A.G. Schneiderman Announces Guilty Plea Of Pharmacist In Connection With $150 Million Medicaid Fraud Scam

A.G. Schneiderman Announces Guilty Plea Of Pharmacist In Connection With $150 Million Medicaid Fraud Scam

NEW YORK—Attorney General Eric T. Schneiderman today announced the guilty pleas of licensed pharmacist Glenn Schabel, 55, of Melville, and his company, Glenn Schabel, Inc. in connection with a nation-wide scheme to sell diverted HIV medication to unsuspecting New Yorkers.  Schabel pled guilty in New York State Supreme Court, Suffolk County in Riverhead to Criminal Diversion of Prescription Medications and Prescriptions in the First Degree, and Commercial Bribe Receiving in the First Degree.  Schabel will be sentenced to up to two and one-third to seven years state prison and forfeit $5,456,267 to the New York State Medicaid Program. Glenn Schabel Inc., pled guilty to Money Laundering in the First Degree.  Today’s convictions were part of the Attorney General’s Medicaid Fraud Control Unit’s (“MFCU”) “Operation Black-Market Meds” investigation.



“This Defendant, a licensed pharmacist, abused the public’s trust and became a participant in this multi-million dollar scheme that at its core preyed on the sick,” said Attorney General Schneiderman. “My office will continue to protect taxpayers and consumers from schemes that threaten the safety of the public.”



In April 2012, MFCU investigators arrested Schabel and three other individuals and charged ten companies, for using a network of bogus prescription medication wholesalers in Alabama, Mississippi, North Carolina, and California to launder money and to sell over $274 million in diverted prescription medications. It was charged that the medications were obtained from illegal or unknown sources, to Allion Healthcare, Inc., the parent company of MOMS Pharmacy, a corporate pharmacy formerly headquartered in Melville, New York. The diverted prescription medications were obtained by Schabel’s co-defendants using various illegal means and included pills that had been previously dispensed to other individuals and that were then re-sold into the black market.  Under Schabel’s supervision, those diverted medications were purchased by MOMS Pharmacy and dispensed to its patients, many of whom were Medicaid recipients.  The New York State Medicaid program ultimately reimbursed MOMS Pharmacy in excess of $150,000,000 for the diverted medications dispensed to those MOMS Pharmacy patients that were covered by Medicaid.  Diverted medication poses a serious health risk to the public due to its unknown origin and quality.  In some cases, diverted prescription medication is counterfeit, expired, not properly stored, or is mislabeled.



In court today, Schabel, who was both the supervising pharmacist and compliance officer for MOMS Pharmacy, pled guilty before the Hon. Richard Ambro, Supreme Court Suffolk County, to one count of Criminal Diversion of Prescription Medications and Prescriptions in the First Degree, a class C felony, and one count of Commercial Bribe Receiving in the First Degree, a class E felony.   Schabel admitted that during a four year period he accepted over five million dollars in bribes and that, on behalf of MOMS Pharmacy, he received prescription medication from sellers that he knew or had reasonable grounds to know were not authorized by law to sell. 



At sentencing, Schabel faces a state prison sentence of between one to three year and two and one-third to seven years.  Glenn Schabel Inc., pled guilty to Money Laundering in the First Degree, a class B felony.  With these pleas, Schabel will surrender his pharmacist license and pay the New York Medicaid program $5,456,267.



The Attorney General thanks the New York State Office of the Medicaid Inspector General (“OMIG”), the Alabama Medicaid Fraud Control Unit, the United States Department of Health and Human Services, Office of Inspector General (“HHS OIG”), the Federal Bureau of Investigation (“FBI”), the United States Drug Enforcement Administration (“DEA”), the United States Food and Drug Administration-Office of Criminal Investigations (“FDA-OCI”), the Florida Department of Law Enforcement, and the United States Attorney’s Office for the Southern District of New York.  All provided valuable information and assistance during the investigation.



The criminal case was prosecuted by MFCU Special Assistant Attorneys General Adam Shlahet and Imran Ahmed with the assistance of NYC Regional Director Christopher M. Shaw and Peri Kadanoff, the Deputy Attorney General of the Attorney General’s Organized Crime Task Force.  The forfeiture action was handled by Special Assistant Attorneys General Andrew Gropper and Diana Elkind.  The investigation was conducted by MFCU Supervising Investigator Victor Maldonado, Senior Special Investigator Denitor Guerra, Investigator Lawrence Riccio, Associate Special Auditor Investigators Cristina Marin and Jonathan Romano with assistance of Deputy Chief Investigator Kenneth Morgan and Regional Chief Auditor Thomasina Smith.  Thom O’Hanlon is the MFCU Chief of Criminal Investigations – Downstate.  The Medicaid Fraud Control Unit is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney.  The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.



The charges against the remaining defendants are merely accusations and the defendants are presumed innocent until and unless proven guilty in a court of law.