CityMD Agrees to Pay Over $12M for Alleged False Claims to the COVID-19 Uninsured Program

 

City Medical of the Upper East Side, PLLC, Summit Medical Group, P.A., Summit Health Management, LLC, and Village Practice Management Company, LLC, which collectively do business as CityMD, and manage and operate approximately 177 urgent care practices in New Jersey and New York, have agreed to pay $12,037,109 to resolve allegations that they violated the False Claims Act by submitting or causing the submission of false claims for payment for COVID-19 testing to a Health Resources and Services Administration (HRSA) program for uninsured patients.

HRSA’s COVID-19 Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment, and Vaccine Administration for the Uninsured Program (the Uninsured Program) provided claims reimbursement to health care providers, generally at Medicare rates, for testing uninsured individuals for COVID-19, treating uninsured individuals with a COVID-19 diagnoses, and administering COVID-19 vaccines to uninsured individuals.

The Justice Department alleges that, from Feb. 4, 2020, through April 5, 2022, CityMD knowingly submitted or caused to be submitted false claims for payment for COVID-19 testing to the Uninsured Program for individuals who had health insurance coverage when CityMD administered those tests. The United States contends that CityMD did not adequately confirm whether those individuals had health insurance coverage before submitting their claims to the Uninsured Program, including but not limited to certain individuals for whom CityMD had health insurance cards on file. The Justice Department further contends that CityMD caused outside laboratories to submit false claims for COVID-19 testing to the Uninsured Program in connection with individuals who had health insurance coverage by issuing requisition forms erroneously indicating that patients were uninsured. 

CityMD received credit in the settlement under the department’s guidelines for taking voluntary disclosure, cooperation, and remediation into account in False Claims Act cases. CityMD cooperated with the United States’ investigation by, among other things, voluntarily contracting with a third party to assist the United States in determining the amount of the losses the United States contends were caused by claims submitted by CityMD to the Uninsured Program for patients who had health insurance as described above.

“The Uninsured Program provided critical financial support for COVID-19 related testing and treatment for uninsured Americans during the height of the pandemic,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This settlement reflects the department’s commitment to ensuring that the pandemic relief programs created by Congress were used as intended.”

“Uninsured Americans who were at risk from COVID-19 were covered by emergency funding programs that made available to them the testing, vaccines, and treatments that they needed,” said U.S. Attorney Philip R. Sellinger for the District of New Jersey. “The alleged misuse of these funds is something we cannot and will not tolerate. Today’s settlement ensures that the money that was obtained inappropriately will be returned to the government.”

This civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Steven Kitzinger, a patient of CityMD. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery.  The qui tam case is captioned United States ex rel. Kitzinger v. City Practice Group of New York LLC d/b/a CityMD, Civ. No. 2:20-cv-20111-SRC-CLW (D.N.J.). Mr. Kitzinger will receive $2,046,308 as his share of the recovery. 

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of New Jersey, with assistance from the Department of Health and Human Services Office of Inspector General.  

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department in partnership with agencies across the federal government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international actors committing civil and criminal fraud and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form. Tips and complaints about other types of potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

Trial Attorney Daniel Meyler of the Civil Division’s Fraud Section and Assistant U.S. Attorney Mark Orlowski for the District of New Jersey handled this matter.

The claims resolved by the settlement are allegations only. There has been no determination of liability.

Former Principals Of Private “Pre-IPO” Funds Charged In Connection With $185 Million Fraud Scheme

 

Mario Gogliormella, Steven Lacaj, and Karim Ibrahim are Alleged to Have Defrauded Investors in Legend Venture Partners and Its Related Funds by Selling Shares in Non-Public Companies at Arbitrarily Inflated Prices and Pocketing Hidden Markups

Damian Williams, the United States Attorney for the Southern District of New York, and Daniel B. Brubaker, the Inspector in Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced the unsealing of an Indictment charging MARIO GOGLIORMELLA, STEVEN LACAJ, and KARIM IBRAHIM, a/k/a “Chris Hayes,” with conspiracy, securities fraud, wire fraud, and investment adviser fraud in connection with their management of L & G Capital Corp., Legend Venture Partners LLC, and a related series of funds. The defendants’ fraudulent misrepresentations about the operation of their funds allowed them to raise approximately $185 million from hundreds of investors. Based in large part on the excessive and undisclosed share price markups they charged to investors, the defendants were able to divert nearly $28 million in investor funds to themselves. They also used investor funds to pay their sales representatives at least $17.5 million in fees and commissions, despite making explicit representations to investors that fees were not being charged. GOGLIORMELLA, LACAJ, and IBRAHIM were arrested earlier today and will be presented this afternoon in Manhattan federal court. The case has been assigned to U.S. District Judge Vernon S. Broderick. 
 
