A.G. Schneiderman Announces The Indictment And Arraignment Of Three-Quarter Housing Operators Yury Baumblit And Rimma Baumblit On Charges Of Medicaid Fraud And Money Laundering

Individuals And Corporations Charged With Receiving Over $600,000 In Illegal Kickbacks

NEW YORK—Attorney General Eric T. Schneiderman today announced the indictment and arraignment of Yury Baumblit and Rimma Baumblit, “three-quarter house” operators in New York City, and their corporate entities #1 Marketing Service, Inc., R Y B Realty, LLC, Steps to Better Living Inc., and Orbit Management Group Inc., on charges of Grand Larceny in the Second Degree, Money Laundering in the Second Degree, and violations of the Social Services Law prohibiting the payment of kickbacks related to the provision of services under the State’s Medicaid program.  The Attorney General’s office arrested Yury and Rimma Baumblit on April 13. Both have remained in custody since their arrest.

At the time of the defendants’ arrest, the Attorney General, in a separate proceeding in State Supreme Court, obtained an order freezing the bank accounts and other property held by the couple and attaching up to $1.9 million of their assets.  Court orders issued at the time preclude the defendants from dissipating or transferring any of their assets without court permission and further prohibit anyone with notice of these orders from giving money or property to any criminal defendant. That proceeding is pending and both sets of orders remain in effect.

“As we allege in our indictment, the defendants orchestrated a deliberate scheme that defrauded taxpayers and ripped off Medicaid, while showing little regard for the well-being of their residents,” Attorney General Schneiderman said. “My office will not stand for those who put profits over the health of some of our most vulnerable members of society.”

Prosecutors allege the defendants engaged in a monthly kickback scheme with a Medicaid-enrolled drug treatment provider.  In exchange for a monthly payment, they forced the residents at their homes to attend a specific drug treatment provider, irrespective of each resident’s actual medical need for drug treatment services. The payments were based on the number of substance-abuse treatment sessions attended by residents of the defendants’ three-quarter houses.  During the course of this scheme, Yury Baumblit and Rimma Baumblit allegedly received over $600,000 in illegal kickbacks through one of four corporations they controlled: #1 Marketing Service, Inc., R Y B Realty, LLC, Steps to Better Living Inc., and Orbit Management Group Inc., all operating in Kings County.

Today, Kings Country Supreme Court Acting Justice Daniel Chun arraigned the defendants on one count of Grand Larceny in the Second 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 the defendants’ four corporate entities: #1 Marketing Service, Inc., R Y B Realty, LLC, Steps to Better Living Inc., and Orbit Management Group Inc., on charges of Grand Larceny in the Second Degree and a violation of the Social Services Law prohibiting the payment of kickbacks related to the provision of services under the State’s Medicaid program.  

Grand Larceny in the Second Degree and Money Laundering in the Second Degree are each Class C felonies and the defendants face a maximum term of incarceration of fifteen years. 

Yury Baumblit and Rimma Baumblit were arrested on April 13, 2016 and initially charged by felony complaint. Judge Marguerite Dougherty set bail at five hundred thousand dollars for Yury Baumblit and three hundred thousand dollars for Rimma Baumblit.  The defendants’ bail conditions remain unchanged following today’s arraignment on the indictment. 

The current indictment focuses on the defendants’ alleged kickback arrangement with one particular substance abuse treatment program; MFCU’s investigation is ongoing. The charges filed in this case are accusations. The defendants are presumed innocent until and until proven guilty in a court of law.

Throughout this investigation, the Attorney General’s office 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 for its cooperation, partnership 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 Office of the Medicaid Inspector General, and the United States Department of Homeland Security for their assistance. 

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 and Christopher Y. Miller and Senior Counsel Carolyn Ellis.  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. Audit support was provided by Special Audit Investigators Patricia Iemma and Nicholas Thottam under the supervision of MFCU Principal Special Auditor Investigator Emmanuel Archer and MFCU Chief Auditor Thomasina Smith. 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 Kelly Donovan.

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