The organized crime group Mirzoyan-Terdjanian sequestered doctors' identities and enrolled non-existent clinicians as Medicare providers. Even false offices were set up. They used stolen beneficiary information and starting billing for phantom procedures.
Alleged criminals were arrested in New York, California, New Mexico, Georgia and Ohio. According to authorities, the alleged fraudsters submitted "more than $100 in concocted bills" to Medicare. The crime operation appears to have started in 2006 and has received only $35.7 million in improper payments, inspectors informed.
118 clinics set up by the criminal group were no more than post office boxes.
Among the list of charges, are included:
- Bank fraud
- Health care fraud
- Identity theft
- Money laundering
Medicare is driven by prompt payments, which is ideal for the cash flow of claims submitters, but also makes the whole system much more vulnerable to fraud and dishonest proceedings.
Crime boss, Armen Kazarian, an Armenia-American nicknamed Vor (thief in law ,similar to Mafia Godfather) was among the people charged. He arrived as an asylum seeker in the USA in 1996.
Endeavour Diagnostics, a supposedly thriving medical lab that claimed to have performed over $1 million's worth of work for patients on Medicare, was nothing more than a small office with one desk and a fax machine in San Fernando Valley, California. At that office, FBI agents found links to an extensive network of phantom businesses which are said to have been created by Armenian gangs in order to defraud Medicare with non-existent services.
FBI agents say the operation was rooted in California and had a chillingly growing level of reach and sophistication. Some crime experts say the ultimate aim of these specific mobsters is oligarchy - a system of national power controlled by few people, to see whether they could infiltrate government. This criminal group had an unrivalled ability to probe the system for potential flaws and weaknesses.
According to prosecutors, they managed to connect with corrupt doctors who were paid to carry out pointless testing on fake accident victims; the government was then charged.
A significant number of arrests were made of American-Armenians in Glendale, California, which has America's largest concentration of Armenian-Americans. Approximately 25% of Glendale's inhabitants are Armenian-Americans.
Los Angeles police Lt. Stephen Margolis said:
The sophistication and the pervasiveness of this type of criminal activity is years in the making. Hopefully, this will serve as a wake up to the extent of the seriousness this problem presents at a national level.
American-Armenians whose ancestors came over to the USA during the first quarter of the last century to get away from Turkish persecution say the majority of Armenia-linked gangs in America today consist of people brought up during Soviet communism - individuals who became experts at exploiting corrupt and vulnerable systems, in an environment where those who did that were seen as heroes.
Zaven Kazazian, President, Los Angeles chapter of the Armenian-American Chamber of Commerce, said:
It is a different cultural background. Everybody was out for themselves.
We are embarrassed by it and we do not have any affiliation with them. They do not represent the true Armenian people. It's like saying all Italians are part of the Mafia. That's just stupid.
The majority of those charged have pleaded not guilty.
An Armenian Foreign Ministry spokesperson has apologized to the US government.