U.S. Attorney Damian Williams said: “By allegedly raising approximately $185 million from over 1,400 investors, Mario Gogliormella, Steven Lacaj, and Karim Ibrahim left a trail of shattered trust and financial ruin. Today’s Indictment is a resolute stance against such alleged egregious breaches of investor confidence in the pre-IPO markets. We will hold perpetrators accountable and safeguard investors from such deceitful practices.”   

USPIS Inspector in Charge Daniel B. Brubaker said: “The U.S. Postal Inspection Service thoroughly investigates investment fraud cases which involve the criminal use of the mail to defraud investors.  This case highlights the crooked path these greedy individuals allegedly took as they charged excessive and undisclosed share price markups, callously defrauding investors out of millions.  I commend the work of our Postal Inspectors, the Securities and Exchange Commission, and the Assistant U.S. Attorneys for the Southern District of New York’s Securities and Commodities Fraud Task Force.  Together we are ensuring that investors are protected, the sanctity of the U.S. Mail is preserved, and ultimately fraudsters are held accountable for their dirty deeds.”

According to the allegations in the Indictment:[1]

From at least in or about 2019 through at least in or about October 2022, GOGLIORMELLA, LACAJ, and IBRAHIM engaged in a scheme to defraud investors in a group of related private funds known generally as the “StraightPath Funds” and the “Legend Funds” (the “Funds”).  In particular, the defendants, and others working at their direction, used “boiler room”-style call centers to market the funds, including to individual, non-professional investors, and present an opportunity to invest in privately held companies expected to go public in the near future (“pre-IPO companies”).  The defendants purported to offer investors the chance to acquire shares in pre-IPO companies at favorable prices in advance of an anticipated public offering, at which time they claimed the shares would be worth significantly more.

Although the defendants and their agents represented to existing and prospective investors in the Funds that they earned no upfront fees or commission in connection with the acquisition of pre-IPO shares on the Funds’ behalf, in reality and contrary to their fiduciary duties, the defendants acquired the shares and then sold them to the Funds at arbitrarily inflated and excessive prices without disclosing to investors the nature or extent of the markup.  The defendants also misled investors regarding the nature of their investments and hid the involvement of GOGLIORMELLA and IBRAHIM, who had previously been disciplined by the Financial Industry Regulatory Authority (“FINRA”) for the management of the Funds.  Moreover, in order to evade detection of their scheme, the defendants destroyed records and otherwise obstructed the efforts of the U.S. Securities and Exchange Commission (“SEC”) to uncover the defendants’ fraud on investors.

GOGLIORMELLA, LACAJ, and IBRAHIM conducted this scheme through several related entities.  Among those entities was L & G Capital Corp. (“L & G”), which, from approximately 2019 up to approximately February 2022, marketed the StraightPath Funds on behalf of StraightPath Venture Partners, Inc. (“SPVP”).  In approximately 2021, multiple individuals associated with SPVP received subpoenas from the SEC in connection with an investigation into SPVP’s unlawful marketing of pre-IPO shares to investors, and in approximately February 2022, SPVP ceased operations.  On or about May 13, 2022, the SEC filed a civil action against SPVP and its founders.  In approximately February 2022, when SPVP ceased operations, GOGLIORMELLA, LACAJ, and IBRAHIM began conducting the scheme under the corporate entity Legend Venture Partners, LLC (“Legend”).  The defendants, now through the corporate entity Legend, continued to market funds investing in pre-IPO shares to investors.  In addition to marketing these funds, Legend was the manager and investment adviser to each of the five Legend Funds. 

In order to generate interest in the Funds among retail investors, GOGLIORMELLA, LACAJ, and IBRAHIM used finders, or “referral agents,” to pitch prospective investors and thereafter to serve as the investors’ primary point of contact.  The defendants used “boiler room”-style call centers wherein salespeople cold-called potential investors, many of whom were not experienced investors, and gave aggressive sales pitches using notes and pitch scripts.  The defendants referred to their pitch scripts as “The Bible.”  Contrary to the defendants’ claim that they and their agents did not make money unless and until investors received a profit on their investments, L & G and Legend paid referral agents a commission, typically a 10 to 15% front-end fee based on the amount of the investment that agents were able to draw to the Funds, plus a portion of the carried interest when the Funds exited their position in a particular company.

