New York, NY - March 12, 2014 - Attorney General Eric T. Schneiderman today announced the arrest of three men for defrauding government-funded health care programs by buying back prescriptions and billing Medicaid as if the medication had been dispensed. The two owners of 184th Street Pharmacy in the Bronx, along with the supervising pharmacist, targeted financially vulnerable patients, putting their health at risk by paying them to forgo necessary anti-retroviral HIV medications.
Owners Ahmed Hamed, 37, of Bayside, Queens, and Tarek Elsayed, 48, of Elmhurst, Queens, and the supervising pharmacist, Mohammed Hassan Ahmed, 36, of Elmhurst, were arrested this morning. All three have been charged with felony Grand Larceny and Scheming to Defraud the Government; in addition, Hamed and Elsayed have been charged with felony Money Laundering.
“These defendants abused the fundamental trust between health care providers and patients by putting their own greed above the health needs of the patients,” said Attorney General Schneiderman. “This blatant theft and abuse of one of our state’s most important health care programs is reprehensible and will not be tolerated.”
“Prescription drug fraud is a crime fueled by greed that continues to plague our nation’s health care system,” said Special Agent in Charge Tom O’Donnell of the U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations’ New York Office. “Today’s arrests, coordinated with NY’s Medicaid Fraud Control Unit, serve as a stark warning to those who would steal from government health programs meant to care for our most vulnerable citizens.”
The defendants, working together, frequently submitted claims for thousands of dollars in reimbursements to Medicaid and Medicaid managed care organizations for medications they did not dispense between March 1, 2013, and the present. In less than a year, government-sponsored health care programs, including Medicaid, Medicare and a number of Medicaid-funded managed care organizations, paid 184th Street Pharmacy in excess of $9.8 million.
The Attorney General’s investigation revealed that on at least eight occasions between October 2013 and February 2014, Mohammed Hassan Ahmed, Tarek Elsayed and Ahmed Hamed paid patients hundreds of dollars in cash in exchange for forgoing their prescriptions, most of which were for HIV medication. The defendants then submitted false claims to Medicaid and to Medicaid-funded health plans certifying that they had in fact dispensed the medication in question. On other occasions, Ahmed, Elsayed and Hamed submitted claims to Medicaid and Medicaid managed care companies costing these insurers thousands of dollars in reimbursements for prescriptions refills that were never dispensed. The defendants also paid Medicaid recipients cash for referring new patients, giving them a bonus for each new patient they brought in.
Medicare also has received numerous complaints regarding its patients being paid to not receive HIV medication and is also believed to be a victim of defendants’ conduct. The Attorney General’s investigation of 184th Street Pharmacy is ongoing.
Hassan Ahmed and Tarek Elsayed funneled the proceeds of their crimes through several companies they owned and controlled. These corporations include A and H Vitamin Supply Corp., Kinrey Medicine Supplies Corp., North American Drugs Corp., Health Care Medicine Supply Corp., NYC Medicine Supply Inc., Five Borough Drugs Corp., Tri-Borough Limo Inc., Premier Gate LLC, United Pillars LLC and two companies alleged to be sound-alikes for well-established wholesalers: Andas Pharmaceutical Supply Corp. and Kinrey Medicine Supplies Corp.
Hamed and Elsayed are charged with three counts of Grand Larceny in the Third Degree, a class D felony, one count of Scheme to Defraud in the First Degree, a class E Felony, and one count of Money Laundering in the Fourth Degree, a class E Felony. Ahmed is charged with three counts of Grand Larceny in the Third Degree, a class D felony, and one count of Scheme to Defraud in the First Degree. If convicted, each defendant faces up to seven years in prison.
In addition to arresting the defendants, the Attorney’s General Medicaid Fraud Control Unit (MFCU), with the assistance of the United States Department of Health and Human Services, Office of the Inspector General (HHS-OIG), the New York State Office of the Medicaid Inspector General (OMIG), the United States Food and Drug Administration (FDA) and the New York City Police Department (NYPD), executed a search warrant this morning at 184th Street Pharmacy, located at 69 East 184th Street in the Bronx.
In conjunction with today’s arrests, the Attorney General also obtained a court order freezing the bank accounts held by the criminal defendants for more than $9.8 million. The order freezes the bank accounts of the above-listed corporations up to the amount of the proceeds they received from their alleged wrongful conduct. The Attorney General further obtained a temporary restraining order prohibiting both the defendants and the 10 shell companies from transferring assets. The Attorney General also seized property belonging to the criminal defendants, including a Maserati, two BMWs and a Mercedes-Benz.
Attorney General Schneiderman thanks HHS-OIG, OMIG pharmacist Serena Fallon, the FDA, Amida Care Inc., Healthfirst PHSP Inc., Express Scripts, CVS Caremark, and NYPD Bronx Narcotics Detective Mike Smyth for their assistance in this investigation.
The investigation was conducted by MFCU Investigators Dominick DiGennaro and David Ryan and Special Agent Liz Rolon, who were collectively supervised by MFCU Supervising Investigator Thomas Creelman, Deputy Chief Investigator Kenneth Morgan, Chief Investigator Thaddeus Fisher and HHS-OIG Assistant Special Agent in Charge Scott Lampert. The audit investigation was conducted by Special Auditor Investigators Cristina Marin and Jonathan Romano, who were supervised by MFCU Regional Chief Auditor Thomasina Smith.
The criminal case is being prosecuted by Special Assistant Attorney General Imran Ahmed of the Attorney General’s Medicaid Fraud Control Unit and Deputy Regional Director Larissa Payne, Regional Director Christopher M. Shaw and Chief of Criminal Investigations-Downstate Thomas O’Hanlon. Civil remedies are being prosecuted by Special Assistants Attorney General Elizabeth Silverman and Kathryn Heim Harris. The Medicaid Fraud Control Unit is led by Acting MFCU Director Amy Held. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.
The charges filed in this case are accusations. The defendants are presumed innocent until proven guilty in a court of law.