A.G. Schneiderman Announces Indictment And Arraignment Of Long Island Attorney And Operators Of “Three-Quarter” Houses On Charges Of Medicaid Fraud And Money Laundering

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
January 12, 2017

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A.G. SCHNEIDERMAN ANNOUNCES INDICTMENT AND ARRAIGNMENT OF LONG ISLAND ATTORNEY AND OPERATORS OF “THREE-QUARTER” HOUSES ON CHARGES OF MEDICAID FRAUD AND MONEY LAUNDERING

Attorney Anthony Cornachio, CEO Of Two New York City Drug Treatment Programs, Allegedly Paid Yury Baumblit And Rimma Baumblit, Operators Of “Three-Quarter Houses,” To Force Residents To Attend Medicaid-Funded Drug Treatment

NEW YORK—Attorney General Eric T. Schneiderman today announced the indictment and arraignment of attorney Anthony Cornachio, 74, of Garden City as well as the indictment and arraignment of NRI Group, LLC. (“NRI”) and Canarsie A.W.A.R.E., Inc. (“Canarsie”), both Medicaid-enrolled drug treatment programs companies controlled by Cornachio. Also announced today was the indictment and arraignment of three-quarter housing operators Yury Baumblit, 66, and Rimma Baumblit, 60, of Brooklyn, and their company Back on Track Group, Inc.

In papers unsealed today in New York State Supreme Court, Kings County, prosecutors allege that Yury Baumblit and Rimma Baumblit, in exchange for payments from Cornachio’s companies, forced residents of their three-quarter homes to attend treatment at NRI and Canarsie regardless of the residents’ actual need for drug treatment services or face eviction. All of the residences leased by Back on Track Group, Inc. and operated by Yury Baumblit and Rimma Baumblit as three-quarter homes were located in Kings County. During the course of this scheme, which dates back to at least 2013, Cornachio allegedly paid Back on Track Group, Inc. over $900,000.00 in illegal kickbacks.  As a result of this kickback scheme, prosecutors allege that Cornachio, through NRI and Canarsie, submitted, and caused to be submitted, at least $1.7 million in false claims for reimbursement to Medicaid. These claims, prosecutors allege, were fraudulent because they resulted from illegal kickbacks and were often medically unnecessary.

“New York’s homeless and substance abuse programs are funded by taxpayers to provide a basic human right and assist those suffering from addiction,” said Attorney General Schneiderman. “Treating vulnerable New Yorkers as pawns to maximize Medicaid reimbursement to generate unjust profits is shocking, and those who steal from Medicaid will be caught and prosecuted.”

Kings Country Supreme Court Acting Justice Daniel Chun arraigned both the individual and corporate defendants on counts of Grand Larceny in the First Degree, Money Laundering in the Second Degree, and a violation of Social Services Law prohibiting the payment of kickbacks related to the provision of services under the State’s Medicaid program.  Justice Chun also arraigned Anthony Cornachio on ten additional counts of Offering a False Instrument for Filing in the First Degree.

Grand Larceny in the First Degree is a Class B felony with a maximum term of incarceration of twenty-five years in state prison.  Grand Larceny in the Second Degree and Money Laundering in the Second Degree are each Class C felonies with a maximum term of incarceration of fifteen years.  Offering a False Instrument for Filing in the First Degree and Social Services Law §366(d) and §366(f) are each Class E felonies with a maximum term of incarceration of four years.

In addition to the indictment announced today, the Attorney General previously obtained an order freezing the bank accounts and other property held by the defendants and attaching up to $5,221,649.28 of those assets.  The Attorney General obtained a temporary restraining order preventing dissipation or transfer of property controlled by the defendants.  In connection with this investigation, in mid-November, MFCU investigators executed a search warrant at Cornachio’s home in Garden City, Long Island and filed a False Claims Act and forfeiture complaint against the defendants seeking over $5 million dollars in damages plus penalties. 

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, and are largely funded from each residents’ monthly housing allowance provided by the New York City Human Resources Administration (“HRA”). 

At the time of his arrest in November, Cornachio was the village attorney for the Village of Island Park, Long Island, and a trustee of Nassau Community College.

In early 2016, Yury Baumblit and Rimma Baumblit were similarly indicted for an alleged kickback arrangement they had maintained with a different substance abuse treatment program.  That indictment, which is currently pending in Kings County Supreme Court, charges Yury Baumblit and Rimma Baumblit with Grand Larceny in the Second Degree and other crimes; they remain incarcerated awaiting trial on both matters.

Throughout this investigation, the Attorney General has worked closely with the various City, State, and Federal Agencies.  In particular, the Attorney General would like to thank the New York City Human Resources Administration (“HRA”) for its cooperation and valuable assistance throughout the investigation and notably the work of its Medicaid Provider Investigations & Audit Unit.   In addition, the Attorney General thanks the New York State Office of Alcoholism and Substance Abuse Services, the United States Department of Homeland Security, and the Office of New York State Medicaid Inspector General for their assistance. 

The investigation was led by MFCU Senior Investigator Albert Maiorano, with the support of Investigator David Ryan and Supervising Investigators Dominick DiGennaro and Michael Casado under the supervision of MFCU 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-Investigator Jillian White, under the supervision of Principal Special Auditor Investigator Emmanuel Archer and 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 is being prosecuted by Special Assistant Attorneys General Megan Friedland and Erin Kelsh under the supervision of NYC Regional Director Christopher M. Shaw.  Thomas O’Hanlon is MFCU’s Chief of Criminal Investigations–Downstate.   The civil case is being handled by Special Assistant Attorneys 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 charges filed in this case, and in the previously-filed case noted above, are merely accusations. The defendants are presumed innocent until and unless proven guilty in a court of law.

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