A medical supply company submitted $1.42 billion in false and fraudulent health insurance claims. An Ohio man has now admitted helping move millions of dollars generated by the operation through U.S. banks.
Eldar Zarbavel, 45, of Pepper Pike, pleaded guilty to one count of money laundering after facilitating approximately $3.4 million in health care fraud proceeds for a transnational criminal organization, according to Cleveland.com.
Federal prosecutors say the organization, based in Russia and elsewhere, was behind a massive operation targeting Medicare and private health insurers. Zarbavel helped it access the U.S. financial system by opening bank accounts in Northeast Ohio for Royce Medical Supply LLC, a Florida durable medical equipment company.
Over just two months in 2024, Zarbavel facilitated the deposit, transfer and withdrawal of roughly $3.4 million in fraud proceeds. He is now the 16th person convicted in Operation Gold Rush, which the Justice Department describes as the largest health care fraud case it has ever prosecuted.
Royce Medical Supply Submitted $1.42 Billion in Claims
Royce Medical Supply became one piece of a far larger network of durable medical equipment companies used by the organization. Between July 2022 and July 2024, the organization submitted approximately $1.42 billion in false and fraudulent claims to Medicare and other health insurers through Royce, according to the U.S. Department of Justice.
The Centers for Medicare & Medicaid Services suspended reimbursement on nearly all of those claims, but some were still paid. The successful reimbursements created another challenge for the organization, getting the fraud proceeds into the U.S. financial system and moving the money elsewhere.
The Fraud Money Initially Looked Legitimate
Prosecutors said reimbursement checks generated by the fraudulent claims came from Medicare and established private health insurance companies. Because legitimate insurers issued the payments, the proceeds initially appeared to be ordinary health care revenue.
The organization allegedly used that appearance of legitimacy to funnel fraud proceeds into accounts opened for durable medical equipment companies. From there, prosecutors say the broader network siphoned money to shell companies and banks overseas.
Federal investigators say the organization also relied on false sale documents and corporate registration records to make nominee owners appear to have legitimate ownership and control of the medical equipment companies and their bank accounts, concealing who actually controlled them.
The Wider Scheme Used Medical Companies Across the Country
The Justice Department said the organization acquired dozens of durable medical equipment companies and used foreign nationals and others as nominee owners. Prosecutors allege it then used stolen identities and personal identifying information belonging to more than one million Americans in all 50 states, including elderly and disabled people, to submit fraudulent health care claims.
When Operation Gold Rush was announced, federal authorities said the organization had submitted more than $10.6 billion in fraudulent Medicare claims for durable medical equipment. Government systems prevented the organization from receiving the vast majority of that money.
The scheme nevertheless resulted in approximately $41 million in Medicare payments to the medical equipment companies and nearly $900 million in payments from Medicare supplemental insurers, according to the Justice Department.
Federal prosecutors also allege that money was eventually routed through shell companies and banks in countries including China, Singapore, Pakistan, Israel and Turkey, with cryptocurrency used as another method of concealing the money trail.
He Faces Up to 20 Years in Prison
Zarbavel helped provide that financial access for Royce Medical Supply. Court records say he opened accounts for the Florida company at banks in Northeast Ohio.
Between June and July 2024, at the direction of members of the organization, he facilitated approximately $3.4 million in deposits, transfers and withdrawals for its benefit. Zarbavel pleaded guilty on Aug. 13 and is scheduled to be sentenced Dec. 16.
The money-laundering count carries a maximum potential sentence of 20 years in federal prison. His actual punishment will be determined by a federal judge after consideration of federal sentencing guidelines and other statutory factors.
Federal authorities say 35 people have now been charged through Operation Gold Rush. Zarbavel is the 16th person convicted in connection with the scheme.
Check Medicare Statements for Equipment You Never Ordered
Medicare advises beneficiaries to review their Medicare Summary Notices, receipts and other statements for services, supplies or equipment they did not receive. An unfamiliar supplier, unexpected medical equipment or a claim for something a patient never ordered can be a sign that personal information has been misused.
Beneficiaries should also guard their Medicare numbers like other sensitive financial information. The Department of Health and Human Services Office of Inspector General warns people to be suspicious of unsolicited offers for free medical equipment that require a Medicare number and recommends that medical equipment be approved by a health care provider the patient knows and trusts.
If a questionable charge appears, Medicare recommends first contacting the provider or supplier in case the entry resulted from an error. If the issue cannot be resolved, or the beneficiary believes a Medicare number has been used fraudulently, the matter can be reported to 1-800-633-4227. Suspected Medicare fraud can also be reported to the HHS Office of Inspector General.