Ohio man pleads guilty to ‘largest healthcare fraud case’

“The healthcare fraud proceeds were particularly susceptible to laundering because they originated from legitimate sources – Medicare and established private insurance carriers – giving the funds the initial appearance of legitimacy,” the Justice Department said.

The fraud scheme was based in Russia and other countries, prosecutors said, and was a multi-billion-dollar scheme. So far, 45 people have been charged.

“As alleged in charging documents, the organization exploited the United States’ financial system by depositing insurance reimbursement checks from the fraud,” the Justice Department said. “To gain access to the United States’ financial system, the organization deployed a range of tactics to circumvent internal controls at multiple banks and in some cases coordinated directly with associates employed at the banks.”

The organization used false sale documentation and corporate registration documents, prosecutors said.

“This documentation falsely reflected that the nominee owners maintained beneficial ownership and control of various fraudulent durable medical equipment  companies,” the Justice Department said. “This disguised the true beneficial ownership and control of the companies and the financial accounts. Upon opening the financial accounts, the organization funneled fraud proceeds from Medicare and other legitimate health care insurers into the accounts as seemingly ‘clean’ money.’”

Zarbavel opened bank accounts in Northeast Ohio for Royce Medical Supply LLC, a Florida-based DME company, the Justice Department said.

Between July 2022 and July 2024, the organization submitted $1.42 billion in false and fraudulent claims to Medicare and other health insurers through this company, the Justice Department said.

“While the Centers for Medicare and Medicaid Services suspended reimbursement on nearly all of these claims, some claims were paid,” according to prosecutors. “Between June and July of 2024, Zarbavel, at the direction of members of the organization, facilitated the deposit, transfer, and withdrawal of approximately $3.4 million in fraud proceeds for the benefit of the Organization.”

Zarbavel pleaded guilty to one count of money laundering and is scheduled to be sentenced Dec. 16. He faces a maximum penalty of 20 years in prison, according to prosecutors.