Thursday, April 15, 2004
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REPUTED BONANNO CRIME FAMILY ASSOCIATE, FIVE LAWYERS, THREE MEDICAL DOCTORS, DENTIST AND OTHER MEDICAL PROFESSIONALS AMONG 43 INDIVIDUALS AND CORPORATIONS INDICTED IN MAJOR ENTERPRISE CORRUPTION NO-FAULT INSURANCE FRAUD CASE; DEFENDANTS CHARGED WITH BILKING INSURANCE COMPANIES OUT OF MILLIONS OF DOLLARS BY OPERATING MEDICAL CLINIC AS "FRAUD FACTORY;” ALLEGEDLY STAGED SHAM ACCIDENTS, FILED FALSE CLAIMS AND PROVIDED UNNEEDED MEDICAL TREATMENT; THREE DEFENDANTS ADDITIONALLY ACCUSED OF LAUNDERING OVER $1.0 MILLION IN CRIMINAL PROCEEDS
Queens District Attorney Richard A. Brown, joined by Police Commissioner Raymond W. Kelly, State Insurance Department Superintendent Gregory V. Serio, State Department of Taxation and Finance Commissioner Andrew S. Eristoff and State Superintendent of Banks Diana L. Taylor, announced today the indictment of 43 individuals and corporations -- including a reputed Bonanno crime family associate, five lawyers, three medical doctors, a dentist, other state-licensed medical professionals and clinic employees posing as medical professionals -- in an enterprise corruption no-fault automobile-insurance operation that defrauded insurance companies of millions of dollars by operating a Queens medical clinic as a "fraud factory," staging sham automobile accidents, submitting false claims and medical reports and providing unnecessary treatment of individuals with feigned injuries.
Three of the defendants have additionally been charged with money laundering and are accused of concealing over $1.0 million of the alleged ring’s criminal proceeds by negotiating insurance company checks at a Manhattan check cashing outlet.
District Attorney Brown said, "The defendants have been charged with operating a medical clinic in Richmond Hill, Queens as a corrupt criminal enterprise -- a ‘fraud factory’ -- for the sole purpose of ripping off insurance carriers. It is alleged that virtually all the clinic’s medical claims were fraudulent, its accident victims shams, its lawyers and medical professionals crooked and its lucrative schemes ‘protected’ by the Bonanno crime family. The charges announced today are a message to those who attempt to rip off the system that law enforcement’s fight against insurance fraud is ongoing and that those who cheat will be sought out and vigorously prosecuted."
Police Commissioner Kelly said, "Insurance fraud is taking money from the pockets of law abiding New Yorkers. This is one ‘factory’ we're all happy to see close."
State Superintendent of Insurance Serio said, "Operation Fraud Factory uncovered individuals who were defrauding millions of dollars from the no-fault system which can translate into higher auto rates for honest New Yorkers. The Department has been aggressively fighting no-fault fraud working with the Queens District Attorney, New York City Police Department, the Department of Tax and Finance and the Banking Department as a key component in Governor Pataki's strategy to stabilize the auto insurance market. Today's arrests are indicative of the collaborative work that successfully takes fraudsters off of the streets to protect New York's auto insurance consumers."
State Commissioner of Taxation and Finance Eristoff said, "As organized crime becomes more sophisticated and moves from back alleys to waiting rooms, so must our enforcement methods. Joint investigations between various government agencies enhance and multiply our individual abilities, better enabling the government to prosecute criminal enterprises that seek to defraud the public. These crimes are especially despicable as they involved individuals who hold public trust and who we rely upon in our time of need."
State Superintendent of Banks Taylor said, “I am very proud of the work our Criminal Investigations Bureau did in tracking the money laundering trail of the 'Fraud Factory.' They responded quickly, confidently, confidentially and carefully in concert with our partners in regulation and law enforcement. Today's announcement speaks loud and clear: if you break the law we will catch you and you will be prosecuted. This has been a textbook case of cooperation and showcasing the great working relationship that we have with each of these agencies. I look forward to continuing our coordinated effort on behalf of all New Yorkers."
The defendants include reputed Bonanno crime family associate Joseph Fratta, five lawyers, three medical doctors, a dentist, a psychologist, a chiropractor, a physical therapist, an acupuncturist, an insurance company claims manager and fake patients who were allegedly paid to receive unneeded medical treatment as well as seven medical corporations and billing companies.
Also charged are eleven alleged jump-ins (purported accident victims), two runners who allegedly recruited the sham victims, the owner and two managers of the Medical Arts Center at 107-13 Jamaica Avenue in Richmond Hill, Queens and two additional alleged money launderers.
The multiple indictments are the result of a 14-month undercover investigation that began in January, 2003 conducted jointly by the New York Police Department’s Auto Crime Division, the New York State Insurance Department's Insurance Fraud Bureau, the New York State Department of Taxation and Finance’s Tax Enforcement Office, the New York State Banking Department’s Criminal Investigations Bureau and the Queens County District Attorney's Organized Crime and Rackets Bureau.