In addition to misleading prospective investors about the compensation paid to referral agents, GOGLIORMELLA, LACAJ, and IBRAHIM defrauded investors in the Funds, for which they acted as fiduciaries, by charging investors excessive and undisclosed markups on share prices of pre-IPO companies, which benefited the defendants and their associates at the expense of investors and the Funds.  These markups regularly exceeded 50% of the price at which Legend had acquired the shares and sometimes were as high as 150%.  These markups, in turn, were used to pay fees and commissions to the defendants and their sales representatives.

GOGLIORMELLA, LACAJ, and IBRAHIM also misled investors by actively taking steps to prevent investors from learning about GOGLIORMELLA’s and IBRAHIM’s leadership roles at Legend because of the fact that both had been disciplined by FINRA.  In addition, GOGLIORMELLA, LACAJ, and IBRAHIM misled investors by misrepresenting the experience and knowledge of the sales representatives who were advising investors to invest in their funds.

In total, during the course of their scheme, from in or about 2019 through in or about October 2022, GOGLIROMELLA, LACAJ, IBRAHIM, and their agents solicited investments into the Funds of approximately $185 million from at least 1,400 investors.  GOGLIROMELLA, LACAJ, and IBRAHIM used much of these investor funds to enrich themselves and their associates and referral agents.  GOGLIORMELLA, LACAJ, and IBRAHIM themselves received a total of more than $28 million in investors’ funds.  For the most part, these distributions were not disclosed to investors or made in accordance with the Funds’ offering documents.  The defendants also paid at least $17.5 million in investor funds to their associates and referral agents, despite having made and caused to be made explicit representations to investors that fees were not being charged or were being waived.  In all, approximately 25% of the capital contributions the Funds received from investors was diverted to pay the defendants and their associates.

The Funds are no longer operational and are under the control of court-appointed receivers tasked with taking possession of the funds’ assets and recommending a plan to return value to investors.

GOGLIORMELLA, 47, of Manhasset, New York, LACAJ, 27, of New York, New York, and IBRAHIM, 34, of Queens, New York, are each charged with one count of conspiracy to commit securities fraud, wire fraud, and investment adviser fraud, which carries a maximum potential sentence of five years in prison; one count of securities fraud, which carries a maximum potential sentence of 20 years in prison; one count of wire fraud, which carries a maximum potential sentence of 20 years in prison; and one count of investment advisor fraud, which carries a maximum potential sentence of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Williams praised the outstanding work of the USPIS.  Mr. Williams further thanked the SEC, which has separately filed civil charges against GOGLIORMELLA, LACAJ, and IBRAHIM.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Adam S. Hobson and Matthew R. Shahabian are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

 [1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth in this release constitute only allegations, and every fact described should be treated as an allegation.

Weekly News from State Senator Gustavo Rivera!

 

SENATOR RIVERA'S DAY CARE INSPECTION BILL PASSES THE SENATE

Last year, our community mourned the tragic passing of 1-year-old Nicholas Dominici. This week, the New York State Senate passed Senator Rivera's legislation to strengthen daycare inspections and empower parents to ensure that no family experiences such a tragedy, especially in places they trust their children to be safe. This legislation will equip inspectors, parents, and childcare providers with resources to ensure daycares are safeguarded. Thank you to Council Member Pierina Sanchez for your collaboration in making this bill a reality. 

SENATOR RIVERA'S HOSPITAL CLOSURE BILL PASSES BOTH HOUSES

On the floor of the Senate, Senator Rivera spoke about his Local Input in Community Healthcare Act, which passed both houses this week. This legislation will address gaps in the state’s current review of proposed hospital and critical unit closures.



Senator Rivera thanks the lead sponsor of this legislation in the Assembly, Assemblymember Simon, who has been a leader on this bill for a decade. Senator Rivera also thanks his co-prime sponsors in the Senate, Senators Kavanagh, Gonzalez, Myrie, Hinchey, and Webb, and all of the advocates who pushed to make this bill a reality.

Senator Rivera hopes the Governor will sign this legislation soon to ensure communities have a say in their local hospital care access.

SENATOR RIVERA'S AUTO SHOP BILL PASSES THE SENATE

The New York State Senate passed Senator Rivera's bill requiring the DMV commissioner to consult with local communities as part of the review of motor shop licenses. Motor shops often participate in illegal activity such as occupying the sidewalk and residential parking spaces, this bill will allow the community to provide feedback on how motor shops are impacting their day-to -day lives. Senator Rivera, when discussing this bill on the floor of the Senate, thanked the community leaders in Community Board 6 for bringing this important issue to his attention.

