Orange County Crackdown on Medicaid, Welfare Fraud

Thirty people have been charged with Welfare Fraud for illegally obtaining over $324,000 in public assistance benefits administered through the Orange County Department of Social Services—mostly Medicaid.

The enforcement action was the result of the collaborative efforts of the Orange County Department of Social Services Special Investigations Unit (SIU), the Sheriff’s Office and the District Attorney’s Office.

Department of Social Services investigators reviewed files of public assistance benefit recipients suspected of fraud, interviewed recipients, and forwarded cases to the District Attorney’s Office for further investigation. Investigators from the District Attorney’s Office and Sheriff’s Office interviewed many of the recipients before arresting them.

Of the $324,793.85 in public assistance benefits alleged to have been obtained under false pretenses, only $63,908.90 was paid to those who fraudulently obtained Supplemental Nutritional Assistance Payments, commonly referred to as “food stamps.” It is alleged that recipients fraudulently obtained just $20,905.77 in interim Temporary Assistance benefits (“TA”), which was distributed to them through debit cards.

The investigations also revealed that $239,979.18 in fraudulent Medicaid payments were paid as the result of statements made by those recipients.

This public benefits fraud enforcement action, entitled “Million Dollar Mark,” is the third one since District Attorney David M. Hoovler took office. To date 97 people have been charged with Welfare Fraud as a result of the three public benefits fraud enforcement actions. The total dollar amount of the fraud involved in the cases is $1,073,676.33. To date, the County has been repaid approximately $123,930.92 by criminal defendants who were charged in the enforcement actions.

Since the actions began in June 2014, the Department of Social Services has also collected $148,390.50 from recipients who voluntarily paid back benefits that they received but were not entitled to — a more than 1,140% increase in fraud repayments.

“The over $1 million in public benefits fraud that have been discovered during the course of these three enforcement actions demonstrate just how much this type of fraud costs taxpayers,” said Hoovler.

He highlighted a serious problem in the way the Medicaid rules are written.

Some business owners intentionally structure the draws of income they receive from their corporations in order to continue to qualify for benefits which most would agree should instead be directed to those who are less fortunate. Some corporation owners who engage in these practices are being advised to do so by tax professionals and others in their community. Under current eligibility rules this is lawful. Similarly, current eligibility rules allow recipients to maintain multiple ’primary’ residences. Even if a public benefits recipient lives the majority of the year outside of New York, they may still be legally entitled to Medicaid benefits administered through the Orange County Department of Social Services if they also maintain a ’primary’ Orange County residence.

The three highest alleged frauds:

• MD Islam, 77, of Monroe, was charged with Welfare Fraud in the Third Degree for allegedly obtaining $39,299.08 in Medicaid benefits to which he was not entitled. The allegations include that from January 1, 2010 through the present, Islam’s primary residence, where he would spend approximately ten months out of each year, was in Bangladesh, and that he falsely stated that his primary residence was in Orange County, so that he could receive benefits from Orange County and New York State.
• Mordechai Friedman, 37, of Monroe, was charged with Welfare Fraud in the Second Degree for having fraudulently received $61,442.27 in Medicaid benefits to which he was not entitled by understating his income. YMF and Associates, Inc., a Subchapter S Corporation of which Friedman is the 100% shareholder, was also charged with Welfare Fraud in the Second Degree for aiding Friedman in the underreporting of his income.
• Reyna Martinez, 32, and the father of her children, Angel Campos, 35, both of whom reside together in Middletown, were indicted by an Orange County Grand Jury, and charged with Welfare Fraud in the Third Degree and Grand Larceny in the Third Degree. Martinez was also indicted for ten counts each of Falsifying Business Records in the First Degree and Offering a False Instrument for Filing in the First Degree, and Campos for seven counts each of those two crimes. It is alleged that Martinez and Campos stole $31,765.90 in Medicaid and SNAP benefits by failing to properly report Campos’s employment and income.