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A.G. Schneiderman Announces Arrest of LI Attorney and Operators of "Three-Quarter" Houses on Charges of Medicaid Fraud and Money Laundering

Attorney General Eric T. Schneiderman announced the arrest of attorney Anthony Cornachio, 74, of Garden City and charges against NRI Group and Canarsie A.W.A.R.E.

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Attorney Anthony Cornachio, who dontrols two NYC drug treatment programs, allegedly paid operators of “Three-Quarter Houses,” to force residents to attend Medicaid-funded drug treatment.

Photo by: Andreas Herrmann, via Free Images.

Garden City, NY - November 11, 2016 - Attorney General Eric T. Schneiderman today announced the arrest of attorney Anthony Cornachio, 74, of Garden City and charges against NRI Group, LLC (“NRI”) and Canarsie A.W.A.R.E., Inc. (“Canarsie”), which are Medicaid-enrolled drug treatment programs controlled by Cornachio.

The Attorney General’s Medicaid Fraud Control Unit (“MFCU”) also charged three-quarter housing operators Yury Baumblit, 66, and Rimma Baumblit, 60, of Brooklyn, and their company Back on Track Group, Inc.

In papers filed in New York City Criminal Court, Kings County and New York State Supreme Court, Kings County, prosecutors allege that Yury Baumblit and Rimma Baumblit, in exchange for payments from Cornachio’s companies, forced residents of their “three-quarter” homes to either face eviction or attend NRI and Canarsie regardless of the residents’ actual need for drug treatment services.

All of the residences leased by Back on Track Group, Inc. and operated by Yury Baumblit and Rimma Baumblit as three-quarter homes were located in Kings County.  During the course of this scheme, which dates back to at least 2013, Cornachio allegedly paid Back on Track Group, Inc. over $900,000.00 in illegal kickbacks.  As a result of this kickback scheme, prosecutors allege that Cornachio, through NRI and Canarsie, submitted, and caused to be submitted, at least $1.7 Million in false claims for reimbursement to Medicaid. These claims, prosecutors allege, were fraudulent because they resulted from illegal kickbacks and were often medically unnecessary.

“We allege that the defendants engaged in a deliberate scheme to exploit those struggling with substance abuse in order to line their own pockets with millions,” said Attorney General Schneiderman. “Medicaid cannot serve as a personal piggy bank for criminals and fraudsters who have little regard for the well-being of their fellow New Yorkers. My office will continue to uphold the integrity of the Medicaid program to ensure that our tax dollars are put towards helping our most vulnerable citizens.”

“Individuals who victimize the most vulnerable New Yorkers should be prosecuted to the full extent of the law,” said Department of Social Service Commissioner Steven Banks. “By forcing residents to submit themselves to medical tests and treatments that in many cases they didn’t even need, these defendants have shown not only a clear intention to defraud Medicaid but also an absolute disregard for human dignity.”

In addition to the arrests, MFCU investigators executed a search warrant at Cornachio’s home in Garden City, Long Island and filed a False Claims Act and forfeiture complaint against the defendants seeking over $5 million dollars in damages plus penalties

Three-quarter homes in New York City are private entities that provide housing to indigent, formerly homeless individuals and those transitioning out of periods of incarceration, and are largely funded from each resident’s monthly housing allowance provided by the New York City Human Resources Administration (“HRA”). 

Anthony Cornachio, NRI and Canarsie have been charged with Grand Larceny in the First Degree, Money Laundering in the Second Degree, and violating Social Services Law § 366(d), which prohibits an enrolled Medicaid provider from paying kickbacks. Similarly, Yury Baumblit and Rimma Baumblit and their corporation, Back on Track Group, Inc. have been charged with Grand Larceny in the First Degree, Money Laundering in the Second Degree, and violating Social Services Law § 366(f), which prohibits individuals from acting in concert with an enrolled Medicaid provider and accepting the payment of kickbacks. 

Grand Larceny in the First Degree is a Class B felony with a maximum term of incarceration of twenty-five years in state prison.  Grand Larceny in the Second Degree and Money Laundering in the Second Degree are each Class C felonies with a maximum term of incarceration of fifteen years.  Social Services Law §366-f is a Class E felony with a maximum term of incarceration of four years. If convicted on all charges, the defendants each face up to 25 years each in state prison.

Cornachio is currently the village attorney for the Village of Island Park, Long Island, and a trustee of Nassau Community College.

In addition to the felony complaints filed, on Monday, the Attorney General obtained an order freezing the bank accounts and other property held by the defendants and attaching up to $5,221,649.28 of those assets.  The Attorney General obtained a temporary restraining order preventing dissipation or transfer of property controlled by defendants. 

Earlier this year, Yury Baumblit and Rimma Baumblit were indicted for a kickback arrangement they maintained with a different substance abuse treatment program. That indictment, which is currently pending in Kings County Supreme Court, charges Yury Baumblit and Rimma Baumblit with Grand Larceny in the Second Degree and other crimes; they remain incarcerated awaiting trial on that matter.

Throughout this investigation, the Attorney General has worked closely with the various city, state, and federal agencies. In particular, the Attorney General would like to thank the New York City Human Resources Administration (“HRA”) for its cooperation and valuable assistance throughout the investigation and notably the work of its Medicaid Provider Investigations & Audit Unit.  In addition, the Attorney General thanks the New York State Office of Alcoholism and Substance Abuse Services, the United States Department of HHS-OIG, and the Office of New York State Medicaid Inspector General Dennis Rosen, MFCU’s partner in combatting fraud against the Medicaid program, for their assistance. 

The investigation was led by MFCU Senior Investigator Albert Maiorano, with the support of Investigator David Ryan and Supervising Investigators Dominick DiGennaro and Michael Casado under the supervision of MFCU Deputy Chief Investigator Kenneth Morgan.   The audit investigation was led by Principal Auditor-Investigator Investigator Patricia Iemma, with the support of Senior Auditor-Investigator Nicholas Thottam and Auditor-Investigator Jillian White, under the supervision of Principal Special Auditor Investigator Emmanuel Archer and NYC Regional Chief Auditor Thomasina Smith.   Investigative support was provided by Supervising Legal Assistant Wendy Dorival and Confidential Legal Analyst Kelvin Caraballo.

The criminal case is being prosecuted by Special Assistant Attorneys General Megan Friedland and Erin Kelsh under the supervision of NYC Regional Director Christopher M. Shaw. Thomas O’Hanlon is MFCU’s Chief of Criminal Investigations–Downstate.  The civil case is being handled by Special Assistant Attorneys General Alee Scott and Christopher Y. Miller with the assistance of MFCU Civil Enforcement Chief Carolyn Ellis. MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney.   

The charges filed in this case, and in the previously-filed case noted above, are accusations. The defendants are presumed innocent until and unless proven guilty in a court of law.