SENATOR RIVERA ATTENDS BRONX INDEPENDENT LIVING SERVICES BLOCK PARTY

Senator Rivera joined community members at Bronx Independent Living Services Block Party. Senator Rivera was there to celebrate Bronx Independent Living Services' 40-year history of advocating and working with and for the disability community. Thank you to Bronx Independent Living Services Executive Director Margaret Della for inviting the Senator.

SENATOR RIVERA TOURS JERICHO PROJECT'S FORDHAM VILLAGE LOCATION

Last week, Senator Rivera toured Jericho's Project Fordham Village Veterans' permanent supportive housing residence. Senator Rivera discussed affordable permanent housing solutions and access to vital social services in New York City with stakeholders. Thank you to Jericho Project CEO Tori Lyon, Fordham Village Manager of Building Operations, Kennisha Lawrence, and Fordham Village Program Director, Dr. Shauntee Byron for hosting the Senator.

UPCOMING COMMUNITY EVENTS

& RESOURCES

WEDNESDAY 6/12: SENATOR RIVERA TO HOST NYC SMALL BUSINESS SERVICES MOBILE VAN

FRIDAY 6/14: SENATOR RIVERA HOSTS FREE HOUSING AND IMMIGRATION ASSISTANCE WITH NMIC!

SENATOR RIVERA'S OFFICE PROVIDING FREE LIFE-SAVING NALOXONE SPRAY AND TESTING KITS

WEDNESDAY 6/12: JUNETEENTH JUBILEE

SUNDAY 6/23: NORWOOD PRIDE

Office of the New York State Comptroller - Save the Date!

 

To RSVP Please Click Here

NOTICE OF CHARTER REVISION COMMISSION GOVERMENT AND ELECTION REFORM FORUM AND BRONX PUBLIC INPUT SESSION

 

Government and Election Reform Forum & Bronx Public Input Session

TIME AND LOCATION:

June 17, 2024, 5:00 pm – 8:00 pm
NYC Heath + Hospitals/Lincoln
234 East 149^th Street, Bronx, NY 10451
(Entrance on Morris Avenue, off 149^th Street)

Virtual location: See link to Zoom meeting posted at nyc.gov/charter.

NOTICE OF PUBLIC INPUT SESSION

The New York City Charter Revision Commission (“CRC”) will host a Government and Election Reform Forum and Public Input Session in the Bronx to discuss proposed changes to the New York City Charter. 

What is this Forum & Public Input Session about?

The New York City Charter (“Charter”) provides the structure of city government and key powers of city elected officials and agencies. The CRC is empowered to review the entire Charter. It may recommend changes that would help city government to work more efficiently and better serve all New Yorkers. 

The public is invited to testify about any matter of importance to city government and to suggest changes to the Charter, while experts will provide testimony on government and election reform proposals. You can find out more about the New York City Charter Revision by visiting us at our website: www.nyc.gov/charter.

Who can give input?

This meeting is open to the public, and the public will have the opportunity to testify before members of the Commission. Any member of the public may testify about their ideas for improving the City Charter for up to three (3) minutes. The Commission will hear testimony from people who attend the meeting in person and also from people who attend by Zoom. A group, organization or institution wishing to testify shall select a single designated representative. New Yorkers from any of the five boroughs may testify. The CRC will attempt to accommodate everyone who signs up to speak at this hearing, but if time does not permit that, the public is encouraged to utilize other opportunities to testify at subsequent public input sessions of the CRC or submit written comments to charterinfo@citycharter.nyc.gov.

Is there a deadline to submit written comments?

The public may submit written comments to charterinfo@citycharter.nyc.gov instead of or in addition to testifying live at a hearing. Written testimony must be received by 5:00 pm on Friday, July 12.

When and where is the hearing?

Doors open to the public, at 5:00 pm on Monday, June 17, at the following location:

NYC Heath +Hospitals/Lincoln
234 East 149^th Street, Bronx, NY 10451
(Entrance on Morris Avenue, off 149^th Street)

The public may join the meeting virtually at the Zoom link posted to www.nyc.gov/charter at that same time.

What if I need assistance to observe or testify at the meeting?

