Babylon Man Convicted for Black Market HIV Drug Sales

A Long Island man with a pharmacy in Melville was convicted Monday of illegally distributing HIV medication obtained from the black market to patients, according to the New York State Attorney General.

Ira Gross, 63, of Babylon, and his shell company, Chaparral Services, LTD., illegally billed Medicaid and others $274 million, earning Gross a profit of $25 million through this scheme, the AG says.

“The perpetrators of this complex scheme not only cheated the state Medicaid program out of millions of dollars, but preyed on some of New York’s most vulnerable patients just to make a quick buck,” Attorney General Eric T. Schneiderman said in a press release.

Gross, a licensed pharmacist, understood the regulations of pharmaceutical distribution and knew how to evade them, the AG says. He allegedly served as the broker between the buyer and seller of the illegal medications and used Chaparral Services, Ltd. to conceal and distribute his money.

In April 2012, the Attorney General’s Medicaid Fraud Control Unit arrested Gross and three others for allegedly distributing HIV prescription medication obtained on the black market through an online pharmacy in Melville. MOMS pharmacy also had satellite offices in Manhattan, Brooklyn and other states.

According to the AG, MOMS and its parent company Allion Healthcare, would dispense the medication to Medicaid recipients and billed the New York State Medicaid program for the tainted medication.

These black market prescriptions were illegally obtained from the street in batches, which included pills that were previously dispensed, stolen or expired, the AG says. Black market medications could cause patients adverse drug interactions, overdoses or a decline in health from not receiving the regulated prescriptions they were prescribed.

A Suffolk County jury found Gross guilty of first-degree grand larceny, first-degree criminal diversion of prescription medications and prescriptions, fourth-degree conspiracy, first-degree attempted grand larceny, first-degree attempted criminal diversion of prescription medications and prescriptions, three counts of first-degree money laundering and first-degree commercial bribing.

Chaparral Services, Ltd. was found guilty of three counts of first-degree money laundering, second-degree money laundering, first-degree commercial bribing.

Several others are being prosecuted for this scheme, including:

• Stephen Manuel Costa, a Florida resident and co-defendant who pleaded guilty on an earlier date, allegedly disguised the sale of the black market medications to MOMs using four shell companies, allowing him to procure millions of dollars of black market HIV medications.
• Harry Abolafia, who also pleadedd guilty on an earlier date, allegedly created false invoices for Costa’s shell companies to make the transactions appear legitimate.
• Glenn Schabel, the supervising pharmacist and compliance officer for MOMS pharmacy, pleaded guilty in March 2016 and admitted that he accepted more than $5 million in bribes over a four-year period. Schabel purchased $274 million worth of black market HIV medications from Costa through Gross, the AG Says.

Through these deals, Schabel and Abolafia were paid more than $5 million and $1 million, respectively, the AG says.

The AG is also asking Gross, Gross’ wife and their adult children, Dakota Gross and Chelsea Gross, to return the money they allegedly earned from this scheme.

Gross will be sentenced on September 8. He faces a sentence of up to eight and one-third to 25 years in prison.

Image via NYSAG