Hudson Valley and Capital Region Taxi Companies and Their Owners Plead Guilty to Illegally Overcharging Medicaid Millions in Fees for Transportation Services
New York Attorney General Letitia James announced that five individuals and their seven transportation companies have pleaded guilty to stealing more than $4.4 million from New York’s Medicaid program through fake billing and illegal kickbacks, as well as engaging in money laundering and other fraudulent schemes to conceal their crimes. Muhammad Rizwan Khan, 38, Muhammad Usman Khan, 40, and Farhan Khan, 29, all of Orange County, and their related companies pleaded guilty on December 4 in Orange County Court for stealing over $3.8 million from Medicaid. As a result, Muhammad Rizwan Khan and Farhan Khan will be sentenced to two and one-third to seven years and one to three years in state prison, respectively. Muhammad Usman Khan will be sentenced to six months in jail concurrent with five years of probation. The Khans will also pay $2 million to Medicaid in restitution for their crimes.
In a separate case, John Gouzos, 48, of Nassau County, and Richard Sehl, 57, of Saratoga County, and their companies all pleaded guilty on November 26 in Rensselaer County Court for stealing over $650,000 from Medicaid. John Gouzos will be sentenced to six months in jail concurrent with five years of probation. Richard Sehl will be sentenced to a five-year term of probation.
“Exploiting vulnerable New York patients to steal millions of taxpayer dollars is illegal and reprehensible,” said Attorney General James. “Funds that should have been used to provide health care and services to New Yorkers in need were instead diverted because of fraudulent schemes. Not only did these individuals steal from Medicaid, they undermined the businesses of honest transportation providers, putting crucial patient services at risk. My office will continue to root out fraud and abuse in our health care system.”
Medicaid reimburses authorized businesses for transporting Medicaid patients to and from covered medical services. Both sets of defendants operated schemes in which they illegally overcharged Medicaid for transportation services. Between September 2019 and October 2023, the Khans and their companies submitted claims for fictitious trips and added fake tolls to trips that were far above any real toll that could be incurred in the service area, regularly adding costs of up to $50 per trip. In total, they overcharged Medicaid over $3.8 million. Gouzos and Sehl also submitted claims to Medicaid for fictitious trips with fabricated mileage to inflate their Medicaid claims between December 2021 and March 2023.
A key part of both operations were illegal kickback schemes involving Medicaid patients that allowed the companies to recruit patients who they could then use to fraudulently bill more expensive trips to Medicaid. The Khans and their companies made weekly kickback payments to Medicaid recipients, who gave them the identification numbers needed to submit false claims. Gouzos and Sehl similarly paid illegal kickbacks to Medicaid patients to request rides from locations much farther away from where they were actually transported, allowing them to charge more per ride.
In addition, both sets of defendants engaged in money laundering using shell companies they operated. These money laundering schemes allowed them to obtain their fraudulent Medicaid payments in cash and distribute kickbacks to Medicaid recipients they had recruited.
Muhammad Rizwan Khan, Farhan Khan, and their companies Tristate Express NY, Inc. (Tristate), Meditrans NY, Inc. (Meditrans), and Empire Trans NY, Inc. (Empire) pleaded guilty to Grand Larceny in the First Degree, a class B felony. Muhammad Usman Khan pleaded guilty to Grand Larceny in the Third Degree, a class D felony, and corporate defendant A1 Class Car, Inc. (A1 Class) pleaded guilty to Money Laundering in the Second Degree, a class C felony.
Gouzos, the owner and president of Medi Cab Corp. (Medi Cab), pleaded guilty to Health Care Fraud in the Third Degree, a class D felony, and is scheduled to be sentenced on January 27, 2025 to six months in jail concurrent with five years of probation. Gouzos has already repaid over $200,000 in restitution to Medicaid. Sehl, who was a manager of Medi Cab, is also scheduled to be sentenced on January 27 to a five-year term of probation for a conviction of Offering a False Instrument for Filing in the First Degree, a class E felony. Corporate defendant Medi Cab entered a guilty plea to Grand Larceny in the Second Degree, a class B felony, and the remaining companies, Jay Auto Care, Inc. (Jay Auto Care), and Hojo Detail Center, Inc. (Hojo), both entered pleas to Money Laundering in the Fourth Degree, a class E felony.
As a result of their convictions, each defendant will also be barred from being a provider in all government-funded health programs, including Medicaid and Medicare.
The Attorney General thanks the following government and private sector partners for their assistance and cooperation in these investigations: the United States Department of Health and Human Services – Office of the Inspector General, the Federal Bureau of Investigation, the New York State Department of Health, the Office of the Medicaid Inspector General, Medical Answering Services, the New York State Police, Orange County Sheriff's Office, and the Town of Crawford Police Department.
The criminal cases were handled by Special Assistant Attorneys General Samantha McCullagh and Patrick Scully with assistance from Regional Director Todd Pettigrew, MFCU Chief of Criminal Investigations Thomas O’Hanlon, and Deputy Chief of MFCU’s Civil Enforcement Division Konrad Payne. Alee Scott is MFCU’s Chief of the Civil Enforcement Division. MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. The Division of Criminal Justice is led by Chief Deputy Attorney General José Maldonado under the oversight of First Deputy Attorney General Jennifer Levy.
Reporting Medicaid Provider Fraud: MFCU defends the public by addressing Medicaid provider fraud and protecting nursing home residents from abuse and neglect. If an individual believes they have information about Medicaid provider fraud or about an incident of abuse or neglect of a nursing home resident, they can file a confidential complaint online or call the MFCU hotline at (800) 771-7755. If the situation is an emergency, please call 911.
New York MFCU’s total funding for federal fiscal year (FY) 2025 is $70,502,916. Of that total, 75 percent, or $52,877,188, is awarded under a grant from the U.S. Department of Health and Human Services. The remaining 25 percent, totaling $17,625,728 for FY 2025, is funded by New York State.
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