A Russia-based criminal syndicate ran one of the largest Medicare frauds in American history out of a storefront in Brooklyn, billing the program more than $10.6 billion and collecting roughly $941 million before federal agents unraveled it, the New York Post reports. Prosecutors have named the case “Operation Gold Rush.”
According to a superseding indictment unsealed June 23, the operation began in 2022, when the group quietly bought up more than 30 U.S. medical-supply companies that were already enrolled in Medicare — businesses scattered across California, Texas, Chicago and Kentucky. To run them on paper, the syndicate recruited young men, primarily from Russia and Estonia, and installed them as straw owners. Twelve people have now been charged with conspiracy to commit wire fraud, health care fraud and money laundering: nationals of Russia, Czechia and Estonia, along with a single U.S. citizen.
One of the New York hubs was G&I Ortho Supply on Avenue X in the Gravesend section of Brooklyn. From those shell companies, prosecutors say, the gang blanket-billed Medicare almost entirely for urinary catheters, using the stolen credentials of some 7,000 physicians and more than 1 million Medicare recipients. The numbers strained belief: one supplier alone billed over $250 million for catheters in 2023 — about $50 million more than every other provider in the country spent on catheters combined, in a year when the entire United States used roughly $200 million worth.
Federal investigators have not identified which Russian organization was behind the fraud, and the indictment is thin on who was directing it from abroad. Criminologists who study Russian organized crime told the Post the sheer scale points higher up. “These are big numbers. I don’t see how you become a John Gotti in Russia without the government either giving you permission or controlling what you do,” said Jay Albanese, a criminology professor at Virginia Commonwealth University. Serguei Cheloukhine, a John Jay College professor and former Interpol officer, went further: “At the very top of the network are the [Russian] politicians and law enforcement. They are protecting the network.”
The money moved through accounts in China, Israel, Pakistan, Singapore, Turkey and Hong Kong. The June 23 announcement drew a wall of federal officials, including FBI Director Kash Patel, Acting Attorney General Todd Blanche, Health and Human Services Secretary Robert F. Kennedy Jr. and Medicare and Medicaid Administrator Mehmet Oz. In April, the Centers for Medicare and Medicaid Services issued 1.3 million recipients new ID numbers over the breach. Among the beneficiaries billed by the ring were 67 people who were already dead, and the scheme generated more than 400,000 complaints.
All 12 defendants are now wanted; prosecutors say the gang directed its U.S.-based members to flee across the Mexican border as arrests began. One straw owner who did not get away, 26-year-old Estonian national Aleksandr Lis, pleaded guilty last year, was sentenced to 28 months and was deported. For the ordinary Americans caught in the fraud, the frustration was that it ran for so long. “Medicare was aware of it,” said Pamela Ludwig, a Nashville boutique owner whose business name was cloned by the scammers, “so why the heck were they still paying these claims?”