Two New Jersey Men Sentenced For Scheme To Defraud Investors In Hemp Company

 

Vitaly Fargesen and Igor Palatnik Misappropriated Approximately $4 Million of Investor Funds

Damian Williams, the United States Attorney for the Southern District of New York, announced today that VITALY FARGESEN and IGOR PALATNIK were sentenced to 4 years and 78 months in prison, respectively, by U.S. District Judge Loretta A. Preska for participating in a fraudulent scheme to defraud investors in CanaFarma Corp. and, later, CanaFarma Hemp Products Corp. (together, “CanaFarma”), by soliciting funds based upon false and misleading representations, failing to invest investor’s funds as promised, and secretly misappropriating millions of dollars of CanaFarma funds. PALATNIK was sentenced on January 11, 2024, and FARGESEN was sentenced today. 

U.S. Attorney Damian Williams said: “Vitaly Fargesen and Igor Palatnik orchestrated a sophisticated scheme to obtain millions of dollars from investors by falsely pledging to spend their funds building a legitimate business. Instead, Fargesen and Palatnik deceived investors about the nature of their business and kept millions of dollars of investor funds for their own personal use.  After they were charged, Fargesen and Palatnik attempted to escape accountability by obstructing this Office’s investigation of their crimes. Today’s sentence should serve as a reminder that if you steal from investors and cover up your crimes, you will pay a steep price.” 

According to the allegations contained in the Indictment and statements made in public filings and public court proceedings:

From in or about March 2019 to in or about March 2020, CanaFarma was a privately held Delaware corporation with offices in New York, New York.  Beginning on or about March 19, 2020, CanaFarma was listed on the Canadian Stock Exchange, and beginning on or about March 23, 2020, CanaFarma was listed on the Frankfurt Stock Exchange.  CanaFarma marketed itself to the investors as a “fully integrated cannabis company addressing the entire cannabis spectrum from seed to delivery of consumer products.”  To the public, FARGESEN was held out as Senior Vice President of Strategic Planning and PALATNIK as Senior Vice President of Product Acquisition at CanaFarma.  In truth, the two men exercised full control of CanaFarma but hid their control from the investing public by, among other things, convincing an experienced businessman to falsely present himself to the market as the CEO of the company.

Using their control of CanaFarma, FARGESEN and PALATNIK devised and carried out a scheme to defraud CanaFarma’s investors by soliciting approximately $14 million in funds, including investments in private shares of CanaFarma, with false and misleading representations concerning the company’s management, products, and financials; failing to invest investor’s funds as promised; and secretly misappropriating at least $4 million of CanaFarma funds for their own benefit.  FARGESEN and PALATNIK effectuated the scheme by, among other things, controlling CanaFarma through a nominal CEO who reported to FARGESEN and PALATNIK, lying to investors regarding CanaFarma’s actual and anticipated operations, attempting to artificially inflate CanaFarma’s reported revenue, making false statements to CanaFarma’s auditors, and misappropriating millions of dollars of investor funds.

In addition to the prison sentence, FARGESEN, 54, of Manalapan, New Jersey, and PALATNIK, 49, of Morganville, New Jersey, were each ordered to forfeit $1,733,000 and to pay restitution in the amount of $4,703,915.26.

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.  Mr. Williams also thanked the U.S. Securities and Exchange Commission, which has filed a parallel civil action.

MAYOR ADAMS ANNOUNCES RETURN OF ‘RISE UP NYC’ SUMMER CONCERT SERIES, FEATURING 18 WORLD-CLASS CONCERTS ACROSS FIVE BOROUGHS

 

Performances Will Showcase Range of Music Genres and Cultures, Reflecting Sounds of Diverse City

Full Rise Up NYC Artist Line-Up to Be Announced in Coming Weeks

New York City Mayor Eric Adams today announced the return of the 'Rise Up NYC' summer concert series, offering 18 free outdoor concerts to New Yorkers across all five boroughs this summer. The highly anticipated concert series — put on in partnership with City Parks Foundation SummerStage — is expanding significantly for its third season, inspiring all New Yorkers to unite and uplift New York City. This collaboration will incorporate select events from City Parks Foundation SummerStage’s free outdoor concerts into the Rise Up NYC lineup — promising an extraordinary and unforgettable summer filled with exceptional music.

