NEW YORK — A vast network of Armenian gangsters and associates used phantom health care clinics and other means to try to cheat Medicare out of $163 million, the largest fraud by one criminal enterprise in the program's history, U.S. authorities said Wednesday.
Federal prosecutors in New York and elsewhere charged 73 people. Most were captured during raids Wednesday morning in New York City and Los Angeles, but there also were arrests in New Mexico, Georgia and Ohio.
The scheme's scope and sophistication "puts the traditional Mafia to shame," U.S. Attorney Preet Bharara said at a Manhattan news conference. "They ran a veritable fraud franchise."
Unlike other cases of crooked medical clinics bribing people to sign up for unneeded treatments, this operation's whole doctor-patient interaction was a mirage, said Janice Fedarcyk, head of the FBI's New York office
The operation was under the protection of an Armenian crime boss, known in Soviet times as a "vor," prosecutors said. The reputed boss, Armen Kazarian, was in custody in Los Angeles.
Bharara said it was the first time a vor — "the rough equivalent of a traditional godfather" — had been charged in a U.S. racketeering case.
Kazarian, 46, of Glendale, Calif., and alleged ringleaders Davit Mirzoyan, 34, of Glendale and Robert Terdjanian, 35, of Brooklyn were charged with racketeering conspiracy, bank fraud, money laundering and identity theft.
The indictment accused Terdjanian and others of hatching other schemes involving stolen credit cards, untaxed cigarettes and counterfeit Viagra. A judge jailed Terdjanian without bail on Wednesday at a brief hearing.
Authorities began the New York-based investigation after information on 2,900 Medicare patients in upstate New York — including Social Security numbers and dates of birth — were stolen.
The defendants in the New York case also had stolen the identities of doctors and set up 118 phantom clinics in 25 states, authorities said. The names were used to submit fake bills for care that was never given, they said.
Some of the phony paperwork was a giveaway: It showed eye doctors doing bladder tests; ear, nose and throat specialists performing pregnancy ultrasounds; obstetricians testing for skin allergies; and dermatologists billing for heart exams.