Office of The Attorney General
- Anne Milgram, Attorney General
Division of Criminal Justice
- Gregory A. Paw, Director
Office of the Insurance Fraud Prosecutor
- Greta Gooden Brown, Insurance Fraud Prosecutor

Defendants and Charges l Medicaid Beneficiaries Charged

TRENTON - Attorney General Anne Milgram and Criminal Justice Director Gregory A. Paw announced that 14 people were arrested or charged today, including the owners of a pharmacy and a clinic in Essex County, in connection with a scheme in which completed prescription forms for HIV/AIDS drugs and other expensive specialty medicines were bought from indigent patients so Medicaid could be billed for drugs that were never actually dispensed.

Prescriptions bought for several hundred dollars were billed to Medicaid for thousands of dollars. The total fraud is estimated to have exceeded $2 million.

The charges resulted from Operation PharmScam, a seven-month investigation targeting Medicaid fraud that was conducted by the Office of Insurance Fraud Prosecutor’s Medicaid Fraud Control Unit, the Jersey City Police Department and the U.S. Food and Drug Administration’s Office of Criminal Investigations.

According to Insurance Fraud Prosecutor Greta Gooden Brown, patients who agreed to go without their medicines were paid cash for their prescriptions, which were used to fraudulently bill Medicaid at prices 10 to 30 times higher than what was paid to the patient.

“We charge that these defendants preyed on one of the most vulnerable segments of our society –
destitute, chronically ill patients who could not resist an offer of instant cash,” said Attorney General Milgram. “We estimate that millions of dollars were stolen from Medicaid, which provides vital health care services and prescription drugs to those who cannot afford them. Moreover, the human cost was compounded and public health was put at risk because Medicaid beneficiaries, many of them HIV/AIDS patients, didn’t receive the medicines they needed.”

It is estimated that two pharmacies – Pharmacy of America at 60 Evergreen Place in East Orange and Orange Drugs at 261 Orange Street in Newark – each may have filed more than $1 million in fraudulent prescription claims with the Medicaid program in 2007. Search warrants were executed today at the two pharmacies and at Samaritan Medical, a medical clinic at 508 South Orange Avenue in Newark.

All 14 individuals arrested today or being sought on warrants were charged with health care claims fraud and Medicaid fraud. A full list of defendants and charges is attached. The investigation is ongoing and additional arrests are anticipated. The state today froze 12 bank accounts and obtained orders to seize three vehicles in connection with the investigation.

The Office of Insurance Fraud Prosecutor’s Medicaid Fraud Control Unit, Jersey City Police Department and U.S. FDA’s Office of Criminal Investigations were assisted in today’s arrests and raids by Division of Criminal Justice investigators, the Essex County Sheriff’s Office, the East Orange Police Department, the Newark Police Department, the State Division of Medical Assistance & Health Services and the New Jersey Regional Computer Forensics Laboratory.

Among those arrested today was Bryan K. Chandler aka Dr. X, 40, of East Orange, the owner and operator of Samaritan Medical. He is charged with conspiring with Medicaid beneficiaries and area pharmacies to defraud the Medicaid program. Chandler allegedly recruited beneficiaries to come to his clinic so that multiple prescriptions could be written in each beneficiary’s name and sold to pharmacies, including Pharmacy of America and Orange Drugs. Those pharmacies allegedly billed Medicaid for the medicines without dispensing them to the named beneficiaries.

Herbert Brandt, 75, of Verona, the owner of Pharmacy of America, and his son, Douglas Brandt, 48, of Verona, who worked at the pharmacy, were arrested and charged with conspiring with Chandler to defraud Medicaid. Also arrested were three pharmacy technicians at Pharmacy of America: [Redacted]; Alicia Stevens, 27, of Newark; and Jannah Muid, 24, of East Orange. Herbert Brandt was arrested today in Florida by the Florida Medicaid Fraud Control Unit.

Jovy D. Carino, 42, of Newark, a pharmacy technician at Orange Drugs, was arrested for allegedly conspiring with Chandler and others to pay cash for prescriptions and submit fraudulent claims to Medicaid.

In addition, seven Medicaid beneficiaries were charged for assisting Chandler, Orange Drugs or Pharmacy of America by selling their prescriptions. Several were arrested and warrants were issued for the remaining beneficiaries.

“We are seeing more of this type of fraud involving pharmacies because unscrupulous Medicaid providers look at the high price of many medications, especially HIV drugs, and see a big payday,” said Criminal Justice Director Paw. “That is why our Medicaid Fraud Control Unit formed a task force to aggressively investigate prescription fraud by pharmacies, doctors, clinics, beneficiaries, and other health care providers.”

Attorney General Milgram credited the numerous investigators, officers and attorneys with the Office of Insurance Fraud Prosecutor’s Medicaid Fraud Control Unit, the Jersey City Police Department and the U.S. FDA who have conducted Operation PharmScam. She further credited all of the Division of Criminal Justice investigators and other law enforcement agencies that assisted in today’s arrests and raids and other aspects of the ongoing investigation. She also credited the New Jersey State Police for their assistance in the investigation.

