NYC Pharmacy And Clinic-Based Criminal Enterprise Charged With $16 Million Theft And Fraud Perpetrated On Medicaid

Defendants Paid Hundreds Of Patients Not To Fill HIV Prescriptions While Also Prescribing Them Pain Killers; Number One Prescribing Physician Assistant Of Class II Opiates In New York State Busted

Schneiderman: Abuse Of Medicaid Is Outrageous And We Will Bring The Full Weight Of This Office To Bear To Catch And Hold Perpetrators Accountable

NEW YORK -- Attorney General Eric T. Schneiderman today announced the indictment of six individuals and three corporations in a $16 million, multi-year scheme to steal from Medicaid. The scam targeted vulnerable HIV patients, mainly in the Bronx, putting their lives in jeopardy by paying them not to fill their HIV prescriptions and then billing Medicaid for those unfilled prescriptions. The indictment, unsealed in Bronx Supreme Court today, alleges top charges of Enterprise Corruption and Grand Larceny in the First Degree against all of the defendants, including ring leader Mujahid a/k/a “Peter” Pervez, who illegally operated as many as 11 pharmacies in New York City and on Long Island, and by Richard Cedeno, the top prescribing physician assistant in New York State for highly addictive Class II narcotic drugs. Pervez, Cedeno and their co-conspirators, including two supervising pharmacists, face up to 25 years behind bars.

“In my time as Attorney General, I’ve seen few cases as systematically criminal and despicable as this one,” Attorney General Schneiderman said. “These defendants abused the very oaths they took by putting the lives of seriously ill patients in jeopardy and stealing public funds. Finally, we’ve put a stop this group of rogue pharmacists and an HIV clinic administrator for good.”

The indictment charges that between January 2009 and April 2012, Pervez’s criminal enterprise, which was structured to systematically defraud Medicaid, victimized hundreds of Medicaid recipients, the majority of which were HIV patients.

While various physicians funneled prescriptions to pharmacies owned or controlled by Pervez, the leading offender was Cedeno, 34. Under a deal struck with Pervez, Cedeno referred his patients to Big Mart Pharmacy, Inc., a pharmacy controlled by Pervez at 2740 3rd Avenue in the Bronx, in exchange for operating an HIV clinic rent free in the same building as Big Mart Pharmacy.

In addition to prescribing HIV medications to patients whom Cedeno then referred to Big Mart Pharmacy, Cedeno also frequently gave patients prescriptions for narcotics. In fact, Cedeno was the number one combined prescriber of Oxycontin, Oxycodone, Hydrocodone and Endocet, all Class II controlled substances, among physician assistants in New York State.

During the 3-year period covered by the indictment, approximately 70% of Big Mart Pharmacy’s patients did not receive their HIV medications; many of whom cashed in their prescriptions. Medicaid was billed for those prescriptions via the indicted pharmacies, including Big Mart Pharmacy. The scam perpetrated at Big Mart alone cost Medicaid millions.

The other two indicted pharmacies are Swami Naryan Pharmacy Inc., d/b/a Super Value Pharmacy, at 3454 Boston Rd., Bronx; and Dabup Inc. d/b/a Langdale Drug & Surgical Supplies, 27-103 80th Avenue, New Hyde Park, New York. The pharmacies were allegedly used as “mothership” pharmacies by Pervez, as hubs to centralize the ordering of medications to more easily control and oversee the criminal enterprise.

Despite having been convicted of defrauding Medicaid in 1991, Pervez, 63, owned 11 pharmacies across New York City and Long Island. After his conviction, he was barred from any future involvement in government funded healthcare, including owning or managing pharmacies. It is alleged that Pervez used his son, who has also been charged, as a front man to operate the businesses despite the two-decade old ban.

By hiding his involvement from state authorities, Pervez, who has fled to his native Pakistan and who this office is seeking to extradite back to New York, owned and controlled pharmacies through his son, Raheel Pervez, who falsified most of the publicly filed paperwork required to operate those pharmacies. Raheel Pervez who, in multiple instances falsely claimed to own and manage the indicted pharmacies, failed to disclose his father’s involvement to state officials, despite being required to do so by law. Peter Pervez in fact exerted near absolute control over the pharmacies, most notably in that he and he alone conducted the final review of all stock requests and deliberately did not order required HIV medications as well as other medication, including Marinol, a synthetic form of marijuana approved by the FDA for the treatment of anorexia in AIDS patients.

Wallace Godette and Ali Soliman, the supervising pharmacist at Super Value Pharmacy and Big Mart Pharmacy, respectively, professionals who were bound by oath and state law to meet minimal standards, failed to enforce those professional standards and instead joined the criminal enterprise to defraud Medicaid and harm patients.

The indictment also alleges, that to continue to bill Medicaid for prescriptions that were not filled, Maria Kramer, the manager of Big Mart, paid patients for their HIV prescriptions and to not receive their medications. Patients were routinely paid per prescription, receiving, for example, $100 dollars for a month’s supply of the HIV drug Atripla. Patients were often paid monthly. Medicaid reimburses pharmacies over $1000 dollars for providing a month’s supply of Atripla to an HIV patient.

