Jul 30, 2014

Hewlett Man Busted in Large Insurance Fraud Scheme

Organization defrauded companies to make millions of dollars, according to U.S. Attorney's Office.

Hewlett Man Busted in Large Insurance Fraud Scheme

A Hewlett man was allegedly part of an organization that schemed to defraud private insurance companies of more than $279 million under New York’s no-fault accident law with the use of fraudulent medical clinics, according to charges revealed Wednesday by the United State Attorney’s Office.

Mikhail Zemlyansky, 35, of Hewlett, was one of 36 people arrested on Wednesday and charged with RICO conspiracy (mail fraud and money laundering), conspiracy to commit health care fraud, conspiracy to commit mail fraud and conspiracy to commit money laundering in what the attorney’s office is calling “the largest single no-fault automobile insurance fraud ever charged.” He faces up to 70 years if convicted on all counts.

“Today’s charges expose a colossal criminal trifecta, as the fraud’s tentacles simultaneously reached into the medical system, the legal system, and the insurance system, pulling out cash to fund the defendants’ lavish lifestyles,” Manhattan U.S. Attorney Preet Bharara said in a release. “As alleged, the scheme relied on a cadre of corrupt doctors who essentially peddled their medical licenses like a corner fraudster might sell fake ID’s, except those medical licenses allowed unlawful entry, not to a club or a bar, but to a multi-billion dollar pool of insurance proceeds.”

No- fault car insurance enables drivers and passengers to obtain benefits of up to $50,000 per person for injuries sustained in an automobile accident, according to the attorney’s office.

From at least 2007 through 2012, the “No-Fault Organization,” consisting primarily of individuals of Russian descent, allegedly operated a scheme that provided unnecessary and excessive medical treatments to bilk car insurance companies. Zemlyansky acted as a controller and owner of the clinic (see attached document for the other defendants).

The organization paid medical practitioners to use their licenses to bill the insurers for the bogus medical treatments. Recruiters were paid thousands of dollars in kickbacks to bring in passengers who were involved in a car accident.

The patients received treatments such as physical therapy, acupuncture, and chiropractic treatments – as many as five times per week for each. They also received psychology, neurology, orthopedics and audiology care.

Patients were then referred to lawyers who filed bogus lawsuits on their behalf. The lawyers — who were also paid kickbacks  — then coached them on what injuries to claim to get as many treatments as possible.

Undercover officers acted as patients as part of the investigation.

The No-Fault Organization laundered the money through shell companies and corrupt check-cashing services. Often, checks would be written from the No-Fault or Modality Clinics with the payee line left blank, and in amounts less than $10,000 in order to avoid potential financial institution reporting requirements and other scrutiny.

Members and associates of the No-Fault Organization paid themselves through their own shell companies and then used the criminal proceeds to fund expensive vacations and to purchase luxury goods.

“The criminal enterprise, while it lasted, was obscenely profitable,” said FBI Assistant Director-in-Charge Janice K. Fedarcyk. “Auto insurance fraud is also a crime that indirectly victimizes every driver in New York.”

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