State officials announced 13 arrests as part of Operation Rayscam, a sting of an alleged Medicaid fraud network. From left, Acting Insurance Fraud Prosecutor Ronald Chillemi, Acting Attorney General John J. Hoffman, and Deputy Attorney General Christopher Ruzich unveiled the scheme this morning, which Hoffman called “disgusting.”Seth Augenstein/The Star-Ledger 

By Seth Augenstein and Ben Horowitz/The Star-Ledger

NEWARK — Rehan “Ray” Zuberi was using a multimillion-dollar Medicaid fraud scheme to finance a life of boundless luxury, and he liked to pay with cash, authorities say.

Inside Zuberi’s 9,000-square-foot mansion in Boonton Township, he had $100,000 in cash, and he paid for a 2014 Lamborghini with a $400,000 casher’s check, according to Deputy Attorney General Christopher Ruzich.

Today, officials outlined during a press conference in Newark how Zuberi’s Diagnostic Imaging Affiliates allegedly operated and how “Operation Rayscam” came about

“It’s disgusting,” said John J. Hoffman, the acting Attorney General. “This enterprise allegedly bilked millions of dollars from Medicaid, a program designed to help New Jersey’s most vulnerable population.”

On Tuesday, Hoffman said, the scheme came to a crashing halt for the 45-year-old Zuberi and 12 associates, including his wife, father and two brothers-in-law.

More than 100 investigators from the state Attorney General’s Office and other agencies seized the enterprise’s assets, which also included a Ferrari, a Rolls Royce and two other luxury cars, along with expensive imaging equipment used at 10 diagnostic facilities across central and northern New Jersey.

The accused allegedly paid doctors to send patients to the offices for MRIs, PET scans and other tests that were not necessary, thereby bilking Medicaid of millions. The scheme allegedly paid out more than $300,000 in kickbacks. In return, the 30,000 fraudulent Medicaid claims filed over five years reeled in $8 million, Hoffman said.

View full sizeAuthorities believe the scheme involved Rehan Zuberi’s wife, father, and two brothers in law.Seth Augenstein/The Star-Ledger 

The kickbacks to chiropractors and physicians were paid using checks from “shell” corporations, and ranged from thousands to tens of thousands of dollars apiece, Hoffman said.

Five alleged ringleaders, including Zuberi, are charged with first-degree racketeering. He and his wife, Humara Paracha, were charged with multiple second- and third-degree counts, including money laundering, authorities said. The couple are also accused of not paying their income taxes since 2009.

Also accused of “controlling” the operation and charged with first-degree racketeering were Baber Eskar, 49, of Pompton Lakes, Zuberi’s close associate and chief operating officer of DIA; Rohit Gupta, president of the Edison DIA and owner of a medical billing company that processed the insurance claims, and Faisal Paracha of Woodbridge, the 30-year-old brother-in-law who was involved in the West Orange location.

Others charged were: Nawab Zuberi of Boonton, Rehan’s 73-year-old father; Salman Siddiqui of Jefferson, Rehan Zuberi’s 37-year-old brother-in-law; Felix Clarin, 44, of Florham Park, who ran the Jersey City location; Judith DeLeon of Bloomfield, 50, who managed the Hackensack office; and Natividada Urena of Clifton, 33, who ran the Union City location.

Abid Syed, 37, of East Hanover, 25-year-old Thomas Grecco of Clifton, and Jose Lopez, 51, of Passaic, were charged with various counts as well, authorities said.

A single anonymous tip began the investigation about 18 months ago, Hoffman said. It eventually resulted in search warrants on 14 locations: the 10 DIA-owned facilities, the offices of DIA’s billing company, and three homes, including Zuberi’s mansion, authorities said. DIA had offices in Hackensack, Elizabeth, Wayne, Jersey City, Englewood, Edison, West Orange, Union City and Montville.

It was not the first time Zuberi has been accused of Medicaid fraud.

The 9,000-square-foot Boonton home of Rehan “Ray” Zuberi, 45, the alleged ringleader of the Medicaid fraud ring busted by authorities today.NJ Attorney General 

In 1998, Zuberi pleaded guilty to defrauding Medicaid — and was sentenced to six years in state prison. After less than a year behind bars, he was released under a form of supervised release, according to Deirdre Fedkenheuer, a spokeswoman for the Department of Corrections.