All of the defendants are charged with one count of Enterprise Corruption and Grand Larceny in the First Degree, class “B” felonies. Other charges they face are listed below.

Today, four of the six individuals indicted were arrested and arraigned in Bronx Supreme Court.

  • Raheel Pervez, 39, of Dix Hills, N.Y., is also charged with three counts of Offering False Instruments for Filing in the First Degree and Conspiracy in the Fourth Degree.
  • Richard Cedeno, 34, of Elmhurst, Queens, is also charged with three counts of Offering False Instruments for Filing in the First Degree, Conspiracy in the Fourth Degree, Commercial Bribe Receiving in the First Degree and Medical Assistance Provider Prohibited Practices, for alleged kickbacks.
  • Maria Kramer, 52, of Fort Lee, N.J., is also charged also with six counts of Offering False Instruments for Filing in the First Degree, Falsifying Business Records in the First Degree, Conspiracy in the Fourth Degree and two counts of Acting in Concert with a Medical Assistance Provider Prohibited Practices for alleged kickbacks. Maria Kramer is currently in custody in Florida awaiting extradition back to New York.
  • Wallace Godette, 78, of Mount Vernon, N.Y., was the supervising pharmacist at Super Value Pharmacy. He is also charged with seven counts of Offering False Instruments for Filing in the First Degree and Conspiracy in the Fourth Degree.
  • Ali Soliman, 75, of Brooklyn, N.Y., was the supervising pharmacist at Big Mart. He is also charged with six counts of Offering False Instruments for Filing in the First Degree and Conspiracy in the Fourth Degree.
  • Peter Pervez, who is being sought, also faces three counts of Falsifying Business Records in the First Degree, eleven counts of Offering a False Instrument for Filing in the First Degree, Conspiracy in the Fourth Degree, Commercial Bribery in the First Degree, and two counts of Acting on Concert with a Medical Assistance Provider Prohibited Practices for alleged kickbacks.
  • Swami Narayan Pharmacy, Inc., d/b/a/ Super Value Pharmacy, 3457 Boston Road, Bronx, New York also faces seven counts of Falsifying Business Records in the First Degree, and Conspiracy in the Fourth Degree.
  • Big Mart Pharmacy, Inc., 2740 3rd Avenue, Bronx, New York also faces two counts of Falsifying Business Records in the First Degree, seven counts of Offering a False Instrument for Filing in the First Degree, Conspiracy in the Fourth Degree and two counts of Acting in Concert with a Medical Assistance Provider Prohibited Practices for alleged kickbacks.
  • Dabup Inc. d/b/a Langdale Drug & Surgical Supplies, 27-103 80th Avenue, New Hyde Park, New York also faces six counts of Offering a False Instrument for Filing in the First Degree and Conspiracy in the Fourth Degree.

In addition to the individuals named above, five other members of the Pervez Enterprise have already been arrested and pled guilty in connection with this scheme. Their cases are all under seal.

In addition to the indictment, the Attorney General also obtained an order freezing the bank accounts and other property held by the indicted individuals and corporations up to $16 million, and also freezing the bank accounts of five other individuals and ten corporations up to the amount of proceeds they received from the conduct of the indicted criminal defendants. The Attorney General has further obtained a temporary restraining order. The restraining order prohibits the indicted defendants and five relatives of Pervez - Ayesha Furqan, Nadia Pervez, Mohammad Bilal, Rahila Pervez and Sara Pervez - from transferring assets. It also bars ten corporations with ties to the family from also transferring assets. The corporations are Safa, Inc., 167 Street Prescription Center, Inc., Akasi Pharmacy Inc. d/b/a Familiar Pharmacy, Aduwa Pharmacy Corp., Neab Pharmacy Inc., Theonis Pharmacy Inc. d/b/a First Health Pharmacy, Jericho RMW Inc., Courtesy Drugs & Surgical Inc., Liberty Pharmacy, Inc., and Well Care Pharmacy of Long Island, Inc.

The Attorney General would like to thank the New York State Office of the Medicaid Inspector General and the New York City Human Resources Administration for their assistance at critical junctures during the investigation underlying today’s indictment. The Office also extends its thanks to the Florida Medicaid Fraud Control Unit, in particular Investigators Roger Hager and Alex Perez, for their assistance in apprehending Maria Kramer.

The case is being prosecuted by Special Assistant Attorneys General Larissa Payne, David Abrams and Jeffrey Winkler of the Attorney General’s Medicaid Fraud Control Unit, under the supervision of Regional Director Christopher M. Shaw, Chief of Civil Enforcement Amy Held, Chief of Criminal Investigations Thomas O’Hanlon, Special Deputy Attorney General Monica Hickey-Martin and Executive Deputy Attorney General Kelly Donovan. The investigation was led by Senior Special Investigator James Serra, Senior Special Audit Investigators Olga Sunitsky and Shoma Howard and Special Auditor Investigators Joshua Berry, Giovanni Liotine and Kashmir Singh. Recently retired Senior Special Investigator Robert Flynn worked on the investigation.

The charges filed in this case are accusations. The defendants are presumed innocent until proven guilty in a court of law.

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