“We charge that neither the law nor any shred of human decency curbed the greed of these defendants,” said Insurance Fraud Prosecutor Greta Gooden Brown. “We will continue to investigate Medicaid fraud and abuse to protect the funding and integrity of this vital program, which is funded by both the state and federal governments.”

Director Paw noted that prescription fraud, including the “buy back” of prescriptions from Medicaid patients, is becoming more common. In 2007, the New Jersey Medicaid program paid over $500 million in reimbursement to pharmacies to dispense medications. Many of these medications, especially HIV medications, are extremely expensive. For example, a one-month supply of the HIV medicine Fuzeon costs more than $2,300.

Fraud in this part of the Medicaid program can take multiple forms, including the pharmacies generating claims or refills for prescriptions that do not exist. However, it is more common for pharmacies to pay cash to beneficiaries, runners or doctors to bring them valid prescription forms or blanks.

Today’s arrests and raids are not the first for Operation PharmScam. On Oct. 29, the Medicaid Fraud Control Unit and the Jersey City Police Department executed search warrants at MLK Pharmacy at 173 M.L.K. Drive in Jersey City and Ampere Pharmacy at 69 4th Avenue in East Orange. They arrested Abdul Bari aka Ghulam Chaudhry, 53, of Nutley, the co-owner of each of those two pharmacies, and Shahid Mahmood, 47, of Jersey City, who was a manager and pharmacy technician at Ampere Pharmacy. Those pharmacies allegedly filed a combined total of approximately $1.5 million in fraudulent Medicaid claims.

In connection with those raids, the state seized assets totaling more than $2.2 million between Oct. 29 and Nov. 20, including 12 financial accounts containing more than $786,000; 7 vehicles, including a 2007 Mercedes Benz and a 2007 Lexus; and four parcels of real property valued at more than $1.3 million.

On Dec. 21, the Medicaid Fraud Control Unit obtained a state grand jury indictment charging an Irvington pharmacy, its owner and an employee with Medicaid prescription fraud. Charges of health care claims fraud and Medicaid fraud were filed against Twumasi Ampofo, 39, of Irvington, the owner of Victory Pharmacy, Inc., employee Charles O. Manu and Victory Pharmacy, Inc., incorporated as Premier Health Services, Inc. and doing business on Springfield Avenue in Irvington. The indictment alleges that between July 19, 2007 and Oct. 24, 2007, Victory Pharmacy, Ampofo and Manu paid cash to Medicaid beneficiaries in return for prescriptions and fraudulently billed Medicaid more than $10,000.

In July 2007, a prior investigation by the Medicaid Fraud Control Unit resulted in the arrests of three defendants for conspiring to use Ojah Pharmacy in East Orange, which was a Medicaid provider, as a criminal enterprise. The three men, including pharmacy owner Charles Jyamfi, 53, of West Orange, were indicted for first-degree racketeering, money laundering and theft. Jyamfi allegedly purchased approximately $2 million in stolen prescription drugs from his co-defendants and others. He used the stolen medications, which were sometimes improperly packaged and labeled, to stock his pharmacy and sell to the public. Those charges are pending.

If anyone has information or would like to report fraud or abuse involving the Medicaid program or Medicaid providers, they should contact the Medicaid Fraud Control Unit by calling the toll-free hotline 1-877-55-FRAUD or visiting the Web site www.NJInsurancefraud.org. All information received through the hotline or Web site will remain confidential.

Defendants and Charges

1. Bryan K. Chandler aka Dr. X, 40, of East Orange. Health Care Claims Fraud (2nd degree), Medicaid Fraud (3rd degree).
2. Herbert Brandt, 75, of Verona. Health Care Claims Fraud (2nd degree), Medicaid Fraud (3rd degree), Money Laundering.
3. Douglas Brandt, 48, of Verona. Health Care Claims Fraud (2nd degree), Medicaid Fraud (3rd degree), Money Laundering.
4. [Redacted]. [Redacted]
5. Alicia Stevens, 27, of Newark. Health Care Claims Fraud (2nd degree), Medicaid Fraud (3rd degree).
6. Jannah Muid, 24, of East Orange. Health Care Claims Fraud (2nd degree), Medicaid Fraud (3rd degree).
7. Jovy D. Carino aka Jasmine, 42, of Newark. Health Care Claims Fraud (3rd degree), Medicaid Fraud (3rd degree).

Medicaid Beneficiaries Charged

1. Edward Kinder Jr. 42, of Newark. Health Care Claims Fraud (3rd degree), Medicaid Fraud (3rd degree).
2. Linda Whiteside, 50, of Newark. Health Care Claims Fraud (3rd degree), Medicaid Fraud (3rd degree).
3. Steven Collazo, 42, of Newark. Health Care Claims Fraud (3rd degree), Medicaid Fraud (3rd degree).
4. Ingrid Thomas, 58, Newark. Health Care Claims Fraud (3rd degree), Medicaid Fraud (3rd degree).
5. Clifton Daniels, 37, of Newark. Health Care Claims Fraud (3rd degree), Medicaid Fraud (3rd degree).
6. Bonita Clark, 52, of East Orange. Health Care Claims Fraud (3rd degree), Medicaid Fraud (3rd degree).
7. Valerie Sessoms, 49, of Newark. Health Care Claims Fraud (3rd degree), Medicaid Fraud (3rd degree).

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