Orange County Transport Company Accused Of Medicaid Fraud: NY AG

ORANGE COUNTY, NY — Three local residents and their four companies have been indicted over accusations that they stole millions from New York’s Medicaid program through fictitious billing and illegal kickback schemes, as well as engaging in fraud and money laundering, New York Attorney General Letitia James announced Thursday.

Arrested were Muhammad Rizwan Khan, Muhammad Usman Khan, and Farhan Khan. They and their related companies, Tristate Express NY, Inc., Meditrans NY, Inc., Empire Trans NY, Inc. , and A1 Class Car, Inc., were charged with stealing over $3.8 million from Medicaid.

In addition, the AG's office announced indictments and arrests of John Gouzos and Richard Sehl of Rensselaer County, and their related companies Medi Cab Corp., Jay Auto Care, Inc., and Hojo Detail Center, Inc. They were charged for stealing over $650,000 from Medicaid.

All five men were also charged with money laundering of their illegally obtained profits.

Medicaid reimburses approved transportation providers for transporting Medicaid patients to and from covered medical services. Prosecutors alleged that the companies operated schemes in which they illegally overcharged Medicaid for their transportation services.

"New Yorkers should be able to trust that all levels of the medical system – from doctors and hospitals to the companies driving them to their appointments – are acting honestly," James said in the news release.

Prosecutors alleged that between September 2019 and October 2023, the Khans and their companies paid Medicaid recipients to use their cabs, submitted claims for fictitious trips, and added fake tolls to trips that were far above any real toll that could be incurred in the area, regularly adding costs of up to $50 per trip. In total, they overcharged Medicaid by over $3.8 million, prosecutors said.

Guozos and Sehl and their respective companies were accused of also engaging in fraud, submitting false claims for transporting patients from addresses that were substantially farther away than where they really lived. In total, between December 2021 and March 2023, they overcharged Medicaid by over $650,000, prosecutors said.

A key part of both sets of operations was establishing kickback schemes involving Medicaid patients, prosecutors alleged, allowing the men and their companies to illegally recruit customers who they could then use to fraudulently bill more rides to Medicaid.

Prosecutors accused the Khans and their companies of making weekly kickback payments to Medicaid recipients for signing up with their companies, which gave them the identification numbers needed to submit false claims.

Guozos and Sehl are accused of paying numerous Medicaid patients a weekly kickback to request rides from addresses farther away from where they lived, allowing them to charge more per ride.

New York state law strictly prohibits all medical providers, including transportation companies, from paying or offering to pay cash kickbacks to anyone in return for the referral of medical services ultimately paid for by Medicaid.

In addition, prosecutors accused both groups of engaging in money laundering using shell companies they operated. The purposes of these money laundering schemes were to obtain the illegal proceeds of their frauds in cash and distribute kickbacks to Medicaid recipients they had recruited, the AG's Office said.

The Khans and their companies were charged with Grand Larceny in the First Degree and multiple counts of Healthcare Fraud in the First Degree, each count involving fraud greater than $1 million. They were also charged with counts of Money Laundering in the Second Degree and additional counts of Offering a False Instrument for Filing and violation of the Social Services Law.

Gouzos and Sehl and their company Medi Cab were charged with Grand Larceny in the Second Degree. They were also charged with two counts of Money Laundering in the Fourth Degree and felony counts of Offering a False Instrument for Filing and Falsifying Business Records.

The charges filed in this case are accusations. The defendants are presumed innocent until proven guilty in a court of law, the AG's Office said.

If convicted of the top count of Grand Larceny in the First Degree, Muhammad Rizwan Khan, Muhammad Usman Khan, and Farhan Khan each face up to 25 years in prison. If convicted of the top counts of Grand Larceny in the Second Degree and Health Care Fraud in the Second Degree, Gouzos and Sehl face up to 15 years in prison, the AG's Office said.

The indictments and arrests were the result of a coordinated effort with the United States Department of Health and Human Services – Office of the Inspector General, the New York State Department of Health, the Office of the Medicaid Inspector General, Medical Answering Services, the New York State Police, Orange County Sheriff's Office, Town of Crawford Police Department, Town of Crawford Police Department, and the Federal Bureau of Investigation, James said in the announcement.

Reporting Medicaid Provider Fraud: The AG's Medicaid Fraud Control Unit defends the public by addressing Medicaid provider fraud and protecting nursing home residents from abuse and neglect. If an individual believes they have information about Medicaid provider fraud or about an incident of abuse or neglect of a nursing home resident, they can file a confidential complaint online or call the MFCU hotline at (800) 771-7755. If the situation is an emergency, please call 911.