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Former government employee charged with embezzlement, fraud

MM Summary- A Virginia state employee falsified her own Medicaid application and received $1,800 of medical services.



A former Medicaid eligibility supervisor for the V.I. Human Services Department was charged Friday with lying on government forms to obtain Medicaid benefits that she was not eligible to receive, according to the warrant for her arrest.

Kathleen Gussie was charged with embezzlement by a public or private officer, embezzlement or falsification of public accounts, conversion of government property, and three counts of making fraudulent claims upon the government. She was released after posting 10% of $50,000 bond, and is scheduled to appear in court Monday.

V.I. Attorney General Denise George held a press conference Friday, when she praised the Justice Department’s newest division, the Medicaid Fraud Control Unit, for acting on a case that had been sitting untouched for years.

It’s unclear why prosecutors did not pursue the case sooner, but according to the affidavit filed by Special Agent Gisselle Quinones, who is in charge of the Special Investigations Division, the suspected fraud was first reported in February 2018. At that time, another Medicaid eligibility supervisor was reviewing “error reports” to identify suspicious entries and came across “what appeared to be fraudulent activities connected with entries in the name of Gussie,” according to the affidavit.

Gussie went to Luis Hospital emergency room on Dec. 11, 2017, and submitted a “Hospital Presumptive Eligibility,” or “HPE” application for Medicaid benefits that listed her income as $30,000.

The income threshold to determine eligibility for Medicaid benefits at the time was $31,931 per household, but Gussie’s actual salary was $44,103, and government documents show that she “was aware of her salary” and “should have known that she was not eligible for Medicaid benefits,” according to the affidavit.

Gussie was deemed eligible for temporary benefits from Dec. 11, 2017, through Jan. 31, 2018, and subsequently enrolled as a permanent Medicaid beneficiary. Gussie continued submitting claims for payment by various medical providers up until July 3, 2018, according to the affidavit. “At no time did Gussie notify the Medicaid program, of which she was a supervisor, that income information provided on her HPE application and in her permanent application for benefits was in error and request that the necessary correction be made. Had that notification been done, Gussie would not have qualified for Medicaid benefits.”

Between June 2007 and April 2016 Gussie worked in various capacities throughout the Medicaid division, and even helped edit the department’s “Manual for the Determination of Medicaid Eligibility,” according to the affidavit.

On Feb. 22, 2018, then-Human Services commissioner Felicia Blyden notified Gussie she was being placed on administrative leave pending an investigation into allegations she violated Medicaid eligibility procedures by applying for benefits during the emergency room visit.

At an administrative hearing on April 11, 2018, “it was recommended that Gussie be terminated from her employment for defrauding the Medicaid Program,” according to the affidavit. “A letter dated April 18, 2018 addressed to Gussie officially notified her of the DHS’s recommendation for her immediate termination.”

But “Gussie did not request that her benefits be cancelled and continued to allow the fraud to continue for months,” according to the affidavit. Despite the recommendation that she be fired immediately, Gussie remained employed but under suspension for a further three years.

“She was on suspension for quite some time. Just recently, several months ago, she was then terminated, finally, with the approval of this governor, Gov. Bryan,” George said Friday.

A total of 35 medical claims were submitted by various providers for services totaling $485.85, and the emergency room visit cost Luis Hospital $1,478.43, according to the affidavit.

The claim for services was initially submitted for payment to Medicaid, but as an employee of the Virgin Islands government, Gussie’s primary insurance was CIGNA.

“Therefore, the claim was rejected for payment by the Medicaid Program. Subsequently, CIGNA paid the amount covered by the CIGNA plan,” according to the affidavit. The remaining balance of $1,478.43 “was again re-submitted for payment to the Medicaid Program; at which time it was determined that the claim was not processed in a timely manner and the claim was denied.”

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Marlboro fraud: Man admits bribing doctors, defrauding IRS of $9.1 million

Curator summary – Alex Fleyshmakher (Bronx) operated a kickback scheme where he paid doctors to send patients to his pharmacies and got $25M in payments from Medicare and Medicaid.



A Marlboro man pleaded guilty on Thursday in federal court to paying kickbacks to doctors and their staff so they would send their patients to his family’s pharmacy and then concealed the activity from the IRS, Acting U.S. Attorney Rachael A. Honig announced.

Alex Fleyshmakher, 34, of the Morganville section, was charged in the U.S. District Court in Trenton with conspiring to violate the federal anti-kickback statute and conspiring to defraud the IRS of $9.1 million in federal taxes, according to a written statement from the U.S. Attorney’s Office.

Fleyshmakher worked at a pharmacy chain called Prime Aid. He worked at its store in Union City, which was co-owned by his father, Igor Fleyshmakher. The younger Fleyshmakher was himself an owner of Prime Aid Bronx — at least on paper. The pharmacy chain specialized in expensive medications that are used to treat such conditions as Hepatitis C, Crohn’s disease, and rheumatoid arthritis, the statement said.

From 2008 and 2017, Fleyshamkher and other Prime Aid employees paid kickbacks and bribes to doctors and their employees in New Jersey and New York. Those kickbacks and bribes included expensive meals, designer bags, cash payments, check payments and money wire transfers, according to the statement.

The prescriptions processed at Prime Aid Union City from one New Jersey medical practice resulted in $24.8 million in Medicare and Medicaid payouts, the statement said.

From 2011 to 2018, Alex Fleyshmakher, working with others, “surreptitiously took insurance reimbursement checks” totaling millions of dollars from the Prime Aid Pharmacies, the statement said.

“Aided by his conspirators, Alex Fleyshmakher then cashed the checks at Brooklyn check cashing businesses or diverted them through Canadian bank accounts back into U.S. accounts that he owned and controlled. He concealed these funds and failed to report them on his personal income tax returns, resulting in a $9.1 million tax loss to the IRS,” the statement said.

The conspiracy and tax evasion charges to which Alex Fleyshmakher pleaded guilty each carries a maximum sentence of five years in federal prison and a $250,000 fine. A sentencing date has been scheduled for May 27, the statement said.

Other alleged conspirators in the kickback scheme included his father, Igor Fleyshmakher of Holmdel, who previously pleaded guilty for his role in the conspiracy; and Eduard “Eddy” Shtindler, of Paramus, who also previously pleaded guilty in a related kickback conspiracy. Their sentencing dates are also pending, the statement said.

Other defendants have also been charged in the matter.

The Prime Aid pharmacies in Union City and the Bronx are now closed, the statement said. 

Fleyshmakher made his plea by videoconference Thursday before U.S. District Judge Michael A. Shipp in Trenton.

Honig credited special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; special agents of the Department of Health and Human Services-Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; and the N.J. Office of the State Comptroller, under the direction of Acting Comptroller Kevin D. Walsh, with the investigation that resulted in Thursday’s  guilty plea.

The government is represented by Assistant U.S. Attorney Joshua L. Haber of the Health Care Fraud Unit of the U.S. Attorney’s Office in Newark.

Newark-based defense attorney Henry Klingeman represents Fleyshmakher.

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