the staff of the Ridgewood blog
Park Ridge NJ, Attorney General Christopher S. Porrino and the Office of the Insurance Fraud Prosecutor (OIFP) today announced that a Bergen County chiropractor has been charged as the final defendant in a multi-level insurance fraud network run by Colts Neck Brothers Anhuar and Karim Bandy.
Anthony Riotto, 44, who operates Riotto Family Chiropractic in Park Ridge, was charged by accusation with third-degree health care claims fraud in connection with the Bandy brothers’ criminal network.
He is the final defendant charged in a complex insurance fraud scheme in which the Bandy brothers paid illegal “runners” to recruit car crash victims as patients for chiropractic facilities they controlled, then collected kickbacks for referring those victims for medical and legal services provided by others who pleaded guilty in the scheme, including a doctor, a lawyer, three licensed chiropractors, a paralegal and a licensed acupuncturist.
“We are moving forward with our prosecution of the final defendant in an investigation that put a stop to egregious corruption of New Jersey’s medical, legal, and insurance industries,” said Attorney General Porrino. “We will continue to enforce the laws that protect patients from being treated like cattle being sold to the highest bidder.”
“Patients must be able to trust that medical decisions are being made in their interest, not in the interest of criminals trying to scam the insurance system,” said Acting Insurance Fraud Prosecutor Christopher Iu. “As this case demonstrates, anyone who exploits and manipulates patients for financial gain will be held accountable.”
According to the allegations against him, Riotto caused numerous fraudulent claims to be submitted to five insurance carriers in connection with patients he referred to MLS Medical, a Park Ridge practice specializing in pain management owned by another participant in the Bandy brother’s criminal scheme.
Riotto allegedly received the patients for his chiropractic practice through the Bandy brothers’ illegal runners network, then referred them to MLS Medical without disclosing to them that he had a financial interest in the practice. MLS Medical, in turn, submitted insurance claims for those patients without disclosing to insurance carriers that the patients had been referred by a practitioner with financial interest in the practice.
Twelve defendants have pleaded guilty and been sentenced in the criminal enterprise exposed in the April 2014 indictment of Anhuar and Karim Bandy and 10 others. Five more individuals, including Riotto, were subsequently charged in connection with the scheme.
The Bandy brothers have admitted that between June 1, 2009 and January 1, 2014 they illegally controlled several chiropractic facilities through purported “management companies” and “marketing companies” whose real purpose was to hide their ownership. New Jersey regulations require that chiropractic facilities be owned by licensed chiropractors or medical doctors; neither Bandy holds such titles.
In order to generate revenue for the chiropractic facilities, the brothers used “runners” to bring motor vehicle accident patients to the facilities so the straw owners could bill insurance carriers for services rendered at the facilities. An investigation determined that, through the scheme, the chiropractic facilities billed insurance companies for millions of dollars for services they purported to perform. The checks sent by the insurance carriers were deposited into the various accounts of the chiropractic facilities or the management companies. A large portion of the monies deposited into the accounts of the chiropractic facilities would then be paid to the Bandy management companies.
The runners were paid up to $1,000 for each patient that they recruited for medical treatment. An investigation determined that the runners retrieved motor vehicle accident reports at local police stations, under the Open Public Records Act rules, and then visited the homes of the motor vehicle accident victims in an attempt to persuade them to utilize the services of the chiropractic facilities controlled by the Bandy brothers. The runners picked up the motor vehicle accident patients from their homes and drove them to the chiropractic facilities. An investigation determined that payments were made to companies incorporated by Karim Bandy for over a thousand referrals of patients for medical treatment and/or clients for legal representation.
In July 2015, Anhuar and Karim Bandy pleaded guilty to second-degree insurance fraud and were each sentenced to six-and-a-half-year prison terms in hearings that took place in June and July, respectively, of this year. They also were ordered to pay a $100,000 fine and $50,000 reimbursement to insurance companies that paid thousands of fraudulent claims over a four-year period.
