Acting Attorney General John J. Hoffman announced that the Office of the Insurance Fraud Prosecutor, Medicaid Fraud Control Unit, arrested the owner of a network of diagnostic imaging centers for his alleged role as the leader of a criminal enterprise that provided hundreds of thousands of dollars in illegal kickbacks to medical practitioners in exchange for patient referrals to his testing facilities.
In addition, the defendants allegedly submitted fraudulent applications to the New Jersey Medicaid program and Department of Health, and evaded paying income and franchise taxes, among other illegal activities. The enterprise allegedly generated millions of dollars in illegal profits. Twelve others were also charged in the alleged scheme.
Rehan “Ray” Zuberi, 45, of Boonton Township, the owner of Diagnostic Imaging Affiliates (DIA) of Hackensack and the alleged leader of the criminal enterprise was arrested Tuesday (June 17). Zuberi’s bail was set at $1 million by Superior Court Judge Stuart A. Minkowitz in Morris County.
DIA, which is owned by Zuberi and used to manage his enterprise, is an umbrella corporation that manages numerous subsidiary diagnostic imaging facilities, which are located in northern and central New Jersey. More than a dozen search warrants were executed Tuesday morning at locations that included 10 DIA-owned facilities, the offices of DIA’s billing company and three homes. A complete list of search warrant locations can be found at the end of this press release.
The search warrants were executed by more than 100 investigators from the following agencies:
- Office of the Insurance Fraud Prosecutor
- Medicaid Fraud Control Unit
- Division of Criminal Justice
- Department of the Treasury
- Division of Taxation
- Department of Banking and Insurance
- Medicaid Fraud Division of the Office of the State Comptroller
- Essex County Prosecutor’s Office
- Morris County Prosecutor’s Office
- Passaic County Prosecutor’s Office
- Regional Computer Forensics Laboratory.
In the course of executing the search warrants, the Office of the Insurance Fraud Prosecutor seized many of the Zuberi enterprise’s assets, including more than $100,000 cash, high-end sports cars such as Lamborghinis and Ferraris, as well as other luxury items, and placed liens on the imaging equipment and Zuberi’s 9,000 square foot mansion.
“This alleged criminal enterprise wove its web of deception through a governmental program and at least two agencies,” Acting Attorney General Hoffman said. “This enterprise allegedly bilked millions of dollars from Medicaid, a program designed to help New Jersey’s most vulnerable population, failed to pay state taxes and submitted numerous fraudulent applications to the Department of Health. This type of criminal activity impacts not just the agencies defrauded, but also law-abiding, tax-paying residents of New Jersey who are forced to cover the costs of the fraud.”
“Kickbacks are a bane of the insurance market,” Acting Insurance Fraud Prosecutor Ronald Chillemi said. “We will not tolerate greed dictating where doctors refer their patients for testing, treatment or other services. Instead, medical practitioners should base their decisions solely on their patients’ medical needs.”
Deputy Attorney General Christopher Ruzich and Detectives Anthony Correll and Kevin Gannon coordinated the investigation with assistance from Detectives Jason Volpe and Yevgeny Gershman.
They worked closely with Special Agent William Makar from the Division of Taxation. Analysts Terri Drumm and Dalisha Carmichael of the Office of the Insurance Fraud Prosecutor assisted in the investigation.
The following owners/operators of DIA companies were also charged Tuesday with first-degree racketeering for their alleged roles in the scheme:
- Humara Paracha, 38, of Boonton Township, Rehan Zuberi’s wife and president of DIA;
- Baber “Bob” Eskar, 49, of Pompton Lakes, Zuberi’s close associate and chief operating officer of DIA;
- Rohit Gupta, 38, of Edison, President of American Imaging of Edison and owner of Medimax, a medical billing company that processed DIA’s insurance claims;
- Faisal Paracha, 30, of Fords, Rehan Zuberi’s brother-in-law, and part owner/manager of American Imaging of West Orange
The following individuals also charged Tuesday are allegedly officers/managers of the companies within Zuberi’s enterprise:
- Nawab Zuberi, 73, of Boonton, Rehan Zuberi’s father, and officer/director of DIA;
- Salman Siddiqui, 37, of Lake Hopatcong, Rehan Zuberi’s brother-in law, and office manager of American Imaging of Montville;
- Felix Clarin, 44, of Florham Park, manager of American Imaging of Jersey City;
- Judith DeLeon, 50, of Bloomfield, manager of American Imaging of Hackensack;
- Natividad Urena, 31, of Clifton, manager of American Imaging of Union City.
Abid Syed, 37, of East Hanover, also was charged as the alleged financial controller of Zuberi's alleged enterprise. Thomas Grecco, 25, of Clifton, who worked in the accounting department of American Imaging of Hackensack, and Jose Lopez, 51,of Passaic, an employee of the organization, were charged for their alleged role in the scheme.
It is alleged that, under Rehan “Ray” Zuberi’s direction, the organization paid more than $300,000 in illegal kickbacks to multiple 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 alleged kickbacks were paid using checks from “shell” corporations created by the Zuberi enterprise and gift cards/certificates.
The Zuberi enterprise also disguised the payment of kickbacks by providing doctors services (e.g. patient transportation). By obtaining referrals through the alleged kickback scheme, the Zuberi enterprise may have generated millions of dollars in illegal profits.
The investigation further determined that the Zuberi enterprise allegedly financially facilitated the criminal enterprise by making numerous structured cashed withdrawals to circumvent the statutory reporting requirements that are triggered by large cash withdrawals.
In 1998, Rehan “Ray” Zuberi, who had been the manager of a medical clinic in Paterson, pleaded guilty to second- and third-degree charges for having defrauded Medicaid. The case was prosecuted by the Medicaid Fraud Control Unit. As a result of his guilty plea, Rehan Zuberi was sentenced to a six-year prison term, and was debarred from the Medicaid program.
It is alleged that, after Zuberi was released from prison, he has used nominees to submit more than a dozen fraudulent applications for provider status to the Medicaid program and more than 30 fraudulent licensing applications to the Department of Health.
More specifically, Rehan “Ray” Zuberi used his co-conspirators/accomplices to submit the applications and hide the fact that he was an owner from the Medicaid program and the Department of Health. By concealing his ownership of the facilities, Zuberi and others in the organization were allegedly able to fraudulently obtain provider status and submit more than 30,000 claims to Medicaid and thousands more to other healthcare insurance companies. The submission of these claims allegedly resulted in Medicaid payments of approximately $8 million between 2008 and 2013.
An investigation determined that Rehan “Ray” Zuberi and Humara Paracha allegedly failed to pay income taxes to the State of New Jersey since 2009 despite the fact that the criminal enterprise generated millions of dollars in profits.
The charges announced today are merely accusations and the defendants are presumed innocent until proven guilty. Because the charges are indictable offenses, they will be presented to a grand jury for potential indictment. First-degree crimes carry a sentence of 10 to 20 years in state prison and a criminal fine of up to $200,000 while second-degree crimes carry a sentence of five to 10 years in state prison and a criminal fine of up to $150,000.
Third-degree crimes carry a sentence of three to five years in state prison and a criminal fine of up to $15,000. A list of the specific charges against each of the defendants is below.
Acting Insurance Fraud Prosecutor Chillemi noted that 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.