“Once again, starting on July 14^th, New Yorkers will gather together and partake in the music and culture that keeps our city moving,” said Mayor Adams. “‘Rise Up NYC’ is a free concert series that fosters camaraderie among New Yorkers and brings enjoyment to our beloved city. Music and the arts are essential to our city, and this summer, we are going to amplify the experience and make sure we are giving residents of the five boroughs an all-star experience at no cost. We welcome all New Yorkers to join us in celebrating the vibrant energy of our city through the shared joy of music.”

“Our ‘Rise Up NYC’ concert series is back, offering free outdoor concerts in all five boroughs,” said Chief Advisor to the Mayor Ingrid Lewis Martin. “As summer kicks into high gear, we invite all New Yorkers to bring their family and friends for fun nights and world-class entertainment in the city that never sleeps. Together we can Rise Up!”

Kicking off on July 14^th with Common, Pete Rock, and other performers at the Herbert Von King Park, the concert series will give New Yorkers free and safe access to exceptional concerts at a time when rising costs are putting a strain on many families. In its previous two seasons, Rise Up NYC featured performances by critically acclaimed artists such as Chrisette Michele, Maxi Priest, Mary Mary, Ja Rule, El Gran Combo de Puerto Rico, Wyclef Jean, and many more.

From July 14^th through August 25^th, the Adams administration will present 18 free concerts to New Yorkers across the five boroughs:

Bronx

Thursday, August 1

Crotona Park (Presented by City Parks Foundation SummerStage)

Crotona Avenue & Claremont Parkway

Friday, August 2

Crotona Park (Presented by City Parks Foundation SummerStage)

Crotona Avenue & Claremont Parkway

Saturday, August 3

Crotona Park (Presented by City Parks Foundation SummerStage)

Crotona Avenue & Claremont Parkway

Tuesday, August 20

Orchard Beach

One Orchard Beach Road

Wednesday, August 21

Orchard Beach

One Orchard Beach Road

Brooklyn

Sunday, July 14

Herbert Von King Park, Brooklyn (Presented by City Parks Foundation SummerStage)

Lafayette Avenue and Marcy Avenue

Friday, August 9

Wingate Park, Brooklyn

Brooklyn Avenue Between Winthrop Street & Rutland Road

Saturday, August 10

Wingate Park, Brooklyn

Brooklyn Avenue Between Winthrop Street & Rutland Road

Sunday, August 11

Wingate Park, Brooklyn

Brooklyn Avenue Between Winthrop Street & Rutland Road, Brooklyn, NY

Manhattan

Sunday, July 21

SummerStage in Central Park, Manhattan (Presented by City Parks Foundation SummerStage)

Rumsey Playfield, 71st Street & 5th Avenue

Saturday, August 3

Apollo Theatre, Manhattan

253 West 125th Street

Queens

Saturday, August 24

Roy Wilkins Park, Queens

Merrick Boulevard & Baisley Boulevard

Sunday, August 25

Roy Wilkins Park, Queens

Merrick Boulevard & Baisley Boulevard

Staten Island

Saturday, August 11

Stapleton Waterfront Park (Presented by City Parks Foundation SummerStage)

Water Street & Prospect Street

Wednesday, August 14

Midland Beach Parking Lot 8

Father Capodanno Boulevard and Hunter Avenue

Thursday, August 15

Midland Beach Parking Lot 8

Father Capodanno Boulevard and Hunter Avenue

The Rise Up NYC concert series will amplify local artists, encourage New Yorkers to support local small businesses near the concert venues, and provide the opportunity for New Yorkers, especially young New Yorkers, to come together to support non-violent solutions to conflicts across the city. This comes as Mayor Adams kicked off in June the city’s “Summer of Possibility,” a celebration of New York City’s unrivaled summer offerings at a time when crime is down, jobs are up, and the city is more livable than when the Adams administration came into office.

For more information about the concert series, including a list of artists that will be updated as each event gets closer, visit the Rise Up NYC website and City Parks Foundation website.

