4 Busted in $150M HIV/AIDS-Medicaid drug scam

New York authorities today busted four ringleaders of a massive HIV/AIDS black market prescription drug scam that allegedly ripped off $150 million from the Medicaid program.

Under the scheme, pharmacists in Brooklyn and Suffolk County resold drugs to patients that were illegally obtained on the black market.

The scam endangered the health of patients by exposing them to drugs of unknown origin and potency.

In some cases, the drugs were mislabeled or may have expired, said state Attorney General Eric Schneiderman.

“The ringleaders of this complex scheme not only cheated the Medicaid program out of millions of dollars, but preyed on some of New York’s most vulnerable patients just to make a quick buck,” Scheiderman said.

 

The indictment charges four defendants with at least eight counts that include grand larceny in the first degree, criminal diversion of prescription drugs, money laundering, commercial bribery, false instrument for filing and conspiracy – all felony offenses.

The defendants include Glenn Schabel, the supervising pharmacists at MOMS Pharmacy and Allion HealtCare , who allegedly accepted more than $274 mllion worth of black HIV medications from a web of shell companies.

The firms were controlled by Stephen Manuel Costa, a 27-year-old Florida resident, who is accused of disguising the sale of the black market medications for resale to MOMS patients, many of whom were on Medicaid, the government health insurance program for the needy.

Another pharmacist, Ira Gross, is accused of brokering the sales of the diverted drugs between Schabel and Costa. And a fourth defendant, Harry Abolafia, allegedly created false invoices for Coats’s companies to make the illegal transactions appear legitimate.

For their efforts, Schabel, Gross and Abolafai were paid millions of dollars by Costa for participating in the scam.

NY Medicaid Inspector General James Cox’s assisted in the probe and its pharmacy investigators helped recover millions of dollars of black market Medications.

“Creating a black market with taxpayer-funded HIV medications is an insidious and costly fraud,” Cox said.