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Online Publication Only v. Amner Khaimov

February 29, 2012

ONLINE PUBLICATION ONLY
ALLSTATE INSURANCE COMPANY, ALLSTATE INDEMNITY COMPANY, ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, AND ALLSTATE NEW JERSEY INSURANCE COMPANY, PLAINTIFFS,
v.
AMNER KHAIMOV, ZOYA AMINOVA, MURDAKHAV KHAIMOV, ALBERT KHAIMOV, YAKOV AMINOV, ILYA TAMAYEFF, ABRAHAM LAYLIEV, ROBERT TERDJANIAN, GALINA VOVK A/K/A VALENTINA BABUCEA, VLADISLAV AGUVAYEV, OGEL SIMAKOV, SERGEY MEZKULA, GRIGOL APRESYANTSI, MARIFAT DAVLATKHONOVA, MICHAEL ZAVRAZHIN, LAPERLA SUPPLY, INC. F/K/A NEW MILLENIUM SUPPLY, INC., PARSONS MEDICAL SUPPLY, INC., JAMAICA MEDICAL SUPPLY, INC., QUEENS MEDICAL SUPPLY, INC., GRAND MEDICAL SUPPLY, INC., ROYAL MEDICAL SUPPLY, INC., UTOPIA EQUIPMENT, INC., GNK MEDICAL SUPPLY, INC., HIGHLAWN BEST MEDICAL SUPPLY, INC., NEW CAPITAL SUPPLY, INC., AVR MEDICAL SUPPLY, INC., FRAZIER TRADING CO., INC., A TO Z WHOLESALE, INC., BULLS EYE WHOLESALE, INC., E-Z SUPPLY, INC., GLOBAL BEST DEAL, INC., GRIGOL SUPPLY, INC., HONO OFFICE SUPPLY, INC., MEDCURE SUPPLIES, INC., TELYA CORP., MAJOR MARKET MERCHANDISE, INC., VZ GROUP, INC., JOHN DOES 1 THROUGH 20, AND ABC CORPORATIONS 1 THROUGH 20, DEFENDANTS.



The opinion of the court was delivered by: John Gleeson, United States District Judge:

MEMORANDUM AND ORDER

In this civil action, an automobile insurance company alleges that medical equipment providers perpetrated a massive fraud in which they submitted hundreds of fraudulent invoices for payment under New York's automobile insurance no-fault law. The plaintiffs are Allstate Insurance Company, Allstate Indemnity Company, Allstate Property and Casualty Insurance Company and Allstate New Jersey Insurance Company (collectively, "Allstate"). Allstate asserts a total of thirty-two causes of action against defendants Amner Khaimov, Zoya Aminova, Murdakhay Khaimov, Albert Khaimov, Yakov Aminov, Ilya Tamayeff, Abraham Layliev, Robert Terdjanian, Galina Vovk a/k/a Valentina Babucea, Vladislav Aguvayev, Ogel Simakov, Sergey Mezkula, Grigol Apresyantsi, Marifat Davlatkhonova, Michael Zavrazhin, LaPerla Supply, Inc. f/k/a/ New Millennium Supply, Inc. ("LaPerla"), Parsons Medical Supply, Inc. ("Parsons"), Jamaica Medical Supply, Inc. ("Jamaica"), Queens Medical Supply, Inc. ("Queens"), Grand Medical Supply, Inc. ("Grand"), Royal Medical Supply, Inc. ("Royal"), Utopia Equipment, Inc. ("Utopia"), GNK Medical Supply, Inc. ("GNK"), Highlawn Best Medical Supply, Inc. ("Highlawn"), New Capital Supply, Inc. ("New Capital"), AVR Medical Supply, Inc. ("AVR"), Frazier Trading Co., Inc. ("Frazier"), A to Z Wholesale, Inc. ("A to Z"), Bulls Eye Wholesale, Inc. ("Bulls Eye"), E-Z Supply, Inc. ("E-Z"), Global Best Deal, Inc. ("Global Best"), Grigol Supply, Inc. ("Grigol Supply"), Hono Office Supply, Inc. ("Hono"), Medcure Supplies, Inc. ("Medcure"), Telya Corp. ("Telya"), Major Market Merchandise, Inc. ("Major Market"), VZ Group, Inc. ("VZ Group"), John Does 1 through 20 and ABC Corporations 1 through 20. The Complaint alleges violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), common law fraud, unjust enrichment and aiding and abetting.

