A.G. Schneiderman Announces Arrests Of Two Queens Residents For Allegedly Defrauding New York State Of More Than $3 Million Dollars
Shahzad Nawaz, The Owner Of Vital Pharmacies Inc., Is Charged With Submitting False Claims To Medicaid And The AIDS Drug Assistance Program For Dispensing Diverted HIV Medication to Patients And For Billing Medicaid For Medication That Was Never Actually Dispensed To Patients
Schneiderman: My Office Will Hold Accountable Those Who Violate The Trust Of The Community And Exploit Vulnerable Members Of Our Society For Personal Financial Gain
NEW YORK, N.Y. – Attorney General Eric T. Schneiderman announced the arrests and indictments yesterday of Shahzad Nawaz a/k/a “Prince Malik,” 44, of Bayside, his business Vital Pharmacies Inc. d/b/a “Vital Drugs,” and the company’s General Manager Irfan Nawaz, 36, of Franklin Square for allegedly stealing more than $3 million from the state Medicaid program and the AIDS Drugs Assistance Program (ADAP). Also indicted were Michael F. Bobadilla, 34, of Bayside, and shell companies, Empire State Surgical and Wholesale Inc. and Exclusive Health and Beauty Wholesale Inc., alleged fictional companies that the defendants used to launder their criminal proceeds.
“These defendants allegedly participated in stealing millions from public funds by placing profit ahead of the well-being and the lives of their seriously ill patients,” Attorney General Schneiderman said. “My office will hold accountable those who violate the trust of the community and exploit vulnerable members of our society for personal financial gain.”
From June 2007 through September 2011, it is alleged that Vital Drugs, acting through its owner and President, Shahzad Nawaz, a part-time rap artist, and its General Manager Irfan Nawaz, paid patients not to fill their HIV prescriptions and to forego receiving life-saving medications in return for side payments. Shahzad and Nawaz are also charged with dispensing to patients “diverted” medications obtained from unlicensed vendors. Michael Bobadilla allegedly created Empire State Surgical and Wholesale Inc. and Exclusive Health and Beauty Wholesale Inc., both shell companies, to help Shahzad Nawaz and Vital Drugs launder the money they obtained from their criminal conduct.
To get paid, Vital Drugs is charged with then submitted false claims to Medicaid or ADAP that certified that the pharmacy had dispensed the medications to patients in accordance with state and federal law. An audit of Vital Drugs’ prescription medication inventory charges that from June 2007 through September 2011, Vital Drugs submitted more than $3 million worth of false claims to Medicaid and ADAP for HIV medications that it had not dispensed to patients or that it obtained from illegitimate sources.
Medicaid or ADAP would not have paid these claims had they known that the HIV medications actually dispensed were diverted from sources outside the regulated drug supply chain, or that such medications were not dispensed at all, as charged. Medicaid and ADAP require that all medications reimbursed through their respective programs be acquired from legitimate and registered pharmaceutical wholesalers. Prescription medications obtained outside of legitimate distribution channels are considered diverted and present a health and safety risk as their authenticity, purity, condition and strength cannot be tracked or verified.
Shahzad Nawaz, Irfan Nawaz, and Vital Drugs are each charged with Grand Larceny in the First Degree, a Class B Felony, which carries a maximum penalty of up to 25 years in prison. In addition, Shahzad Nawaz, Empire State Surgical and Wholesale Inc., and Exclusive Health and Beauty Wholesale Inc. are each charged with the Class C Felony of Money Laundering in the Second Degree, which carries a maximum penalty of up to 15 years in prison.
The Defendants were arraigned before Acting Supreme Court Justice Barry Kron in New York State Supreme Court, Queen County. Bail was set at $250,000 for defendant Shahzad Nawaz and at $100,000 for Irfan Nawaz.
The Attorney General thanks Bristol Meyer Squibb and the New York State Board of Pharmacy for their assistance in this investigation.
The investigation was conducted by MFCU Special Investigator Denitor Guerra and Special Auditor Investigator Meenal Shah with the assistance of Deputy Chief Investigator Kenneth Morgan, Principle Auditor Investigator Paul Erhardt and Regional Chief Auditor Thomasina Smith.
The case is being handled by Special Assistant Attorneys General Herman Wun, Travis Hill, David Abrams, and Kathryn Harris with the assistance of New York City Regional Director Christopher M. Shaw. Thomas O’Hanlon is MFCU’s Chief of Criminal Investigations – Downstate. MFCU is led by Acting Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. The Criminal Division is led by Executive Deputy Attorney General Kelly Donovan.
The charges against the defendants are accusations and the defendants are presumed innocent until and unless proven guilty.
