Empire - pic - Money Laundering

THREE-QUARTER HOUSE OPERATORS ARRESTED ON CHARGES OF MEDICAID FRAUD

By MARK WOODSON

Attorney General Eric T. Schneiderman today announced the arrest of Yury and Rimma Baumblit yesterday, “three-quarter house” operators in New York City, on charges of Grand Larceny in the Second Degree, Money Laundering in the Second Degree, and violations of the Social Services Law prohibiting the payment of kickbacks related to the provision of services under the State’s Medicaid program. In addition to yesterday’s arrest, the Attorney General’s Medicaid Fraud Control Unit (“MFCU”) filed a False Claims Act lawsuit and other civil causes of action against Yury and Rimma Baumblit and others seeking over $1.9 million dollars in damages plus penalties. If convicted on all charges, Yury and Rimma Baumblit face up to 15 years in prison.

In papers filed yesterday in Kings County Criminal Court and filed earlier this week in Kings County Supreme Court, prosecutors allege the Baumblits engaged in a monthly kickback scheme with multiple Medicaid-enrolled drug treatment providers. In exchange for a monthly payment, the Baumblits agreed to force the residents at their homes to attend specific drug treatment providers, irrespective of the residents’ actual medical need for drug treatment services, and in violation of numerous State laws, including the Patient’s Bills of Rights. The payments were based on the number of substance-abuse treatment sessions attended by residents of the Baumblits three-quarter houses. During the course of this scheme, the Baumblits received over $600,000 in illegal kickbacks through one of four corporations they controlled: #1 Marketing Service, Inc., R Y B Realty, LLC, Steps to Better Living Inc., and Orbit Management Group Inc., all operating in Kings County.

“As our complaint demonstrates, Yury and Rimma Baumblit lined their pockets by preying on some of the most vulnerable members of society,” said Attorney General Schneiderman. “Our complaint demonstrates that over several years, the Baumblits carried out a deliberate and illicit scheme to defraud taxpayers, rip-off Medicaid, and force residents into programs and services that benefited no one but themselves. We will deliver swift justice to the Baumblits once and for all.”

While the criminal charges filed yesterday focused on the Baumblits kickback arrangement with one particular substance abuse treatment program, the Baumblits had arrangements with several such providers. MFCU’s investigation into these other substance abuse treatment providers is ongoing.

During the course of its investigation, MFCU found that the Baumblits kept their three-quarter homes in deplorable conditions, often forcing their residents to live without heat in the winter, without air conditioning in the summer, and with vermin, mold, persistent leaks and broken windows. Residents were crammed into small rooms in which three or four grown men often lived. Residents were also subjected to acts of violence and threats by the Baumblits and their house managers, and were locked out of the houses during much of the day.

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