Permits Filed For 779 East 181st Street In Crotona, The Bronx

 

Permits have been filed for a four-story residential building at 779 East 181st Street in Crotona, The Bronx. Located between Mapes Avenue and East 181st Street, the lot is near the West Farms Square-East Tremont Avenue subway station, serviced by the 2 and 5 trains. Giergj Bujaj is listed as the owner behind the applications.

The proposed 50-foot-tall development will yield 6,628 square feet designated for residential space. The building will have 12 residences, most likely rentals based on the average unit scope of 552 square feet. The masonry-based structure will also have a penthouse and a 20-foot-long rear yard.

GRID Drafting and Consulting is listed as the architect of record.

Demolition permits will likely not be needed as the lot is vacant. An estimated completion date has not been announced.

EDITOR'S NOTE:

The empty lot is next to the building in the picture.

Pharmacy Owner and Associate Sentenced for Health Care Fraud and Black Market Prescription Drug Diversion Scheme

 

A pharmacy owner and an associate were sentenced for submitting false and fraudulent claims to Medicare and California Medicaid (Medi-Cal) for prescription drugs and engaging in a black market prescription drug diversion conspiracy.

Irina Sadovsky, 54, of Calabasas, California, a pharmacist who owned Five Star RX, doing business as Five Star Pharmacy and Ultimate Pharmacy Inc., was sentenced on July 8 to two years and three months in prison. Shahriar “Michael” Kalantari, 56, of Los Angeles, was sentenced yesterday to one year and 11 months in prison.

According to court documents and evidence presented at trial, from September 2016 to April 2017, Sadovsky conspired to submit fraudulent claims to Medicare and Medi-Cal for prescription drugs that were never dispensed to beneficiaries and instead were provided to her co-conspirators to sell on the black market. Sadovsky’s co-conspirators created fraudulent prescriptions, and Sadovsky recommended the combinations of prescription drugs to be written and checked the eligibility of the patients for reimbursement.

Kalantari, who is not a medical professional, conspired with Sadovsky to defraud Medicare and Medi-Cal by generating false prescriptions. Kalantari’s co-conspirators obtained beneficiary information, which Kalantari then used to write or cause to be written false and fraudulent prescriptions for expensive prescription medication, including drugs used to treat HIV. These medications were not dispensed to patients, but rather were provided to a co-conspirator to sell on the black market.  

A jury convicted Sadovsky in October 2022 of one count of conspiracy to commit health care fraud and one count of conspiracy to engage in the unlicensed wholesale distribution of prescription drugs. A jury convicted Kalantari in November 2022 of one count of conspiracy to commit health care fraud, three counts of health care fraud, and one count of conspiracy to engage in the unlicensed wholesale distribution of prescription drugs.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; Assistant Director in Charge Akil Davis of the FBI Los Angeles Field Office; and Special Agent in Charge Timothy DeFrancesca of the Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Regional Office made the announcement.

The FBI and HHS-OIG investigated the cases, with valuable assistance from the California Department of Justice.

Counsel Alexis Gregorian and Trial Attorney Matthew Belz of the Criminal Division’s Fraud Section handled the sentencing hearings. Counsel Alexis Gregorian, Assistant U.S. Attorney Alexandra Michael for the Central District of California, formerly of the Criminal Division’s Fraud Section, and Justin Givens, formerly of the Criminal Division’s Fraud Section, tried the cases.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,400 defendants who collectively have billed federal health care programs and private insurers more than $27 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.

Attorney General James Announces Ban on Ex-NRA CFO Wilson “Woody” Phillips from Not-for-Profit Industry in New York

 

Settlement Follows AG James’ Win in Liability Phase of NRA Trial Where Jury Found NRA, Phillips, and Wayne LaPierre Liable for Breaking Not-for-Profit Laws

New York Attorney General Letitia James announced a settlement with the National Rifle Association’s (NRA) former Chief Financial Officer (CFO) Wilson “Woody” Phillips banning him from serving as a fiduciary of a not-for-profit in New York for 10 years and requiring training before returning to any such position. In February, a jury found Phillips liable for violating his duties in managing the NRA and its financial affairs and ordered him to pay $2 million in damages. A second phase of the trial, set to begin on July 15, was going to determine whether Phillips should be barred from re-election or appointment as an NRA officer or director, or from serving as a fiduciary in any other New York state not-for-profit corporation. Today’s agreement keeps the jury’s verdict against Phillips intact, including the monetary damages he has to pay, and removes him from the second, remedial phase of the trial against the NRA, Wayne LaPierre, and John Frazer, who were senior executives of the NRA until recently.   

