TRENTON – Acting Attorney General John J. Hoffman and the Office of the Insurance Fraud Prosecutor (OIFP) announced today that the ringleader of a major criminal enterprise and his wife pleaded guilty to charges that they bribed dozens of doctors in exchange for referrals, worth several million dollars, to the medical imaging centers they owned and operated. It was also announced that three other co-conspirators in the bribery scheme pleaded guilty to their roles.
Rehan Zuberi, 46, of Boonton, pleaded guilty to first-degree financial facilitation of criminal activity and second-degree conspiracy to commit commercial bribery before Morris County Superior Court Judge Stuart Minkowitz. Later in the day, Zuberi pleaded guilty to second-degree conspiracy to commit theft by deception before Bergen County Superior Court Judge James Guida. That charge stemmed from a separate OIFP investigation that found that Zuberi had received reimbursements from insurers for repairs well in excess of what he had actually paid, thus receiving more than $100,000 in overpayments. Zuberi’s wife, Humara Paracha, 39, of Boonton, pleaded guilty to third-degree conspiracy to commit commercial bribery.
The plea agreement calls for Zuberi to receive a 10-year state prison sentence with a four-year non-parole eligibility period and for Paracha to receive three years of probation. The agreement also requires them to pay restitution in the amount of $1 million. Zuberi will also be banned for life from being a provider under the Medicaid program, or working in a Medicaid facility, and all other government health programs.
“Zuberi built a company that made millions and whose business model was predicated on paying bribes and making misrepresentations to insurance companies,” said Acting Attorney General John Hoffman. “His criminal enterprise was noteworthy for the sheer volume of greedy transactions that left a long trail of evidence that led to this successful prosecution.”
“Bribery undermines the insurance market, causing business to flow to the wrong places, which inflates rates for everyone that pays premiums,” said Acting Insurance Fraud Prosecutor Ronald Chillemi. “To their patients, a doctor’s opinion is sacred, and it should not be for sale.”
Zuberi, his wife and 13 associates were arrested in June in an operation called “Operation RayScam”. At the time, Zuberi was the owner of Diagnostic Imaging Affiliates (DIA), which was an umbrella corporation that managed numerous diagnostic imaging facilities throughout northern and central New Jersey. From 2008 to 2014, Zuberi and employees of the organization paid several million dollars in kickbacks to dozens of medical practitioners, including chiropractors and physicians, in return for patient referrals to DIA testing centers for expensive diagnostic tests (e.g., MRIs and PET scans). These kickbacks were paid from “shell” corporations created by the Zuberi enterprise and were delivered in the form of cash, checks, gift cards, lavish dinners and expensive vacations. The Zuberi enterprise also disguised the payment of kickbacks by providing doctors services (e.g., patient transportation and office renovations). By obtaining referrals through the alleged kickback scheme, the Zuberi enterprise made millions of dollars in illegal profits. Under state law, medical practitioners are not permitted to accept a benefit in exchange for a referral.
The investigation further determined that Zuberi financially facilitated the criminal enterprise by making numerous structured cash withdrawals to circumvent the statutory reporting requirements that are triggered by large cash withdrawals.
In October, OIFP arrested seven medical practitioners for allegedly taking illegal kickbacks worth approximately $200,000 from DIA in exchange for patient referrals to the company’s testing facilities. In a span from 2008 to 2013, the medical practitioners allegedly made more than 20,000 referrals to DIA centers, which resulted in payments of millions of dollars from private insurance carriers and the Medicare and Medicaid programs.
Last month, three others who participated in Zuberi’s scheme pleaded guilty to their respective crimes:
- Dr. Simon B. Santos, 73, of Guttenberg, pleaded guilty to third-degree commercial bribery in Morris County Superior Court. In pleading guilty, Santos admitted that beginning prior to April 2010, he received an approximate total of $30,000 in cash bribes directly from Zuberi, the owner of Diagnostic Imaging Affiliates. In addition to the cash, Santos said he received airline tickets, event tickets and rent payments from Zuberi for space that Zuberi did not use. Santos said that Zuberi explained that he expected referrals in exchange for the bribes and that these illicit transactions took place primarily at his practice in Union City and at Zuberi’s office in Hackensack.
- Jose Lopez, 52, of Passaic, pleaded guilty to third-degree commercial bribery and third-degree financial facilitation of criminal activity in Morris County Superior Court. Lopez admitted that between 2010 and 2014 he offered payments to medical practitioners for patient referrals to DIA facilities owned by Zuberi. In that same span, he admitted to making numerous structured cash withdrawals to circumvent the statutory reporting requirements that are triggered by large cash withdrawals.
- Felix Clarin, 45, of Florham Park, pleaded guilty to third-degree commercial bribery in Union County Superior Court. Clarin admitted that between 2010 and 2014 he offered payments to medical practitioners for patient referrals to DIA facilities owned by Zuberi.
Medical Fraud Control Unit Chief Deputy Attorney General Peter Sepulveda represented OIFP at the plea hearing. Lieutenant Anthony Butler and Detective Anthony Correll coordinated the investigation with assistance from Detectives Jason Volpe, Yevgeny Gershman and Kevin Gannon. They worked closely with Special Agent William Makar from the Division of Taxation. Analyst Terri Drumm of the Office of the Insurance Fraud Prosecutor assisted in the investigation.
Acting Insurance Fraud Prosecutor Chillemi noted that some important cases have started with anonymous tips. People who are concerned about insurance cheating and have information about a fraud can report it anonymously by calling the toll-free hotline at 1-877-55-FRAUD, or visiting the Web site at www.NJInsurancefraud.org. State regulations permit a reward to be paid to an eligible person who provides information that leads to an arrest, prosecution and conviction for insurance fraud.