Armen Kazarian, Armenian Mobster, Guilty of Bilking Medicare With Imaginary Clinics

Forget smuggling, prostitution and extortion; the real money is in Medicare fraud.

Medicare is struggling with serious problems already -- ballooning costs and an ideologically hostile Republican Party, to name just two. But at least for the moment it no longer has to tangle with the Armenian mob. Armen Kazarian, an Armenian gangster, pleaded guilty in Manhattan Federal court today to racketeering charges brought in connection to the largest Medicare fraud in history.

Kazarian and 43 other members of an Armenian organized crime network were charged in October with setting up 118 imaginary health clinics to rack up more than $100 million in billings for patients and procedures that never existed.

If Medicare fraud sounds like the sort of crime only committed by feeble doctor-nerds, think again. Kazarian is a Vor, or member of the elite and brutal "thieves-in-law" who originated in Soviet gulags before taking organized crime to a whole new level in Russia and all over the world since the Soviet collapse.

Kazarian was arrested in Los Angeles, but many of the other Mirzoyan-Terdjanian affiliates charged in the case are based in Brooklyn.

The group set up phony clinics at postal addresses in 25 states, using the stolen identities of real doctors. Then they used stolen patient data -- much of it coming from the Orange Regional Medical Center in Middletown -- to bill for non-existent procedures.

"The diabolical beauty of the Medicare fraud scheme -- from the criminals' standpoint -- was that it was completely notional," said Janice Fedarcyk of the FBI when the indictments were announced. "There were no real medical clinics behind the fraudulent billings, just stolen doctor's identities. There were no colluding patients signing at clinics for unneeded treatments, just stolen patient identities. The whole doctor-patient interaction was a mirage."

In some cases, the fraud was obvious, according to the U.S. District Attorney's office:

"Forensic pathologists billed for live office visits; Eye doctors billed for bladder tests; Ear, nose, and throat specialists billed for performing pregnancy ultrasounds; and obstetricians tested for skin allergies."

Medicare administrators would often detect the fraud and shut the "clinics," but not before paying out millions of dollars in claims. When they did shutter a clinic, the fraudsters would just open a new one.

Kazarian is set to be sentenced on October 6. His charges carry a maximum of 20 years in prison, but under the terms of his deal with the D.A. he won't serve more than three years.