“New Yorkers deserve to know that when they support a not-for-profit, those donations are being used to advance its mission, not squandered on lavish perks for staff or cronies,” said Attorney General James. “For decades, Wilson Phillips oversaw and allowed financial mismanagement and corruption at the NRA, and that is why the jury found him, the NRA, and his co-defendants, senior executives Wayne LaPierre and John Frazer, liable for their misconduct. Today’s agreement should serve as an example that my office will hold anyone, and everyone, involved in abusing their power or misappropriating funds accountable.”

Attorney General James filed a lawsuit against the NRA and the other current and former senior officers in August 2020. On the eve of the trial, Wayne LaPierre stepped down as Executive Vice President and CEO of the NRA, a role he held for more than 30 years. The jury found all of the defendants—the NRA, LaPierre, Phillips, and Frazer—liable for violating New York not-for-profit laws. Phillips was found liable for failing to uphold his duties as a nonprofit executive and ordered to pay $2 million in damages. The jury also concluded that LaPierre abused his position, violated his duties to the NRA, and caused $5.4 million in financial harm to the NRA. He was ordered to pay $4.35 million to the NRA after crediting payments he made in advance of the trial.

Over the course of a six-week trial, the Office of the Attorney General (OAG) presented evidence revealing the extent of the NRA and its senior leaders’ violations of the law and misuse of NRA funds. The evidence presented included:

• Invoices of repeated private flight trips to the Bahamas taken by Wayne LaPierre with friends and family and paid for by the NRA that were allowed by Phillips; 
• Expense reports submitted by Wayne LaPierre and paid by the NRA for reimbursement of outdoor mosquito treatment at his house, landscaping for his house, and gifts for friends and family; 
• Lucrative NRA contracts given to companies owned by LaPierre’s friends, from whom he received valuable gifts, with payments to such companies approved and facilitated by Phillips; 
• Invoices worth more than $4 million dollars from the NRA’s then-largest vendor, Ackerman McQueen, described as “out-of-pocket” expenses with no detail and which Phillips allowed to be used as a pass-through for expenses incurred by NRA Executives, including high-end travel expenses for Wayne LaPierre and hair and makeup expenses for LaPierre’s wife; and
• Testimony from whistleblowers detailing harassment, intimidation, or other forms of retaliation by the NRA for raising concerns about the misuse of funds. 

The second phase of Attorney General James’ trial against the NRA, LaPierre, and Frazer is set to begin on July 15 before Justice Joel Cohen, sitting without a jury, to determine non-monetary relief. 

Governor Hochul Updates New Yorkers on Extreme Weather

 

Governor Hochul: “This is highly unusual weather for this time of year, or actually any time of year for the State of New York, so we must be vigilant. Listen to the cell phone alerts that are going off on your cell phones from the National Weather Service. Take them seriously. We've already seen homes that have been flattened, images of streets and roads, power lines are down — that's occurring in real time right now and it could be coming your way depending on what part of the State you're in. So please take it very seriously."

Hochul: “My teams have communicated with every single emergency management team at the county level. I've been in contact with many county executives and mayors as well, throughout the morning and the early afternoon. We also brought in personnel from multiple state agencies: State Police, Thruway Authority, DOT, DEC — and others who are prepared to really cut up the limbs that may be falling on roads and taking down the power lines with them and creating very hazardous conditions.”

Earlier today, Governor Kathy Hochul updated New Yorkers on extreme weather. Good afternoon. Tropical storm Beryl continues to be barreling throughout the State of New York. We have just entered the third hour of what is going to be at least a 10-hour major storm event. I want to take a couple minutes to lay out the risks that we're seeing, some of the weather events that have already happened, and what we're anticipating over this next day. And also talk about the State resources that we've already deployed.

