United States District Court, S.D. New York
Decided January 28, 2015
For Plaintiff: Edward B. Diskant, Esq., UNITED STATES ATTORNEY OFFICE, SDNY, New York, NY.
For Defendant: Joanna C. Hendon, Esq., Sharanya Mohan, Esq., Alicia K. Amdur, Esq., SPEARS & IMES LLP, New York, NY.
ROBERT W. SWEET, United
States District Judge
Defendant Bladimir Rigo (" Rigo" or " Defendant" ) sought and obtained a hearing under United States v. Fatico to contest the amount of loss attributable to him pursuant to his guilty plea to one count of Conspiracy to Commit Healthcare Fraud and one count of Conspiracy to Commit Adulteration Offenses and the Unlawful Wholesale Distribution of Prescription Drugs. Upon the findings set forth below, the loss attributable to Rigo is $2.9 million.
Plaintiff the United States of America (the " Government" ) charged Rigo by criminal complaint in September 2013 and, in November 2013, a grand jury returned indictment 13 Cr. 897 (RWS) similarly charging the Defendant with one count of
conspiracy to commit healthcare fraud and one count of conspiring to commit adulteration and unlawful wholesale distribution of prescription medications. Rigo pled guilty to both counts on April 23, 2014 before the Honorable Kevin N. Fox, United States Magistrate Judge. During the course of his allocution, Rigo admitted to his participation in the charged scheme as follows:
During the years mainly 2010 to 2012, but also in previous years, I agreed with others to buy and to sell medicines that had been prescribed to patients with insurance, Medicaid, without having a license to sell them or to buy them. On occasion the medications had the labels removed or cleaned up in order for them to be sold.
On September 11, 2014, Rigo requested a hearing pursuant to United States v. Fatico, 603 F.2d 1053 (2d Cir. 1979), in order to resolve a dispute between the parties concerning the amount of loss attributable to him as a result of the offense conduct. The hearing took place in November 2014 and final argument was heard on December 2, 2014, at which point the motion was marked fully submitted.
Evidence Adduced at the Hearing
The Conspiracy and the Government's Investigation
Between 2010 and 2012, the Government conducted a nationwide investigation into the unlawful diversion and trafficking of prescription drugs that were previously dispensed to Medicaid recipients into an underground secondhand market. See Mohan Decl. Ex. A (Pre-Sentencing Report dated July 22, 2014, (" PSR" )) ¶ 8. Rigo was convicted as a result of this investigation.
The scheme worked as follows: first, the lowest level participants in the scheme (the " Insurance Beneficiaries" ) filled prescriptions for month-long supplies of drugs at pharmacies throughout the country, including in the Southern District of New York and in the Newark, New Jersey area. These Insurance Beneficiaries were typically HIV or AIDS patients who paid little or no money for the drugs in question because their insurance plans, typically Medicaid, covered the costs. The Insurance Beneficiaries then sold their bottles of medications to other participants in the scheme, referred to in the investigation as " Collectors," for cash at locations like street corners and bodegas. Mr. Arcadio Reyes-Arias (" Reyes-Arias" or " Chino" ) and Mr. Rogelio Leyba (" Leyba" ) were two such Collectors. Collectors, in turn, sold the secondhand bottles they collected to Rigo and other " Aggregators," scheme participants who typically bought large quantities of secondhand drugs from multiple Collectors. Eventually, the secondhand drugs made their way to corrupt distributors and pharmacies willing to re-dispense these drugs to unsuspecting consumers.
Health care benefit programs, such as Medicaid, were generally defrauded twice with respect to each bottle dispensed in the scheme. On the front end, a health care benefit program was fraudulently induced into paying for these drugs under the false representation that these drugs would be taken by the Insurance Beneficiary to whom they were dispensed. The scheme participants then also sought to defraud health care benefit programs again on the back end of the scheme. By concealing the source of the bottles and the fact that the bottles have been previously dispensed, the scheme participants attempt to have the bottles re-dispensed as new, legitimately obtained drugs by pharmacies, thereby fraudulently inducing
health care benefit programs like Medicaid to pay for the same ...