Eleven People Arrested in New Jersey in Large-Scale Medicaid Fraud Scheme
Bribery and Money Laundering Charges Also Lodged Against One Defendant

NEWARK—Federal and state agents this morning arrested 11 people who are charged by complaint, along with two corporations, in connection with a large-scale scheme to defraud the Medicaid program of millions of dollars, U.S. Attorney Paul J. Fishman announced today.

The complaint also charges the owner of a home health aide business headquartered in Linden, New Jersey, with attempting on two occasions to hinder a state investigation by bribing a state regulator—who was working with the FBI—and with conspiring with the owner of another home health aide business in Elizabeth, New Jersey, to launder money.

The defendants arrested this morning are scheduled to appear this afternoon before U.S. Magistrate Judge Madeline Cox Arleo in Newark federal court.

“The defendants in this case allegedly enriched themselves by gaming the Medicaid system,” U.S. Attorney Fishman said. “The actions described in this complaint are especially egregious, because the taxpayer dollars that were stolen were intended to provide necessary health care for our most vulnerable citizens. I’m especially proud that federal and state law enforcement agencies worked together effectively to uncover this alleged fraud.”

David Velazquez, Acting Special Agent in Charge of the FBI, Newark, said, “The FBI views health care fraud as a severe crime problem that poses a potential risk to patients and increases health care costs for all. Today’s arrests are the result of a four-year investigation into a sophisticated scheme involving multiple layers of fraud, money laundering, and bribery, in order to defraud the New Jersey Medicaid program of millions of dollars. This case is indicative of how the FBI, along with its federal partners and the state of New Jersey, will continue to work together to pursue those that steal from our health care system.”

“Falsely billing Medicaid for millions of dollars as alleged in today’s complaint is a serious crime,” Internal Revenue Service (IRS) Criminal Investigation Acting Special Agent in Charge Shantelle P. Kitchen, Newark Field Office, said. “Financial fraud schemes such as this are often described as a house of cards. The underlying structure can fall apart at any time and expose the individuals responsible. IRS-Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their money.”

New Jersey Attorney General Jeffrey Chiesa said, “The New Jersey Division of Consumer Affairs regulates nurses, home health aides, and home health agencies in our state and the Division’s Enforcement Bureau aggressively investigates any allegations of fraud or wrongdoing by those regulated professionals and businesses. We are proud to have worked with the FBI on this investigation. Alleged billing fraud by health professionals affects the entire economy and will not be tolerated.”

According to the complaint filed in this case:

Irina Krutoyarsky, 58, of Springfield, New Jersey, was the owner and operator of HHCH Health Care Inc., a for-profit home health aide business located in Linden. HHCH billed Medicaid for services purportedly provided by home health aides to Medicaid-eligible patients. Medicaid is a jointly funded federal-state health insurance program that provides certain health benefits to the disabled and individuals and families with low incomes and resources. Paul Mil, 68, of Springfield, was the owner and operator of People Choice Home Care Inc., another for-profit home health business located in Linden and Elizabeth, which also billed Medicaid for services purportedly provided by home health aides.

Krutoyarsky, Mil, and their conspirators allegedly defrauded Medicaid of millions of dollars through a variety of schemes, including:

• Billing Medicaid for treatment and services not actually rendered;
• Obtaining fraudulent home health aide certifications for employees and others;
• Using illegal aliens and/or non-certified individuals to provide home health aide services and billing Medicaid, claiming the services had been provided by certified home health aides.

According to the complaint:

During the investigation, an individual working with the FBI—“Cooperating Witness Three” (CW3)—met Krutoyarsky, Mil, and others at HHCH and consensually recorded a number of conversations. For example, on January 31, 2012, CW3 met with Krutoyarsky and Mil to discuss obtaining a home health aide license. During this consensually recorded conversation (audio and video), they discussed fraudulently billing Medicaid by providing false information about the patients, known as a “bait and switch”:

Krutoyarsky: You know, it’s just the free money...coming in.

CW3: That’s true.

Mil described how they billed Medicaid for services not actually rendered:

Mil: It’s a lot of people, a lot of people who...Medicaid. Government pay for the service. We can get, you know, between 10 and 18 hours [of Medicaid billing per week per patient]. Look, people can work in a week and get paid hundred bucks a week doing nothing. Why not?