Today's weather is what we call a triple header. Three major concerns. First of all, thunderstorm and tornado threats, but also reports of touching down in places in Chautauqua County, Silver Creek, as well as the town of Eden — which is right near my hometown of Hamburg, so, I know exactly what that area is all about. It's a more rural area — as it's heading into East Aurora. So, I've already been in communication with the county executives of Chautauqua County, as well as Erie County to find if there's any resources they need. They're out there currently assessing the damage from what are likely to be tornadoes, but that will not be actually confirmed until tomorrow.

So, there are multiple warnings going out from this area, but I have to warn everyone myself, because it goes all the way on a map from Jamestown up to Plattsburgh, literally dissecting the entire State of New York. Everything North of there is under a tornado watch. This is highly unusual weather for this time of year, or actually any time of year for the State of New York, so we must be vigilant.

Listen to the cell phone alerts that are going off on your cell phones from the National Weather Service. Take them seriously. We've already seen homes that have been flattened, images of streets and roads, power lines are down — that's occurring in real time right now and it could be coming your way depending on what part of the State you're in.

So please take it very seriously. Also, we’re seeing the impacts of this storm heading towards the North Country with high volumes of heavy rain. And we anticipate there'll be flash flooding, which occurs very quickly — especially dangerous for homes and businesses that are along the waterways and the many streams and rivers that we have in the North Country.

And right now, we're expecting to see the same level — the same risk level — that happened last year in the Catskill area — Highland Falls — when we had a 1,000-year flooding event, which was rather cataclysmic. Much destruction to the downtown area as well as neighboring homes. And so, the rainfall accumulates, it saturates the ground, and then we expect massive flooding.

So, this rainfall should stop around 10 p.m. tonight, but the risk of flooding continues into tomorrow. And if that's not enough — 1, 2, 3 — we can now have extreme heat on top of it all. It's not as dangerous as last month's heatwave because we don't think they're going to continue over the course of a week — but we're seeing it in places like even Ithaca in the summertime, which is usually a pretty mild time of year for places in upstate New York.

It's a 106 degree real-feel on your skin. So, in New York City, the temperature will feel like 97 degrees. The challenge also is the power outages, either from the down lines from the tornadoes or from the heavy rains or from the high winds. So, these all provide a major public health risk for us right now. So we're prepared.

My teams have communicated with every single emergency management team at the county level. I've been in contact with many county executives and mayors as well, throughout the morning and the early afternoon. Our emergency operations is open, led by Commissioner Jackie Bray. We also brought in personnel from multiple state agencies: State Police, Thruway Authority, DOT, DEC — others who are prepared to really cut up the limbs that may be falling on roads and taking down the power lines with them and creating very hazardous conditions.

So, 4,000 road workers from the DOT and Thruway, 6,000 utility workers who are already being deployed, but are prepared to go anywhere in the State to restore power as soon as possible.

We're not expecting a long duration before restoration occurs, but one never knows. So, everyone should be ready with their own flashlights and ways to keep cool and know where your county cooling centers are in the event that you're in a high temperature area and you lose your power.

We also have our nine swift water rescue teams prepared to be activated from the DEC. As I mentioned, the State Police are ready to help with traffic. So again, this is what New Yorkers need to do: stay vigilant. Do not assume that you can go out in your vehicle in one of these major storm events, especially in the areas of high flooding. It only takes two feet of water on the ground that can sweep your vehicle away and take you into a very dangerous situation and possible loss of life.

So, flash flooding alerts will continue. Have a “go bag” ready in case you need to evacuate, especially if you're anticipating the conditions that are just continuing to deteriorate. Batteries, flashlights, food, medicine, and talk to your family about where you'll go if you need to evacuate.

And if there's other specific warnings related to if a tornado is coming to your area as well, we're providing that information. So, we will get through this together. New Yorkers, we always do, but remember, it's not just you and your family, you have neighbors. Look out for individuals — our senior citizens who are very vulnerable.

Make sure you take care of your pets. And again, this is a triple — a trifecta — storm that's hitting us right now as we speak, and I'm going to continue giving updates throughout the day and afternoon. My team is out there as well. So, just want to remind all New Yorkers, stay safe and continue monitoring the situation very closely.

NYS Comptroller DiNapoli Releases Audits

 

New York State Comptroller Thomas P. DiNapoli announced today the following audits have been issued.

