Pharmacy owners charged in $30M health care fraud, money-laundering scheme

December 22, 2020 Brooklyn Eagle Staff

The U.S. District Court for the Eastern District of New York, more informally known as Brooklyn Federal Court, in Downtown Brooklyn. Photo: Rob Abruzzese/Brooklyn Eagle

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Two owners of more than a dozen pharmacies in New York City and on Long Island have been charged for their alleged roles in a $30 million health care fraud and money laundering scheme in which they exploited emergency codes in the Medicare system in order to submit fraudulent claims for expensive cancer drugs that were never provided, ordered or authorized by medical professionals, according to the U.S. Attorney’s Office for the Eastern District of New York.

Peter Khaim and Arkadiy Khaimov, both of Forest Hills, were charged with one count of conspiracy to commit health care fraud and wire fraud, and one count of conspiracy to commit money laundering. Khaim was also charged with two counts of concealment money laundering and one count of aggravated identity theft, and Khaimov was separately charged with two counts of concealment money laundering. The defendants arraigned before Magistrate Judge Vera M. Scanlon in Brooklyn Federal Court.

According to the indictment, the defendants used COVID-19 emergency override billing codes in order to submit fraudulent claims to Medicare. Then they were paid more than $30 million for cancer medication Targretin Gel 1%, including for claims where the medication never was purchased by the pharmacies, prescribed by physicians or dispensed to patients, according to the indictment.

The defendants allegedly acquired control over more than a dozen New York pharmacies by paying others to pose as the owners of the pharmacies and hiring pharmacists to pretend to be supervising pharmacists at the pharmacies for the purpose of obtaining pharmacy licenses. Targretin Gel 1% has an average wholesale price of approximately $34,000 for each 60-gram tube.

With the proceeds of the fraud, the defendants allegedly engaged in a money-laundering conspiracy by creating sham pharmacy wholesale companies that they named after pre-existing pharmacy wholesalers. They fabricated references to invoices to make it appear that funds transferred from the pharmacies to the sham pharmacy wholesale companies were for legitimate pharmaceutical drug purchases, according to the indictment.

In the first phase of this conspiracy, the defendants conspired with an international money launderer who arranged for funds to be wired from the sham pharmacy wholesale companies to companies in China for distribution to individuals in Uzbekistan, according to the charges. In exchange, the defendants allegedly received cash from an unlicensed money transfer business, minus a commission that was deducted by the money launderer.

In the second phase of this conspiracy, when the fraudulent proceeds exceeded the amount of cash available, the defendants caused others to transfer funds back from the sham wholesale companies to the defendants, their relatives or their designees in the form of certified cashier’s checks and cash, the complaint charges. The defendants allegedly used the proceeds of the scheme to purchase real estate and luxury items.

“As alleged in the indictment, the defendants manipulated information in over a dozen pharmacies to defraud the Medicare program, including by taking advantage of systems that were intended to assist patients during the COVID-19 pandemic, and then went to great lengths to hide their ill-gotten gains through a network of sham companies,” stated Acting United States Attorney Seth DuCharme. “This Office and our law enforcement partners are committed to holding accountable those who seek to enrich themselves at the expense of vital taxpayer-funded health care programs upon which so many rely.”

This case was investigated by HHS-OIG’s New York Field Office, the FBI’s New York Field Office, the IRS-CI’s New York Field Office and the FDIC. It is being handled by the Medicare Fraud Strike Force under the supervision of the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section.