* * * *

Krutoyarsky: ...But as long as these people doesn’t live in the same address, so Medicaid is not gonna trace.

CW3: Oh, so, otherwise they will trace. Okay.

Krutoyarsky: Because they do the tracings, you know. They gonna see who’s working, who’s not working, this and that....So this way, they gonna have a free money....Government, free money.

After meeting with Krutoyarsky and Mil, CW3 met with defendant Nekadam S. Galibova, an HHCH office employee who assisted CW3 in obtaining a home health aide license without taking the required course or test. CW3 underwent neither the required training nor testing, but in March 2012, CW3 received a home health aide license from the New Jersey. Krutoyarsky, Mil, and others billed Medicaid under CW3’s license, knowing that CW3 provided no treatment to any patients.

Galibova was also a purported HHCH home health aide. The investigation revealed that she conspired with Krutoyarsky and others to bill Medicaid for services not rendered. Galibova and HHCH billed Medicaid for a patient (referred to as Patient M.N.) from July 27 to 31, 2009 and August 3 to 4, 2009, periods when that patient was, in fact, out of the country.

Krutoyarsky and Mil also dispatched undocumented aliens and other unlicensed individuals to patients’ homes. Defendant Sonia Mesa was observed by the FBI visiting a patient’s home; however, Medicaid was billed using the names of others, including Alla Neymet and Leonora Popesku.

Krutoyarsky also bribed a New Jersey Department of Labor employee on two occasions to stop wage and hour investigations into HHCH and People Choice. This state employee, however, was cooperating with the FBI and is referred to in the Complaint as “Cooperating Witness Two” (CW2). On June 14, 2010, Krutoyarsky met CW2 about the state investigation into HHCH. Krutoyarsky did not want to provide CW2 with records related the HHCH and handed CW2 an envelope containing approximately $1,000 in cash.

Krutoyarsky and CW2 passed notes back and forth, negotiating the bribe. Eventually, Krutoyarsky agreed to pay CW2 $10,000, which she later paid. On April 14, 2011, Krutoyarsky paid another $15,000 to CW2 to subvert a state investigation into People Choice.

Krutoyarsky and Mil then allegedly laundered the proceeds of the Medicaid fraud to conceal their scheme and allow it to continue. Krutoyarsky and defendant Gulmira Shayakhmetova are alleged to have conspired to structure money by making numerous cash withdrawals in amounts under $10,000 to evade the banks requirement to file a report with the U.S. Treasury.

Count one charges conspiracy to commit health care fraud and carries a maximum penalty of 20 years in prison and a $250,000 fine. Counts two and three each charge bribery and each charge carries a maximum penalty of 10 years in prison and a $250,000 fine. Count four charges conspiracy to commit money laundering and carries a maximum penalty of 20 years in prison and a $500,000 fine. Count five charges conspiracy to unlawfully structure financial transactions and carries a maximum penalty of five years in prison and a $250,000 fine.

In addition, HHCH and People Choice were charged in count one of the criminal complaint with conspiracy to commit health care fraud.

The criminal complaint also alleges forfeiture and provides notice of the federal government’s intent to forfeit at least $3.45 million in proceeds from the alleged offense and numerous properties in Krutoyarsky’s name in New Jersey, Florida, and New York.

U.S. Attorney Fishman praised agents of the FBI, under the direction of Acting Special Agent in Charge David Velazquez in Newark; IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen; U.S. Citizenship and Immigration Services; New Jersey Attorney General Jeffrey Chiesa; New Jersey State Comptroller Matthew Boxer; Division Director Mark Anderson, Office of the State Comptroller, Medicaid Fraud Division; New Jersey Division of Consumer Affairs, under the direction of Director Eric T. Kanefsky, Board of Nursing; Hal Wirth, Commissioner, New Jersey Department of Labor; U.S. Department of State-Diplomatic Security; and the Marlboro Police Department, under the direction of Chief Bruce Hall, for the investigation leading to today’s charges.

The government is represented by Assistant U.S. Attorneys Anthony Moscato and Jonathan W. Romankow of the Organized Crime/Gangs Unit, Lakshmi Srinivasan Herman of the Economic Crimes Unit and Peter W. Gaeta of the Asset Forfeiture and Money Laundering Unit.

The charges and allegations contained in the complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.