pm 

On Wednesday, Feb. 29, 2012, Manhattan U.S. Attorney Preet Bharara announced that 36 arrests had been made in a $279 million insurance fraud scheme.
On Wednesday, Feb. 29, 2012, Manhattan U.S. Attorney Preet Bharara announced that 36 arrests had been made in a $279 million insurance fraud scheme.
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DNAinfo/Ben Fractenberg

MANHATTAN — Three dozen people are facing federal charges for allegedly orchestrating a $279 million insurance fraud scheme that involved doctors, lawyers and members of a Russian organized crime ring, according to the FBI.

An 18-month investigation by the FBI-NYPD Eurasian Organized Crime Joint Task Force unearthed a complex network of individuals in New York, New Jersey and Minnesota working together to defraud insurance companies over the course of at least five years, officials said. Each person charged in the case is facing a maximum sentence of between 30 and 70 years in prison. 

“Today’s charges expose a colossal criminal trifecta, as the fraud’s tentacles simultaneously reached into the medical system, the legal system, and the insurance system, pulling out cash to fund the defendants’ lavish lifestyles,” Manhattan U.S. Attorney Preet Bharara said in a statement.

The scheme was built around New York’s no-fault automobile insurance law, which requires that every vehicle registered in the state have insurance that would cover drivers and passengers for up to $50,000 each. The law also mandates prompt payment for medical treatment.

The scheme relied heavily on several corrupt doctors “who essentially peddled their medical licenses like a corner fraudster might sell fake IDs,” Bharara said.

From 2007 to 2012, several doctors used their medical licenses to open clinics that were operated by members of the Russian mob and provided unnecessary and excessive medical treatments to car accident victims.

The lawyers allegedly involved in the scheme filed bogus lawsuits, advising passengers on what injuries to claim to maximize the unnecessary treatments.

And several so-called “runners” were allegedly paid thousands of dollars to refer people to the phony clinics, keeping the flow of income constant, officials said.

The investigation that ultimately felled the intricate web of criminals used undercover NYPD officers who “were treated like thousands of other ‘patients’ receiving therapy, tests, and medical equipment they didn’t need,” NYPD Comissioner Raymond Kelly said in a statement.

“I want to congratulate the U.S. Attorney’s Office and the agents and detectives assigned to the joint FBI-NYPD Organized Crime Task Force for bringing this investigation to a successful conclusion,” Kelly added.

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