Two sets of defendants have filed motions to dismiss the complaint. First, defendants Aminov, GNK and Highlawn (collectively, the "Aminov defendants") moved to dismiss the RICO, common law fraud and unjust enrichment claims against them (Counts XXXXIII). Then defendants Amner Khaimov, Murdakhay Khaimov, Albert Khaimov, Aminova, Tamayeff, LaPerla, Parsons, Jamaica, Queens, Grand, Utopia and New Capital (collectively, the "Khaimov defendants")*fn1 moved to dismiss the claims against them, also for RICO, common law fraud and unjust enrichment (Counts I-III, V-VII, IX-XII, XIV-XVIII, XXV-XXVII). The Khaimov defendants moved in the alternative to compel arbitration of all claims against them. A few days before oral argument, the Aminov defendants provided notice that they joined the Khaimov defendants' arguments in full. For the reasons set forth below and stated at oral argument, the motions are denied in their entirety.

BACKGROUND

A. Factual Allegations

Although the 162-page Complaint*fn2 in this case contains extensive detail, a full explication of the Complaint's factual allegations is unnecessary to decide the motions before me. I here provide only a summary of those allegations to provide context for this decision.

The moving defendants are retail stores that provide durable medical equipment ("DME") and/or orthotic devices*fn3 to victims of automobile accidents, and the stores' respective owners. Allstate alleges that these retail stores entered into arrangements with medical clinics and wholesalers to perpetrate a sophisticated fraudulent scheme in which the retail stores submitted hundreds of fraudulent invoices to Allstate for reimbursement under New York's no-fault law*fn4 that grossly inflated the amounts the retail stores actually paid for DME and/or orthotic devices.

According to the Complaint, the wholesalers coordinated with the retail stores to supply them with falsified invoices, some of which reflected prices that were 10 to 20 times the actual prices the retail stores paid the wholesalers for the equipment; other times, the invoices documented illusory purchases where no equipment was bought at all. The retail stores in turn used these inflated invoices to demand reimbursement from Allstate pursuant to its obligations under the no-fault insurance law in amounts that grossly exceeded the amounts the stores were actually entitled to. Accident victims were induced to sign blank delivery receipts verifying receipt of equipment before it was ever received; failing that, their signatures were forged. To further obfuscate their fraud, the retail stores remitted payment to the wholesalers for the amount of the inflated invoices and supplied this documentation to Allstate; however, through a complex money laundering scheme, the wholesalers cashed the checks at complicit check cashing establishments that returned up to 90% of the money to the retail stores, which in turn paid kick-packs to the medical clinics that directed the accident victims to the retail stores in the first place.

B. Procedural History

Allstate commenced this action on May 18, 2011, asserting against the moving to Illinois. ECF No. 10. The Aminov defendants filed a motion to dismiss the Complaint on November 4, 2011. ECF No. 48. On December 16, 2011, the Khaimov defendants filed a motion to dismiss the Complaint or, in the alternative, to compel arbitration of the claims. ECF No. 59. On February 10, 2012, the Aminov defendants filed a letter indicating they joined the Khaimov defendants' arguments in full. ECF No. 70. The court held oral argument on the motions on February 16, 2012.

DISCUSSION

A. Motions To Dismiss

In an oral ruling at the conclusion of oral argument, I denied the moving defendants' motions to dismiss. I have explained my reasoning in writing in a memorandum and order recently filed in Allstate Ins. Co. v. Lyons, No. ...


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