TRENTON – Attorney General Christopher S. Porrino and the Office of the Insurance Fraud Prosecutor (OIFP) today announced that two brothers from Colts Neck each have been sentenced to six-and-a-half-year prison terms for masterminding a multi-level insurance fraud ring in which they paid illegal “runners” to recruit car crash victims as patients for chiropractic facilities they controlled, and also collected kickbacks for referring those victims for medical and legal services provided by others involved in the scheme.
Anhuar Bandy, 54, and his brother Karim Bandy, 55, must each pay a $100,000 fine and $50,000 reimbursement to insurance companies that paid thousands of fraudulent claims over a four-year period. Karim Bandy was sentenced before Superior Court Judge Thomas M. Brown in Mercer County on Friday. Anhuar Bandy was sentenced before Judge Brown on June 2.
Thirteen others members of the fraud ring - including a doctor, a lawyer, three licensed chiropractors, a paralegal and a licensed acupuncturist – have also been sentenced by Judge Brown in the scheme.
“Anhuar and Karim Bandy were the ringleaders of a morally bankrupt band of criminals. They lured unsuspecting accident victims into their scheme and then steered them toward corrupt medical and legal professionals in exchange for cash,” said Attorney General Porrino. “After years of illegally making money off the misfortune of others, the Bandy brothers are now paying the price for their criminal greed.”
“Our office has worked diligently to unravel the defendants’ web of lies and deceit and put a stop to a criminal enterprise that compromised the care of vulnerable accident victims and undermined the integrity of New Jersey’s legal, medical, and insurance industries, said Acting Insurance Fraud Prosecutor Christopher Iu. “As the masterminds behind this fraud ring, Anhuar and Karim Bandy have more than earned these significant prison sentences.”
In July 2015 both Bandy brothers pleaded guilty to second-degree insurance fraud in connection with charges brought against them and 10 other co-defendants in an April 2014 indictment by a state grand jury. Four others were also charged in the scheme.
The indictment charged that between June 1, 2009 and January 1, 2014, Anhuar and Karim Bandy illegally controlled several chiropractic facilities through purported “management companies” and “marketing companies” whose real purpose was to hide their ownership. New Jersey regulations require that chiropractic facilities be owned by licensed chiropractors or medical doctors; neither Bandy holds such titles.
In order to generate revenue for the chiropractic facilities, Anhuar and Karim Bandy used runners to bring motor vehicle accident patients to the facilities so the straw owners, could bill insurance carriers for services rendered at the facilities. An investigation determined that, through the scheme, the chiropractic facilities billed insurance companies for millions of dollars for services they purported to perform. The checks sent by the insurance carriers were deposited into the various accounts of the chiropractic facilities or the management companies. A large portion of the monies deposited into the accounts of the chiropractic facilities would then be paid to the Bandy management companies.
The runners were paid up to $1,000 for each patient that they recruited for medical treatment. An investigation determined that the runners retrieved motor vehicle accident reports at local police stations, under the Open Public Records Act rules, and then visited the homes of the motor vehicle accident victims in an attempt to persuade them to utilize the services of the chiropractic facilities controlled by the Bandy brothers. The runners picked up the motor vehicle accident patients from their home and drove them to the chiropractic facilities. An investigation determined that payments were made to companies incorporated by Karim Bandy for over a thousand referrals of patients for medical treatment and/or clients for legal representation.
The following professional service providers pleaded guilty and were sentenced in the scheme:
- Dr. Mark Schwartz, D.O., 50, of Park Ridge, owner of MLS Medical in Park Ridge who pleaded guilty to one count of third-degree health care claims fraud and was sentenced to three years of probation and 40 hours of community service.
- David Walker, Esq., 58, of Rockaway, a personal injury lawyer who pleaded guilty to one count of third-degree conspiracy and was sentenced to two years of probation and 40 hours of community service.
- Alexandra Gallegos, 55, of Piscataway, a paralegal who received a percentage of the profits of Walker’s firm, who filed personal injury claims on behalf of the motor vehicle accident patients. She pleaded guilty to third-degree conspiracy and third-degree criminal use of runners and was sentenced two years of probation, 40 hours of community service, and a $5,000 criminal fine.
- Edward Formisano, D.C., 55, of Roxbury, a chiropractor and purported owner of Eclipse Chiropractic, located in Plainfield, Lakewood Chiropractic, located in Lakewood, Liberty Chiropractic Center, located in Jersey City, and Chiropractic Spine Center, located in Perth Amboy. He pleaded guilty to one count of third-degree health care claims fraud and was sentenced to two years of probation and 40 hours of community service.
- Louis Brown, D.C., 65, of Rahway, a chiropractor and purported owner of True Healing and Wellness, located in New Brunswick, New Century Chiropractic, located in Dover, and Wellspring Rehabilitation, located in North Plainfield. He pleaded guilty to one count of third-degree criminal use of a runner and was sentenced to two years of probation and 40 hours of community service.
- Gerald Roth, D.C., 69, of Highland Park, a chiropractor who pleaded guilty to one count of third-degree criminal use of runners and was sentenced to one year of probation.
- Sergey Lipschitz, 44, of Morganville, an acupuncturist who pleaded guilty to one count of third-degree insurance fraud and was admitted into the Pretrial Intervention Program.
The following individuals pleaded guilty to criminal use of runners (3rd degree) and were sentenced:
- Cesar Huaman, 48, of Orlando, Fla., who also recruited other runners in the scheme, also pleaded guilty to third-degree conspiracy. He was sentenced to two years of probation.
- Estefania Frias, 27, of Plainfield, who is Anhuar Bandy’s fiancé; was sentenced to two years of probation, 40 hours of community service, a $2,000 criminal fine, and $2,000 in restitution.
- Bernardo Neiman, 55, of Elizabeth, was sentenced to one year of probation.
Lillian Frias, 55, of Plainfield, who is Estefania Frias’ mother; Albert Lee Hughes, 35, of Orlando, Fla.; and Anali Rivera, 29, Somerville, were all admitted into the Pretrial Intervention Program based on the charges in the indictment. Charges are pending against Rene Lacotera, 39, of Elizabeth; who is being sought on a fugitive warrant.
In 2004, Anhuar Bandy was convicted on charges of criminal racketeering, conspiracy, health care claims fraud, and theft charges brought by the Office of the Insurance Fraud Prosecutor. Bandy subsequently served approximately four years in state prison.
Deputy Attorney Cheryl Maccaroni, Bureau Chief, Private Insurance, represented the State at the sentencing of today. Lt. Joseph Waters, Investigator/Analyst Marwa Kashef coordinated the investigation. Detectives Janet Amberg, Amy Carson, Heather Pittman, and Analyst Bethany Schussler assisted in the investigation. Acting Insurance Fraud Prosecutor Iu thanks the Special Investigations Units and counsel for the following insurance Companies: Allstate, Plymouth Rock, Liberty Mutual, Geico and Travelers; as well as the New Jersey Department of Banking and Insurance, the New Jersey Division of Taxation, and the National Insurance Crime Bureau for their assistance in the investigation.
Acting Insurance Fraud Prosecutor Iu 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.
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