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Post date: June 20 2000

Gramercy Park Pharmacy Owner Admits To Over $1 Million "phantom Drug" Medicaid Scam

Attorney General Spitzer today announced that a Manhattan pharmacy owner has admitted to stealing more than $1 million from the Medicaid program by fraudulently billing for thousands of expensive drugs, including AIDS medications, that were never dispensed to patients - or even in stock.

Appearing late yesterday afternoon in Manhattan Supreme Court before Justice Carol Berkman, Nader Attia and his corporation, Michael's Pharmacy, Inc., of East 23rd Street in Manhattan, each pleaded guilty to the crimes of Grand Larceny in the Second Degree and Offering a False Instrument for Filing in the First Degree.

Sentencing was set for July 26, at which time Justice Berkman indicated she would sentence Attia to one year in jail and the corporation to a conditional discharge. As part of their plea, both defendants have also agreed to make restitution of $1.5 million to the Medicaid program.

"In carrying out their massive fraud, the defendants billed the State for having dispensed nearly 370,000 pills, all costly brand name drugs, that the pharmacy did not even have in stock. As a result of these 'phantom' drugs, the pharmacy's Medicaid billings jumped dramatically from $360,000 in 1997 to more than $2 million in 1999," said Spitzer.

"My Office will continue to aggressively pursue and prosecute those individuals who abuse the Medicaid program and the taxpayers of this State."

The illegal billings took place between March 1997 and November 1999. Among the drugs improperly billed for were Viracept, Combivir, Zerit, Crixivan, Epivir, Sustiva, Ziagen, Diflucan, Invirase, Retrovir, Zantac, Procardia, and Mevacor.

Spitzer thanked the State Health Department for initially referring the matter to his office. He also thanked the New York City Human Resources Administration for its assistance during the course of the investigation.

Michael's Pharmacy, Inc., has locations at 333 East 23rd Street in Manhattan and at 7817 17th Avenue in Brooklyn. Attia, 42, and his wife own and live in the Brooklyn building where their pharmacy is located. Attia and his corporation were indicted last month.

The case was prosecuted by Special Assistant Attorney General Robert J. Goldstein, of the New York City Regional Office of Spitzer's Medicaid Fraud Control Unit. All cases are handled under the direct supervision of Deputy Attorney General Jos? Maldonado.