Chief Investigative Reporter Jonathan Dienst on crime, corruption and terrorism.

Dozens Busted in Medicaid Prescription Drug Fraud Scheme

The individuals charged allegedly participated in a sophisticated scheme to buy legally prescribed medications from Medicaid recipients and, after using a series of middlemen, eventually resell the repackaged prescription drugs to pharmacies at a profit

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    NEWSLETTERS

    NBCMiami.com

    Nearly 50 people have been charged with participating in a major prescription drug diversion fraud ring that cost the Medicaid program tens of millions of dollars, NBC 4 New York has learned.

    Dozens of people were arrested in New York, New Jersey and six other states Tuesday by the FBI Health Care Fraud Task Force on federal Medicaid fraud, wire fraud and mail fraud charges, law enforcement sources said. The task force includes investigators from the FBI, DEA, NYPD and other state and local agencies.

    The individuals charged allegedly participated in a sophisticated scheme to buy legally prescribed medications from Medicaid recipients on street corners and in bodegas throughout the city, including the Bronx and Washington Heights.

    The "second-hand drugs" would then be sold to higher level "collectors" and "aggregators" who would sell the drugs into distribution channels in Texas, Florida, Nevada, Utah, Alabama that resold the drugs to pharmacies and wholesale prescription drug companies in New York, New Jersey, Massachusetts, Pennsylvania, Illinois, South Carolina, Mississippi, Arizona, Kentucky, Minnesota, Washington, Hawaii and Puerto Rico, court papers say.

    Medications that were purchased and sold included those used to treat AIDS, asthma and schizophrenia, officials said.

    Prosecutors say the scheme is potentially dangerous to unwitting consumers of the second-hand prescriptions because the bottles are sometimes treated with potentially hazardous chemicals during the relabeling process, usually stored in uncontrolled conditions and may have expired.

    The suspects arrested in the New York-area were processed at the FBI's offices in lower Manhattan.

    "The scheme posed serious health risks at both the collection and distribution ends," FBI Assistant Director Janice Fedarcyk said in a statement. "People with real ailments were induced to sell their medications on the cheap rather than take them as prescribed, while end-users of the diverted drugs were getting second-hand medicine that may have been mishandled, adulterated, improperly stored, repackaged and expired."

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