Congratulations to special agents with the California Department of Justice (DOJ) Bureau of Medi-Cal Fraud and Elder Abuse who worked together with local and federal law enforcement officers in Glendale as part of Operation “Psyched Out” to investigate, arrest and prosecute 16 defendants involved in an elaborate $20 million scheme to defraud Medicare and Medi-Cal, by among other things, fraudulently prescribing expensive anti-psychotic medications and then repeatedly re-billing the government for those drugs.  It all centered around the clinic,  Manor Medical Imaging. 

On February 18, 2014,  the last three defendants in this case, including a doctor who took money to let his name be used thousands of times on bogus prescriptions, were convicted of health care fraud conspiracy, aggravated identity theft, conspiracy to misbrand pharmaceutical drugs, false statement to the federal government and conspiracy to use other people’s identification documents in furtherance of fraud.

“These individuals often preyed on folks who were down-and-out, they wrote bogus prescriptions, used stolen identities, and recycled expensive, anti-psychotic drugs.  The scope of this scheme and their criminal behavior is reprehensible,” said Alan Barcelona, president of the California Statewide Law Enforcement Association (CSLEA).  CSLEA is an association of nearly 7,000 law enforcement, public safety and consumer protection professionals who serve the State of California, including DOJ special agents.

The three found guilty on February 18th include:

• Dr. Kenneth Johnson, 47, of Ladera Heights, who served as the face of Manor with pharmacists and auditors from Medicare and Medi-Cal, and who pre-signed thousands of blank prescriptions that were filled out by co-conspirators.
• Nuritsa Grigoryan, 49, of Glendale, who holds an Armenian medical license and pretended to be an American doctor when she saw homeless “patients” at the clinic and filled out the bogus prescriptions pre-signed by Dr. Johnson.
• Artak Ovsepian, 32, of Tujunga, one of the leaders of the conspiracy who oversaw the acquisition of drugs at pharmacies using the bogus prescriptions.

This was the largest case of its kind in Southern California and the first case in the nation involving an organized scheme to defraud government health care programs through fraudulent claims for anti-psychotic medications.  Members of the conspiracy created or doctored patient files to make it falsely appear the drugs were necessary and the patients were legitimately treated. After the prescriptions were filled at pharmacies and paid for by Medicare and Medi-Cal, they were sold on the black market and redistributed to pharmacies, where the drugs would be subject to new claims made to Medicare and Medi-Cal as though they were new bottles of drugs.  The scheme generated fraudulent billings of more than $20 million dollars, of which Medi-Cal and Medicare actually paid more than $8 million. 

The defendants are scheduled to be sentenced in June and face as many as 32-37 years in prison.

With this week’s guilty verdicts, 16 defendants,  involved in this scheme and charged in 2011, have now been convicted.