American Sign Language and Spanish interpretation will be provided online and on-site. Please make language interpretation and/or other accessibility requests by 5:00 pm on Thursday, June 13 by emailing mopdcommissioner@cityhall.nyc.gov or by calling 212-788-0014 and leaving  a voicemail. All requests will be accommodated to the extent possible.

Attorney General James Warns New Yorkers of Online Romance Scams

New York Attorney General Letitia James issued a consumer alert warning New Yorkers about increasingly common online scams in which fraudsters use dating apps, social media, and unsolicited text messages to befriend their victims and then convince them to make fraudulent investments. These online romance scams are also known as “pig butchering” – which is language scammers use to describe “fattening up” victims by gaining their trust before finally taking their money. The Office of the Attorney General (OAG) is encouraging New Yorkers to take steps to protect themselves from these schemes and to report these scams to the involved dating or social media app and to law enforcement.  

“New Yorkers hoping to find romance and personal connections online are instead being taken advantage of and victimized by heartless scammers,” said Attorney General James. “Sophisticated fraudsters are increasingly using dating apps and social media to trick users into bogus investment schemes. The personal and sometimes romantic nature of these scams can often leave their victims feeling ashamed and isolated. New Yorkers who fall victim to these frauds should know they are not alone. I encourage anyone who believes they may have been a victim of an online romance scam to contact my office.” 

Pig butchering schemes typically target victims online via dating websites and apps, social media, and unsolicited text messages. After a virtual meeting between the victim and scammer, the conversation generally transitions over to an encrypted chat platform such as WhatsApp or WeChat that can shield the scammer’s identity from law enforcement. 

The scammers typically spend a substantial amount of time making victims believe that they are in a romantic or otherwise close personal relationship. After the personal connection is made, the scammer shifts the conversation to trading or investment opportunities. Scammers will send screenshots of their own purported high balances on trading platforms or websites, as well as pictures of their supposedly luxurious lifestyles, to reinforce the appearance that they are highly successful investment experts. Once a victim places enough trust in the scammer, the scammer introduces the victim to an investment opportunity, often in cryptocurrency or foreign currencies. Scammers may even refer the victim to what appears to be a legitimate website by slightly misspelling the name of a familiar institution. From there, victims are led to believe that they are making incredible returns with the help and expertise of the knowledgeable scammer. 

Throughout the scam, victims typically see their account balances increase on purported online statements or investment platforms. In turn, the victims place more trust in the scammers and invest more of their funds. After the victims have deposited substantial sums of money into the scammer’s platform, ranging from tens of thousands to over a million dollars, they will be unable to withdraw their funds or will be asked to prepay fake withdrawal fees or taxes with the promise that their investment gains will be released. Eventually, the scammers will cut off contact.

Attorney General James recommends that New Yorkers take basic steps to avoid becoming the victim of a romance scam or other online fraud scheme. These include: 

• In general, do not wire money, send cryptocurrency, or give cash to people you don’t know and haven’t vetted because these transactions are irreversible.
• Research the person’s photo and profile using online searches to see if the image, name, or details have been used elsewhere. Keep in mind that scammers may be using stolen identities to create profiles that appear to be real, and their profiles, IDs, and photographs could be generated using AI. 
• Be suspicious of individuals you encounter online who: 
  • Change their phone number throughout the “relationship” and/or tell you to delete the conversations. 
  • Promise to meet in person or by video call, but always come up with an excuse about why they cannot. 
  • Move conversations from text or email to WhatsApp or another encrypted platform. 
  • Attempt to isolate you from friends or family by advising you to keep the relationship or the investment opportunity they are offering a secret.
  • Ask you for detailed personal financial information or explicit or private photographs, which could later be used to extort you. 
  • Pressure you to withdraw from retirement accounts (even at a penalty), to borrow money from friends/relatives, or to apply for loans from a bank. 
• Never rush into any investment. Be skeptical if the individual insists that you must invest money within a very short time frame, claiming you will lose out on the opportunity. 
• Before investing, consult a trusted legal professional or financial advisor who can advise you if the investment is proper. You can check investment professional registration at FINRA’s BrokerCheck. 
• Trust your instincts and think twice before investing. If it seems too good to be true, it probably is. 
• If you suspect fraud, report the individual to the dating or social media app and to law enforcement. Save all communications so that you can provide them to law enforcement if needed. 

Attorney General James encourages anyone who may have been a victim of this type of scam to report it to OAG by filing a complaint online or calling 1-800-771-7755. Any identifying information provided to OAG will be protected according to law and policies on the safeguarding of identifying information.