Calif. A.G. Obtains Record State Prison Sentence for Medi-Cal Fraud

May 14, 2004

California Attorney General Bill Lockyer has obtained a prison sentence of more than 18 years for a key player in an organized crime ring that reportedly defrauded California’s Medi-Cal system of more than $20 million. The sentence is the longest in California history for Medi-Cal fraud.

“This record sentence is the result of an intensive, five-year investigation into and prosecution of a sophisticated criminal operation that stole patient and physician identify information and submitted false claims in order to steal millions of dollars from the state’s Medi-Cal system,” Lockyer said. “It also illustrates the aggressive stance my office takes in prosecuting those who try to cheat a system that more than six million Californians rely on for vital health care.”

Orange County Superior Court Judge Kazuhiru Makino sentenced Tahir Saeed Sherani to 18 years and eight months in California prison. Sherani, 38, was convicted by an Orange County jury on January 6, 2004, on 21 felony counts, including identify theft, Medi-Cal fraud, grand theft, conspiracy and tax evasion. Sherani was ordered to pay criminal penalties of $5 million as well as $2.5 million in restitution to Medi-Cal and $903,000 in back taxes to the state.

The criminal complaint was filed in 2002 after a three-year investigation into Medi-Cal fraud by the California Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA). The BMFEA worked closely with the New Jersey Attorney General’s Office, the U.S. Department of Health and Human Services Office of the Inspector General and the California Department of Health Services. Twenty-three of 29 defendants in the case have been convicted of charges, including endangering public health, identity theft, submitting false claims to Medi-Cal and Medicare, money laundering, tax evasion and grand theft. Charges are pending against the remainder.

The ring-leader of the operation, Surinder Singh Panshi, of South Orange, New Jersey, was sentenced in California in September 2003 to 16 years in prison on four felony counts including Medi-Cal fraud, grand theft, acts injurious to public health and tax evasion. He also was ordered to pay $2.5 million in restitution and $124,000 in back taxes to the state.

The crime ring reportedly operated a complex scheme using more than 15 clinical labs in Los Angeles, Orange and Riverside counties to illegally bill government health programs for tests that were never authorized by doctors, nor performed. Medical clinic employees were paid to draw excess blood from unsuspecting patients, and other blood was purchased from runaway children, homeless individuals and drug addicts.

The blood was tested at labs controlled by the crime operation, which then billed Medi-Cal using stolen confidential patient information that was shared between the labs. The scheme also involved the theft of doctors’ identities to create false records showing the physicians authorized the labs to perform the tests. The crime ring also fostered a black market for blood and the stolen identities obtained by the defendants.

Some of the money stolen from Medi-Cal and Medicare was laundered through a small market in Jersey City, New Jersey. Checks issued by California, totaling approximately $15.5 million, were paid to the labs for fraudulent services, then cashed at the New Jersey market using fake identification.

The funds also were laundered through several clinical labs, including four that Sherani reportedly operated. Those labs were Physician’s Laboratory Institute Inc., in Signal Hill; Imedics Laboratory Inc., in San Dimas; Medical and Facility Diagnostic Laboratory Inc., in Lakewood; and Rica Lab Inc., in San Gabriel.

Sherani was convicted in New Jersey in 1999 of conspiracy, kickbacks, Medicaid fraud and money laundering. The criminal activity for which he was convicted this month occurred while he was on bail and on probation in the New Jersey charges. Sherani lived in Anaheim and West Covina while operating the labs in California.

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