Attorney General Cuomo Announces Sentencing Of Key Figure In Massive Medicaid Fraud Ring

NEW YORK, NY (July 3, 2008) - Attorney General Andrew M. Cuomo today announced that one of the kingpins in charge of a massive Medicaid fraud ring was sentenced to three and a third to ten years in prison. Rauf Ahmad, the owner of several New York City pharmacies, played a key role in the ring that involved a doctor, pharmacists, millions in fraudulent Medicaid billings, and large money transfers to bank accounts in Pakistan.

Ahmad was involved in the illegal operation from November 2005 to October 2006, during which time he purchased bogus prescriptions and Medicaid beneficiary cards from partners in the scheme and used them to bill Medicaid on behalf of the pharmacies that he owned. In total, Ahmad made fraudulent billings to, and was paid by, Medicaid more than $5 million for prescriptions that were never filled.

Ahmad also transferred more than $1 million in criminal proceeds he obtained from the Medicaid fraud ring to Pakistan in transactions designed to hide the nature of the cash transfers.

"It is reprehensible that some individuals would steal from a system that provides affordable and quality health care to New Yorkers," said Attorney General Cuomo. "My Medicaid Fraud Control Unit will continue to investigate and prosecute individuals and institutions who jeopardize care for legitimate patients and cost the taxpayers millions of dollars."

Bronx Supreme Court Justice Steven L. Barrett sentenced Ahmad, 49, of Jersey City, NJ, to three and a third to ten years in prison following his plea of guilty to grand larceny in the first degree (B felony), conspiracy in the fourth degree (E felony), and scheme to defraud the state by unlawfully selling prescriptions (A misdemeanor). Ahmad's sentencing stems from a four month long undercover investigation by the Attorney General's Medicaid Fraud Control Unit, with assistance from the State Office of Medicaid Inspector General. As a result of the investigation, the Medicaid fraud ring was dismantled.

According to court documents, the investigation revealed that Ahmad was involved in a complex network of criminal Medicaid fraud where the prescriptions that Ahmad bought originated from a Bronx medical practice. Criminal activity that occurred at the practice included:

  • Dr. Deepak Sachdev wrote thousands of prescriptions to hundreds of patients for expensive AIDS-related and anti-psychotic medications without obtaining medical histories or performing any medical tests (Sachdev was arrested but later granted an Adjournment in Contemplation of Dismissal due to mental illness. In the agreement with the Attorney General's office, Sachdev also surrendered his New York and New Jersey medical licenses.)
  • Co-defendants involved in the ring handled the volume of patients at the office and made sure that only those with functioning Medicaid cards would be able to see the doctor
  • Patients sold their prescriptions and Medicaid information to co-defendants for less than $100
  • The co-defendants then sold the prescriptions to Ahmad's pharmacies, which used the patients' Medicaid cards to bill Medicaid

The following is a list of Ahmad-owned pharmacies to which he illegally transferred prescriptions and billed Medicaid, knowing that the prescriptions would never be filled:
  • Seven D Pharmacy, Shakespeare Avenue, Bronx
  • Bath Pharmacy Inc. (also known as Family Pharmacy), Bath Avenue, Brooklyn
  • Shop Rite Pharmacy (also known as Shop Wise Pharmacy), Liberty Avenue, Ozone Park
  • Best Pharmacy, Grand Concourse, Bronx
Ahmad is also a defendant in a civil action filed by the Attorney General's office, seeking the recovery of the money Ahmad stole, including more than $1 million transferred by Ahmad's wife to Ahmad's family in Pakistan. Since the arrest, the Attorney General's office has secured the return of $400,000 of Ahmad's funds from Pakistan, and continues to seek the forfeiture of Ahmad's remaining criminal proceeds, including working with the Department of Justice to forfeit real estate purchased by Ahmad in New Jersey. The civil action also resulted in an order freezing Ahmad's assets.

In addition to thanking the Office of the Medicaid Inspector General, the Attorney General thanked the United States Department of Homeland Security, Bureau of Immigration and Customs Enforcement, Newark, New Jersey office, the New Jersey Attorney General's Office Medicaid Control Unit, and the New York City Police Department for their assistance in this case.

This case was prosecuted by Special Assistant Attorney General Debra Glatt of the Attorney General's Medicaid Fraud Control Unit. Chief of the Civil Enforcement Unit, Paul J. Mahoney, is pursuing the civil action. Senior Special Investigators Edward Lafond, William Diaz, Robert Crook, Joseph Scalogna, Pedro Foruria, James Serra, Robert Flynn, Lawrence Riccio, Victor Maldonado, and Jose Ruiz assisted in the investigations, under the supervision of Supervising Special Investigator Ralph Aquino; and Associate Special Auditor Investigators Jonathan Romano, Andrea D'Alessio, David Verhey, Yehuda Scheff, Anthony Spaventa, Joanna-Joy Volo, Sandy Bizzaro, and Patricia Iemma, under the supervision of Principal Special Auditor Investigator Jerome Hosinking.
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