The following professional service providers pleaded guilty and were sentenced in the scheme:
Dr. Mark Schwartz, D.O., 50, of Park Ridge, owner of MLS Medical in Park Ridge who pleaded guilty to one count of third-degree health care claims fraud and was sentenced to three years of probation and 40 hours of community service.
David Walker, Esq., 58, of Rockaway, a personal injury lawyer who pleaded guilty to one count of third-degree conspiracy and was sentenced to two years of probation and 40 hours of community service.
Alexandra Gallegos, 55, of Piscataway, a paralegal who received a percentage of the profits of Walker’s firm, who filed personal injury claims on behalf of the motor vehicle accident patients. She pleaded guilty to third-degree conspiracy and third-degree criminal use of runners and was sentenced two years of probation, 40 hours of community service, and a $5,000 criminal fine.
Edward Formisano, D.C., 55, of Roxbury, a chiropractor and purported owner of Eclipse Chiropractic, located in Plainfield; Lakewood Chiropractic, located in Lakewood; Liberty Chiropractic Center, located in Jersey City; and Chiropractic Spine Center, located in Perth Amboy. He pleaded guilty to one count of third-degree health care claims fraud and was sentenced to two years of probation and 40 hours of community service.
Louis Brown, D.C., 65, of Rahway, a chiropractor and purported owner of True Healing and Wellness, located in New Brunswick; New Century Chiropractic, located in Dover; and Wellspring Rehabilitation, located in North Plainfield. He pleaded guilty to one count of third-degree criminal use of a runner and was sentenced to two years of probation and 40 hours of community service.
Gerald Roth, D.C., 69, of Highland Park, a chiropractor who pleaded guilty to one count of third-degree criminal use of runners and was sentenced to one year of probation.
Sergey Lipschitz, 44, of Morganville, an acupuncturist who pleaded guilty to one count of third-degree insurance fraud and was admitted into the Pretrial Intervention Program.
The following individuals pleaded guilty to criminal use of runners (3rd degree) and were sentenced:
Cesar Huaman, 48, of Orlando, Fla., who also recruited other runners in the scheme, also pleaded guilty to third-degree conspiracy. He was sentenced to two years of probation.
Estefania Frias, 27, of Plainfield, who is Anhuar Bandy’s fiancé, was sentenced to two years of probation, 40 hours of community service, a $2,000 criminal fine, and $2,000 in restitution.
Bernardo Neiman, 55, of Elizabeth, was sentenced to one year of probation.
Lillian Frias, 55, of Plainfield, who is Estefania Frias’ mother; Albert Lee Hughes, 35, of Orlando, Fla.; and Anali Rivera, 29, Somerville, were all admitted into the Pretrial Intervention Program based on the charges in the indictment. Charges are pending against Rene Lacotera, 39, of Elizabeth, who is being sought on a fugitive warrant.
In 2004, Anhuar Bandy was convicted on charges of criminal racketeering, conspiracy, health care claims fraud, and theft charges brought by the Office of the Insurance Fraud Prosecutor. Bandy subsequently served approximately four years in state prison.
Deputy Attorney Cheryl Maccaroni, Bureau Chief, Private Insurance, represented the State in the filing of the criminal charges against Riotto on September 8, 2017. Lt. Joseph Waters, Investigator/Analyst Marwa Kashef coordinated the investigation. Detectives Janet Amberg, Amy Carson, Heather Pittman, and Analyst Bethany Schussler assisted in the investigation. Acting Insurance Fraud Prosecutor Iu thanks the Special Investigations Units and counsel for the following insurance Companies: Allstate, Plymouth Rock, Liberty Mutual, Geico and Travelers; as well as the New Jersey Department of Banking and Insurance, the New Jersey Division of Taxation, and the National Insurance Crime Bureau for their assistance in the investigation.
Acting Insurance Fraud Prosecutor Iu noted that some important cases have started with anonymous tips. People who are concerned about insurance cheating and have information about a fraud can report it anonymously by calling the toll-free hotline at 1-877-55-FRAUD, or visiting the Web site at www.NJInsurancefraud.org. State regulations permit a reward to be paid to an eligible person who provides information that leads to an arrest, prosecution and conviction for insurance fraud.