A criminal Armenian gang with a vast network of associates have been charged with using phantom health care clinics to cheat the Medicare trust fund out of $163 million, which is the largest fraud case by one criminal entity in the Medicare program’s history, according to U.S. officials.
Federal prosecutors charged and captured 73 people in New York and elsewhere, including Los Angeles, New Mexico, Georgia, and Ohio during raids. The New York based investigation began after information on 2,900 Medicare trust fund patients in upstate New York reported stolen social security numbers and dates of birth.
Social Security scams are not new, and neither is Medicare trust fund scams but authorities were amazed at the sophistication of the Armenian operation. The people charged in the New York case set up phantom clinics in 25 states, and had stolen the identities of doctors. The names were submitted to Medicare trust fund offices for care that was never given.
The entire doctor-patient operation was a hoax, which is unlike previous scams involving people who Medicare was billed on behalf of for unnecessary care and treatment. The whole social security scam–Medicare trust fund fraud operation– was under an Armenian crime boss called a “vor”. Prosecutors released the name of the boss as Armen Kazarian who is in custody in Los Angeles.
U.S. attorney Preet Bharara says it was the first time a vor–a rough equivalent of a traditional godfather– had been charged in a U.S. racketeering case. The defendants were also charged with bank fraud, money laundering, and identity theft.
Social Security scams are quite popular according to scambusters.org, and involve some popular gimmicks like offering services to obtain social security numbers for newborns, notifying social security of name changes for newly married people, or obtaining personal earnings statements for a fee (Scambusters.org, 2010).