According to the charges, the investigation -- Operation Fraud Factory -- uncovered evidence that the defendants engaged in various schemes to defraud millions of dollars from insurance companies by staging automobile accidents, submitting insurance claims for property damage, medical expenses and bodily injury that contained false and exaggerated information, ordering expensive and baseless diagnostic tests and equipment and filing fraudulent lawsuits.
The 43 defendants -- 36 individuals and seven corporations -- have been variously charged with Enterprise Corruption, Insurance Fraud, Forgery, Falsifying Business Records, Money Laundering, Commercial Bribery, and Conspiracy as well as violations of the New York State Tax Law. Some defendants face up to 25 years in prison if convicted. Additionally, the accused attorneys have been charged with illegally soliciting clients thereby violating the Judiciary Law.
The indictments charge that, between October 29, 2002 and October 27, 2003, the ring engaged in various corrupt schemes at the Richmond Hill clinic with the complicity of seven other medical corporations and billing companies operating out of the same Richmond Hill location: (1)Accurate Management Group, Inc.; (2)ALBT Enterprises, P.C.; (3)Improved Collections Services, Inc.; (4)Oberon Medical Rehabilitation, PLLC.; (5)Restorative Medical Rehabilitation, P.L.L.C.; (6)Tai Yang Medical Acupuncture, P.C. and (7)Zal Acupuncture, P.C.
The indictments charge that the ring allegedly operated under the protection of the Bonanno crime family through defendant Fratta who supervised and managed part of the ring’s business and received a salary from the Richmond Hill clinic where he had an office.
The indictments charge that the clinic's alleged boss, Arthur Bogoraz, and its alleged managers, including Irena Chernomaz, and alleged head runner Pasqual “Richie” Clemente, assisted Fratta in carrying out schemes for the criminal enterprise.
The indictments charge that Matthew Averko, a claims arbitration adjuster employed by the Robert Plan Insurance Company at 999 Stewart Avenue in Bethpage, New York, received cash payments from the clinic through clinic manager Steve Marcus of up to $60,000 between 2002 and 2003 in exchange for approving claims his employer had previously denied.
The indictments charge that Fratta and Bogaraz -- as part of the money-laundering component of the scheme -- gave to Rocio Duran and Denian Duran checks from various insurance carriers totaling over $1.0 million that were made payable to the clinic’s doctors and other medical professionals. Rocio Duran and Denian Duran, it is alleged, negotiated the checks at the Wholesale Connection L.L.C. at 17 Battery Place in Manhattan and then distributed the cash proceeds to Fratta and Bogaraz who are alleged to have used the money in part to pay runners and sham patients.
The indictments allege further that the ring paid runners up to $2,700 for each person whom they recruited to pose as injured accident victims. Fake patients, it is alleged, received payment from either a runner or a clinic employee of up to $2,000 for their participation in the scheme. In order to receive payment, the indictments allege, a fake patient had to visit a medical doctor, a chiropractor, an acupuncturist and a physical therapist several times per week, sign up with a lawyer affiliated with the scheme and receive unnecessary MRIs, X-Rays, nerve conduction studies and medical supplies.
Fratta and Bogoraz are additionally charged with income tax evasion for substantially under-reporting their earnings from the medical clinic in an effort to avoid paying the required amount in taxes.
District Attorney Brown said, “The defendants are alleged to have plundered the system for millions of dollars. Their alleged crimes cost New York’s drivers plenty and drove up the cost of insurance policies. Auto insurance fraud costs New Yorkers an added $1 billion each year -- nearly $200 per driver -- and that is the major reason why New York's automobile insurance coverage costs an average of nearly $2,000 per driver, second highest in the nation.”
The insurance companies allegedly defrauded include: Clarendon Insurance Company, Kemper Insurance Company, National Grange Mutual Insurance Company, Auto One General Insurance, State Farm Insurance, Allstate Insurance Company, Progressive Insurance Company, American Transit Insurance, and Liberty Mutual Insurance.
District Attorney Brown said his office has notified the New York State Grievance Committee for the 2nd and 11th Judicial Districts in Brooklyn and the New York State Education Department’s Division of Professional Licensing in Albany about the allegations against the attorneys, medical doctors and other medical professionals, all of whom face loss of their licenses if convicted.
