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A.G. Schneiderman Announces Guilty Pleas Of “Three-Quarter” Housing Operators Yury Baumblit And Rimma Baumblit

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
February 15, 2018

Attorney General’s Press Office / 212-416-8060
nyag.pressoffice@ag.ny.gov
Twitter: @AGSchneiderman  

A.G. SCHNEIDERMAN ANNOUNCES GUILTY PLEAS OF “THREE-QUARTER” HOUSING OPERATORS YURY BAUMBLIT AND RIMMA BAUMBLIT 

Yury Baumblit and Rimma Baumblit Will Each Serve State Prison Sentences For Medicaid Fraud Scheme that Forced Residents to Attend Treatment Programs Regardless of Medical Need

NY’s Medicaid Program Expects To Recoup $1.5 to $2.5 Million From Sale Of Baumblit Assets

BROOKLYN – Attorney General Eric T. Schneiderman today announced the guilty pleas and expected prison sentences of Yury and Rimma Baumblit, the operators of “three-quarter” homes in New York City for a scheme to defraud Medicaid through kickbacks. Kings Country Acting Supreme Court Justice Daniel Chun accepted the guilty pleas of both defendants on two counts each of Grand Larceny in the Third Degree. Three-quarter homes in New York City are private entities that provide housing to indigent, formerly homeless individuals and those transitioning out of periods of incarceration.

Both defendants were indicted in 2016 by the Attorney General’s Medicaid Fraud Control Unit for having defrauded the State Medicaid program through a systematic scheme whereby, in exchange for money, Yury  Baumblit and Rimma Baumblit mandated that the residents of their three-quarter homes attend substance abuse treatment at designated treatment programs regardless of medical need. At a later date, Yury Baumblit will be sentenced to concurrent terms of 2 ½ to 5 years in state prison for each crime; Rimma Baumblit will be sentenced to concurrent terms of 2 to 4 years in state prison for each crime.

“Yury Baumblit and Rimma Baumblit lined their pockets by preying on our most vulnerable New Yorkers,” said Attorney General Eric T. Schneiderman. “This should serve as yet another reminder that my office will aggressively pursue and prosecute those who seek to get rich by taking advantage of New Yorkers.”

In addition to their guilty pleas, Yury Baumblit and Rimma Baumblit each executed civil settlement agreements with the Attorney General’s Medicaid Fraud Control Unit. Under the terms of those agreements, each of them agreed to forfeit assets, including two properties they own in Brooklyn: a 5,000 square foot home in Manhattan Beach and a cooperative apartment in Brighton Beach. Each of them also agreed to forfeit luxury goods seized in connection with the civil action against them, including jewelry, watches, over 200 designer handbags, and 21 fur coats. The sale of assets is projected to realize between $1.5 and $2.5 million dollars in civil restitution for the State Medicaid program.

As part of their guilty pleas, Yury Baumblit and Rimma Baumblit admitted they had engaged in a kickback scheme with Medicaid-enrolled drug treatment providers Narco Freedom Inc., NRI Group, LLC, and Canarsie A.W.A.R.E. Inc. In exchange for monthly payments, the two individuals forced the residents at their three-quarter homes to attend treatment at these three drug programs, irrespective of the residents’ actual medical need for drug treatment services, and in violation of numerous State laws. Had the patients refused, they would have been evicted by the Baumblits and left homeless. The payments that Yury Baumblit and Rimma Baumblit received were based on the number of substance-abuse treatment sessions attended by residents of their three-quarter homes. During the course of the scheme dating back to 2010, the Baumblits received over $1.5 million in illegal kickbacks through five corporations they controlled: #1 Marketing Service, Inc., R Y B Realty, LLC, Steps to Better Living Inc., Orbit Management Group Inc., and Back on Track Group, Inc. As a result of this kickback scheme, the Medicaid program also paid over $2 Million to Narco Freedom Inc., NRI Group, LLC, and Canarsie A.W.A.R.E. Inc.

In 2016, the Attorney General’s Medicaid Fraud Control Unit also indicted NRI Group, LLC, Canarsie A.W.A.R.E. Inc., and the owner of both treatment programs, Anthony Cornachio, for their participation in the kickback scheme to which the Yury Baumblit and Rimma Baumblit pled guilty. Criminal charges remain pending against NRI Group, LLC, Canarsie A.W.A.R.E. Inc., and Anthony Cornachio. A trial is expected later this year. Narco Freedom was convicted last year of Enterprise Corruption for defrauding the Medicaid program in a related scheme. The charges against the remaining defendants are merely accusations and the defendants are presumed innocent unless and until proven guilty in a court of law.

Four of the Baumblits’ corporate entities – #1 Marketing Service, Inc., R Y B Realty, LLC, Steps to Better Living Inc., and Orbit Management Group Inc. – were previously convicted of Grand Larceny in the Second Degree. The other charged corporate entity, Back on Track Group, Inc. was previously convicted of Grand Larceny in the First Degree.  All the corporate entities were sentenced to a conditional discharge. 

Yury Baumblit and Rimma Baumblit were each previously convicted in 2009 by the Attorney General’s Automobile Insurance Fraud Unit for having participated in a no-fault insurance scam.

Throughout this investigation, the Attorney General’s office has worked closely with the various City, State, and Federal Agencies. The Attorney General would like to thank the New York City Human Resources Administration for its cooperation, partnership and valuable assistance throughout the investigation and especially note the work of its Medicaid Provider Investigations and Audit Unit. In addition, the Attorney General thanks the New York State Office of Alcoholism and Substance Abuse Services, the Office of the Medicaid Inspector General, and the United States Department of Homeland Security for their assistance. 

The investigation was led by Senior Investigator Albert Maiorano, with the support of Investigator David Ryan and Supervising Investigator Dominick DiGennaro and Supervising Investigator Michael Casado; all under the supervision of Deputy Chief Investigator Kenneth Morgan. The audit investigation was led by Principal Auditor-Investigator Investigator Patricia Iemma, with the support of Senior Auditor-Investigator Nicholas Thottam and Auditor-Investigators Jillian White and Megan Scott, under the supervision of NYC Regional Chief Auditor Thomasina Smith. Investigative support was provided by Supervising Legal Assistant Wendy Dorival and Confidential Legal Analyst Kelvin Caraballo.

The criminal case was prosecuted by Senior Counsel Erin Kelsh and Special Assistant Attorney General Megan Friedland, under the supervision of NYC Regional Director Christopher M. Shaw. Thomas O’Hanlon is MFCU’s Chief of Criminal Investigations –Downstate. The civil case was handled by Special Assistant Attorney General Alee Scott with the assistance of MFCU Civil Enforcement Chief Carolyn Ellis. MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. The Criminal Justice Division is led by Executive Deputy Attorney General Margaret Garnett.

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