Zuberi was removed from the Medicaid program in 2000, but was reinstated by federal authorities in 2007, and then by the state in 2011, according to a state official.

This afternoon, Zuberi and his associates appeared for bail hearings in Superior Court in Morristown. Deputy Attorney General Ruzich requested increases for Zuberi and the four others accused of leading the operation, and the defense attorneys asked for decreases.

Judge Robert Gilson maintained bail at $1 million for Zuberi and $300,000 for Eskar, Gupta and Faisal Paracha, changing the bail only for Zuberi’s wife, Humara Paracha, lowering it from $300,000 to $250,000.They remain in the Morris County jail.

Paracha’s attorney, E. Alexander Jardines, pointed out that the couple has three children and both of their parents are now in prison. He requested the bail be lowered to $100,000.

Ruzich, asking that Zuberi’s bail be increased to $2 million, pointed out that he was born in Pakistan, is not a U.S. citizen, has business interests in Pakistan and China and “at this point has no employment to go back to.”

The cash found in Zuberi’s mansion is an indication he has more money that isn’t visible, Ruzich said.

Jewelry – and a Rolls-Royce – were part of the inventory seized by about 100 investigators on Tuesday after a year of investigation into Diagnostic Imaging Affiliates.NJ Attorney General 

But Zuberi’s attorney, Joseph Rem Jr., painted an entirely different picture.

“Right now, he is close to indigent,” Rem said. “The state seized his businesses, cars and real estate. Right now, he doesn’t have funds to pay counsel.”

Riza Dagli, another attorney who is representing Zuberi, said the state has not made clear what evidence the investigation is based upon.

“What we know is, they arrested a lot of people, seized a lot of boxes, and made a lot of accusations. Once the dust settles, he’s confident he’ll be exonerated,” Dagli said.

Meanwhile, more than 100 people have lost their jobs, said Gina Coscia, who identified herself as a former employee at the American Imaging Center in Montville, one of the DIA facilities.

All 10 facilities were raided and shut down on Tuesday, she said, and employees were not paid for the past two weeks.

“The police told us to just find a new job,” she said. “We were basically left jobless and broke.”

RELATED COVERAGE

• 13 charged in NJ racketeering case involving Medicaid fraud, officials say

BOONTON TOWNSHIP — Thirteen people have been charged in a Boonton Township-based racketeering case allegedly involving Medicaid fraud, kickbacks to doctors, falsifying financial records, bribery and tax evasion.

Complaints against the 13 were filed by state officials today in Superior Court in Morristown. The 13 were arrested on Tuesday by agents from the state Attorney General’s Office, and 12 of them are being held at the Morris County jail pending bail hearings scheduled for Thursday, according to officials at the jail.

Among those arrested was Rehan Zuberi, 45, of Boonton Township, who is among five people facing first-degree racketeering charges for allegedly being “in control of an enterprise engaging in commercial bribery, falsifying records, Medicaid fraud and offering payments to doctors in exchange for referrals in an amount more than $75,000,” according to complaints signed by detective Anthony Correll of the Office of the Insurance Fraud Prosecutor’s Medicaid Fraud Control Unit.

Zuberi, who is being held on $1 million bail with no 10 percent option, is the president of the American Imaging Center, an outpatient radiology center. The company performs MRIs and other medical tests on patients referred by doctors at 14 centers across New Jersey, according to its website.

In 1998, Zuberi pleaded guilty to taking part in a fraud scheme in which millions of dollars in unnecessary blood tests were sent to a Manalapan lab in exchange for kickbacks in 1995, according to a report by the state Office of the Insurance Fraud Prosecutor. Zuberi at the time was a partner in two clinics in Newark and one in Paterson, the report said.

Others facing first-degree charges for allegedly controlling the racketeering operation include Baber Eskar, 48, of Pompton Lakes, the company’s chief operating officer; Rohit Gupta, 38, of Edison; Humara Paracha, 38, of Boonton Township, identified by The Record of Woodland Park as Zuberi’s wife; and Faisal Paracha, 30, from the Fords section of Woodbridge.