Among 36 individual defendants charged are: reputed Bonanno associate (1)Joseph Fratta, 55, of 90 Gold Street in Manhattan; five attorneys: (2)Manuel Gomez, 44, of 1810 Hunts Point Avenue in the Bronx; (3)Joseph Lerman, 33, of 1124 East 32nd Street in Brooklyn; (4)Vitaliy Ostrovski, 32, of 6312 Bay Parkway in Brooklyn; (5)Alexis Ravitch, 25, of 24 Hickory Street, Deer Park, New York and (6)Michael Rosenblatt, 42, of 444 East 82nd Street in Manhattan; an insurance company arbitration manager: (7)Matthew Averko, 38, of 101 Burtis Street, Lynbrook, New York; three medical doctors: (8)Roger Brick, 54, of 18 Scotland Drive in Livingston, New Jersey; (9)Natalia Gurevich, 57, of 31-23 Crescent Sreeet in Long Island City, Queens and (10)Naum Vaisman, 71, 840 East 8th Street in Brooklyn; a dentist: (11)Yury Babeck, 50, of 2465 Cove Court in South Bellmore, New York; a psychologist: (12)Gabriel Feldmar, 56, of 2 Bay Club Drive in Bayside, Queens; a chiropractor: (13)Michael Silverstein, 44, of 1 River Place in Manhattan and an acupuncturist: (14)Zalmai Frahmand, 57, of 22-34 77th Street in Jackson Heights, Queens.
Also included are a physical therapist: (15)Raymond Paas, 25, of 87-26 114th Street in Richmond Hill, Queens; alleged Medical Arts Center owner (16)Arthur Bogoraz, 26, of 10 Hackett Drive in Edison, New Jersey; clinic managers: (17)Irena Chernomaz, 28, of 97-10 62nd Drive in Rego Park, Queens and (18)Vivian Rios-Singh, 29, of 433 Bleeker Street in Brooklyn and (19)Steve Marcus, 39, of 1944 Briggs Street in Bellmore, New York; two alleged participants in the alleged money laundering scheme: (20)Denian Duran, 30, of 4 Neversink Drive in Newburg, New York and (21)Rocio Duran, 28, of 2845 University Ave in the Bronx and the clinic’s alleged supervising runner (22)Pasqual Clemente, 36, of 5641 Clover Place in Glendale, Queens.
Additional individual defendants include: (23)Ernesto Cristotomo, 20, of 1667 George Street in Ridgewood, Queens; (24)Santa Diaz, 51, of 89 Nicholas Avenue in Brooklyn; (25)Meredith Greenberg, 32, of 1 Madison Lane in Carle Place, New York; (26)Sergey Kirillov, 29, of 4611 Fort Hamilton Parkway in Brooklyn; (27)Edwin Maldonado, 31, of 88-25 Eldert Lane of Woodhaven, New York; (28)Myra Martinez, 34, of 18 Hamilton Avenue on Staten Island; (29)Willis Ariel Morillo, 25, of 210 Tapscott Street in Brooklyn; (30)Luis Paz, 24, of 55-03 103rd Road in Corona, Queens; (31)Manual Pena, 56, (32)Reimon Pena, 29, and (33)Anna Roman, 52, all of 2105 Walton Avenue in the Bronx; (34)Arelis Peralta, 51, of 90-07 78th Street in Woodhaven, Queens; (35)Rafael Duran, 46, of 120 Humbolt Street in Brooklyn and (36)Ivan Valenzuela, 27, of 90-07 78th Street in Woodhaven, Queens.
District Attorney Brown, Police Commissioner Kelly, Superintendent Serio, Commissioner Eristoff and Superintendent Taylor commended the New York City Police Department's Auto Crime Division, the New York State Insurance Department's Insurance Fraud Bureau, the New York State Department of Taxation and Finance's Tax Enforcement Office, the New York State Banking Department’s Criminal Investigation Bureau and the Queens County District Attorney's Organized Crime and Rackets Bureau and Detective Squad for their professionalism in the investigation.
Particularly cited are NYPD Auto Crime Division Detective David Moore under the supervision of Sergeant George Nash and Lieutenant Gene Borelli and the overall supervision of Captain Michael Byrne, Deputy Inspector Howard Lawrence and Chief Douglas Zeigler; NYS Insurance Department Fraud Bureau Investigator Gary Anderson under the supervision of Supervising Investigator August Durelli; NYS Taxation and Finance Department Supervising Investigator Angelo Polito and Auditor Kim Lee Stewart under the supervision of Director Nicholas Reynolds as well as Jay Vredenburg, Mark Phelan and Tim Anderson under the supervision of Frank Risler, Director of the NYS Department of Taxation and Finance's Computer Forensic Unit; NYS Banking Department Criminal Investigation Bureau Investigator Delroy Levy under the supervision of Acting Director John Dinin and Queens District Attorney’s Detective Bureau Detectives Edwin Driscoll and Ronald Georg under the supervision of Chief Lawrence J. Festa and Deputy Chief Al D. Velardi.
Assistant District Attorneys Peri Alyse Kadanoff, Supervisor, and Michael A. Wiesenfeld of the District Attorney's Organized Crime and Rackets Bureau are prosecuting the case under the supervision of Assistant District Attorneys Gerard A. Brave, Chief, and Marc P. Resnick, Deputy Chief, and the overall supervision of Executive Assistant District Attorney for Investigations Peter A. Crusco and Deputy Executive Assistant District Attorney for Investigations Linda M. Cantoni.
It should be noted that indictments are merely accusations and that defendants are presumed innocent until proven guilty.