Department of Health – Medicaid Program – Improper Payments for Brand Name Drugs (Follow-Up) (2024-F-9)

New York’s Medicaid program, administered by the Department of Health (DOH), covers medically necessary prescription and non-prescription drugs. State law directs pharmacies to substitute prescribed drugs with less expensive drugs containing the same active ingredients, dosage form and strength. A prior audit, issued in December 2022, found $1,102,823 in Medicaid overpayments for brand name prescription drugs where generic drugs were available. The follow-up found DOH officials instituted a system enhancement that identified certain drugs as generic, but that the system enhancement did not apply to all Food and Drug Administration-approved generics. Further, since the initial audit, Medicaid has paid an additional $6.3 million for drugs that appear to be generic drugs but were paid using brand name drug pricing methods, and the Office of the Medicaid Inspector General has made minimal progress in reviewing and recovering any improper payments identified in the initial report. Of the initial report’s three audit recommendations, two were not implemented and one was partially implemented.

Homes and Community Renewal – Division of Housing and Community Renewal – Physical and Financial Conditions at Selected Mitchell-Lama Developments Located Outside New York City – Sunnyside Manor: Unauthorized Bank Account (2024-S-12)

The Mitchell-Lama Housing program was created to provide affordable rental and cooperative housing to middle-income families. Pursuant to the New York Codes, Rules and Regulations, program developments must open a bank account to deposit all rent receipts and other miscellaneous operating income and use this account to disperse all expenses for operations. Auditors found that the Sunnyside Manor development’s Board of Directors (Board) held a checking account (with an average monthly balance of $14,007 for the 3 fiscal years ended March 31, 2022) separate from the development’s operating accounting that, according to the property manager, included deposits of community room rental income. In addition to these deposits, auditors identified transactions, totaling $51,048, paid from Sunnyside Manor’s operating account to the Board-held account. Bank statements for the Board-held account showed numerous questionable debit card transactions, including Amazon purchases (such as vitamins, a treadmill mat, a cooking apron, and toys) totaling $2,512 and restaurant payments totaling $1,723.

State Education Department (Preschool Special Education Audit Initiative) – UCP of Niagara County dba Empower – Compliance with the Reimbursable Cost Manual (2023-S-3)

United Cerebral Palsy Association (UCP) of Niagara County dba Empower (Empower), a not-for-profit special education provider located in Niagara Falls, is approved by the State Education Department (SED) to provide education services to children with disabilities up to age 5. For the 3 fiscal years ended June 30, 2020, Empower reported approximately $6.6 million in reimbursable costs for the SED preschool cost-based programs. Auditors identified $1,141,685 in reported costs that did not comply with requirements.

Department of Labor – Controls and Management of the Unemployment Insurance System (Follow-Up) (2023-F-41)

One of the Department of Labor’s (DOL) key tasks in assisting the unemployed is administering the State’s Unemployment Insurance (UI) program. A prior audit, issued in November 2022, found deficiencies with DOL’s oversight and management of its UI system. During the pandemic, faced with the high demand for UI benefits and the need to process claims quickly, DOL resorted to stop-gap measures to compensate for system limitations, which resulted in misclassification of claims as State instead of federal liabilities, overpayment of claims, and supplemental spending to maintain the outdated UI system infrastructure while a new system was in development. DOL officials made some progress addressing the issues identified in the initial audit report, including continuing the development of a replacement system and collecting and analyzing data to improve the balance between fraudulent identity protection and streamlining the process for those in need of UI benefits. Of the initial report’s six recommendations, two were implemented, three were partially implemented, and one was not implemented.

Department of Health – Medicaid Program – Managed Care Payments to Unenrolled Providers (2021-S-6)

Medicaid managed care organizations establish provider networks by contracting with physicians, hospitals, and other providers to provide medical care to their members. The 21st Century Cures Act and additional federal guidance mandated that managed care in-network providers enroll as participating providers in the state Medicaid program by January 1, 2018 (with the exception of certain provider types). Through the screening and provider enrollment process, the Department of Health (DOH) gains a level of assurance over a provider’s validity to provide Medicaid services. Auditors found DOH does not monitor encounter claims, which detail member health care services and payments to providers, to identify inappropriate managed care payments to providers who are not enrolled in Medicaid. This and other weaknesses led to over $1.5 billion in improper and questionable payments.