A.G. Schneiderman Announces $7.9 Million Settlement And State Prison Sentences In Major Illegal Prescription Buy-Back And Money Laundering Scheme

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
March 2, 2017

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A.G. SCHNEIDERMAN ANNOUNCES $7.9 MILLION SETTLEMENT AND STATE PRISON SENTENCES IN MAJOR ILLEGAL PRESCRIPTION BUY-BACK AND MONEY LAUNDERING SCHEME

Defendants Paid Off Patients To Forgo HIV Medication And Submitted Millions In False Claims To Medicaid And Medicare

Schneiderman: These Defendants Exploited The Trust Between Healthcare Providers And Patients For Financial Gain

NEW YORK—Attorney General Eric T. Schneiderman announced today the sentencing of two pharmacy owners, a supervising pharmacist and ten corporations for defrauding several government-funded healthcare programs, including Medicaid and Medicare. An investigation revealed that on at least eight separate occasions between November 2013 and February 2014, the defendants paid patients hundreds of dollars in cash to forgo their prescription medications, the vast majority of which were to treat HIV. The defendants then submitted false claims to Medicare, Medicaid and Medicaid-managed care organizations and were reimbursed for distributing the medications, despite the fact that they were never dispensed to patients. Tarek Elsayed, 50, of Elmhurst Queens, the co-owner of 184th Street Pharmacy in the Bronx, was sentenced today in Bronx County Supreme Court by the Honorable Stephen Barrett to one to three years in state prison. 

“These defendants abused the fundamental trust between healthcare providers and patients by putting their own greed above the health needs of their patients,” said Attorney General Schneiderman. “This blatant theft and abuse of our state and country’s most important healthcare programs is reprehensible and will not be tolerated.”

Previously, in August of 2016, Ahmed Hamed, 39, of Elmhurst Queens, the second co-owner of 184th Street Pharmacy, was sentenced to two to six years in state prison. In October of 2016, Mohamed Hassan Ahmed, 38, of Bayside, the supervising pharmacist at 184th Street Pharmacy, was sentenced to one to three years in state prison and was required to surrender his license to practice pharmacy. Collectively, the three defendants stole over $10 million from government-funded health care programs.

In addition, the Attorney General’s Medicaid Fraud Control Unit (MFCU) reached a $4.1 million civil settlement agreement with defendant Elsayed and a $3.8 million civil settlement agreement with defendant Hamed. Defendant Hamed was also required to forfeit a Maserati and BMW he purchased with the proceeds from the scheme. Both vehicles have since been sold and proceeds from the sales returned to the state Medicaid program.

Between March 2013 and March 2014, Medicare, Medicaid and Medicaid-managed care organizations paid 184th St. Pharmacy over $10 million for medications 184th St. Pharmacy claimed to have dispensed to patients. MFCU’s investigation revealed however that the pharmacy ordered only $1 million in medications from legitimate pharmaceutical wholesalers. 

During the undercover operations, the defendants advised undercover investigators from MFCU to sell their prescriptions to only the defendants. The defendants also paid the undercover investigators for referrals of new patients who sold their prescriptions to the defendants for cash. 

MFCU’s investigation further revealed that often within days of illegally obtaining funds from government-funded healthcare programs, defendants Ahmed Hamed and Tarek Elsayed funneled their criminal proceeds through several shell companies they owned and controlled, each named to be seem similar to well-known but unrelated companies in healthcare.  One such company pled guilty to Money Laundering in the First Degree, a class B Felony; the rest pled guilty to Money Laundering in the Second Degree, a class C Felony. Each corporation will be dissolved.

Tarek Elsayed pled guilty to one count of Grand Larceny in the Second Degree, a Class C Felony.  Ahmed Hamed pled guilty to two counts of Grand Larceny in the First Degree, a Class B Felony, and two counts of Grand Larceny in the Second Degree.  Mohamed Hassan Ahmed pled guilty to one count of Grand Larceny in the Second Degree.  

Attorney General Schneiderman thanks Amida Care Inc., which provided a referral of suspected fraud that led MFCU to perform several undercover investigations; Healthfirst PHSP, Inc.; Express Scripts; and CVS Caremark for their cooperation in this investigation.

The Attorney General also thanks MFCU’s partners in law enforcement, including the New York State Office of the Medicaid Inspector General; the United States Department of Health and Human Services Office of the Inspector General (HHS-OIG); and the New York City Police Department, notably Detective Mike Smyth.

The investigation was conducted by MFCU Supervising Investigator Dominick DiGennaro and MFCU Special Investigator David Ryan and HHS-OIG Special Agent Liz Rolon with the assistance of MFCU Deputy Chief Investigator Kenneth Morgan and HHS-OIG Special Agent in Charge Scott Lampert.  MFCU’s audit investigation was conducted by Principal Special Auditor Investigator Cristina Marin and NYC Deputy Regional Chief Auditor Jonathan Romano with the assistance of MFCU Regional Chief Auditor Thomasina Smith. Confidential Legal Assistant Kelvin Caraballo also assisted on the case.

The criminal case was prosecuted by Special Assistant Attorney General Imran Ahmed of the MFCU New York City Regional Office with the assistance of New York City Regional Director Christopher M. Shaw.  The civil case was handled by Special Assistant Attorney General Kathryn Harris and Special Assistant Attorney General Elizabeth Silverman with the assistance of MFCU’s Civil Enforcement Chief Carolyn Ellis. Thomas O’Hanlon is MFCU’s Chief of Criminal Investigations–Downstate.  MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney.

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