Facing various charges for allegedly participating in the operation are Jose Lopez, 51, of Passaic; Natividad Urenak, 31, of Clifton; Felix Clarin, 44, of Florham Park; Judith Deleon, 50, of Bloomfield; Thomas Grecco, 25, of Clifton; Salman Siddiqui, 37, from the Lake Hopatcong section of Jefferson; Abid Syed, 37, of East Hanover and Nawab Zuberi, 73, of Boonton.

Officials from the state Attorney General’s Office declined to comment today but expected to provide additional information on Thursday. The case is being prosecuted by Deputy Attorney General Christopher Ruzich.

MORE MORRIS NEWS

At a confirmation hearing Wednesday for Sylvia Mathews Burwell, nominated to take over the helm of Obamacare, U.S. Sen. Robert Menendez (D-N.J.) quizzed her about the backlog facing Medicaid newcomers in New Jersey.

State officials reported earlier in the week that 25,000 applicants remained stuck in a backlog, while another 7,000 people were still waiting for their ID cards.

In questioning the nominee, Menendez said that while the backlog was clearly the state’s problem to fix, her department should provide vigorous oversight to make sure that was happening.

If people who attempt to join the state’s expanded Medicaid program get caught in bureaucratic red tape, he said, the promise of the Affordable Care Act will have been thwarted.

He also urged her to make sure a clear message was sent to providers that they should accept patients who are presumed to be eligible, even if those patients don’t yet have their cards.

In a separate line of questioning, he relayed complaints about restrictions placed by some new insurance policies on health services for people with autism. While the Affordable Care Act bans dollar caps on services, some insurers have imposed non-dollar caps on the amount of service or treatment for autism, the senator said.

That violates the intent of the regulation that made autism treatment part of the essential benefits plans must offer, he said.

“It has the potential to deny access to care to families across the nation,” he said.

The questions were part of Burwell’s final confirmation hearing before the Senate Finance Committee for her final confirmation hearing on Wednesday. While Republicans raised pointed questions about the implementation of the Affordable Care Act, they were cordial in their interactions with Burwell, praising her availability and cooperation in her previous positions.

MORE POLITICS

At a confirmation hearing Wednesday for Sylvia Mathews Burwell, nominated to take over the helm of Obamacare, U.S. Sen. Robert Menendez (D-N.J.) quizzed her about the backlog facing Medicaid newcomers in New Jersey.

State officials reported earlier in the week that 25,000 applicants remained stuck in a backlog, while another 7,000 people were still waiting for their ID cards.

In questioning the nominee, Menendez said that while the backlog was clearly the state’s problem to fix, her department should provide vigorous oversight to make sure that was happening.

If people who attempt to join the state’s expanded Medicaid program get caught in bureaucratic red tape, he said, the promise of the Affordable Care Act will have been thwarted.

He also urged her to make sure a clear message was sent to providers that they should accept patients who are presumed to be eligible, even if those patients don’t yet have their cards.

In a separate line of questioning, he relayed complaints about restrictions placed by some new insurance policies on health services for people with autism. While the Affordable Care Act bans dollar caps on services, some insurers have imposed non-dollar caps on the amount of service or treatment for autism, the senator said.

That violates the intent of the regulation that made autism treatment part of the essential benefits plans must offer, he said.

“It has the potential to deny access to care to families across the nation,” he said.

The questions were part of Burwell’s final confirmation hearing before the Senate Finance Committee for her final confirmation hearing on Wednesday. While Republicans raised pointed questions about the implementation of the Affordable Care Act, they were cordial in their interactions with Burwell, praising her availability and cooperation in her previous positions.

MORE POLITICS

TRENTON — Two former aides at a Hackensack home health agency allegedly submitted hundreds of false claims to Medicaid for services they never provided, bilking the government out of thousands of dollars, authorities said.

Anatoli Rountsev, 52, of Totowa, and Naum Lavnevich, 56, of Oakland, were charged Monday with 43 and 154 counts of second-degree health care claims fraud, respectively, as well as third-degree Medicaid fraud and third-degree theft by deception, acting Attorney General John J. Hoffman said.

They both worked as certified homemaker home health aides at Confident Care Corporation. The company is headquartered in Hackensack and has 10 satellite offices in New Jersey, as well as offices in Florida.

Between January 2008 and June 2009, Rountsev submitted 463 false claims to Medicaid for services he did not provide, a state grand jury indictment said. Rountsev was allegedly at another job and couldn’t have performed any of the services.

Medicaid paid out $12,598 for the claims.