A rehabilitation provider and three-quarter house operators were indicted for three-year Medicaid fraud scheme in Brooklyn, and their other properties frozen. On January 13, 2017, New York State Attorney General Eric T. Schneiderman announced the indictment and arraignment of attorney Anthony Cornachio, as well as the NRI Group, LLC and Canarsie A.W.A.R.E., Inc., both Medicaid-enrolled drug treatment programs companies controlled by Cornachio. Also indicted were three-quarter housing operators Yury Baumblit and Rimma Baumblit, of Brooklyn and their company Back on Track Group, Inc.
According to the indictment, prosecutors alleged that the Baumblits forced residents of their three-quarter homes to attend treatment at NRI and Canarsie, regardless of actual need for drug treatment, under threat of eviction. During the three-year scheme, Cornachio allegedly paid Back on Track Group over $900,000 in illegal kickbacks. The indictment alleged that Cornachio, through his companies, submitted or caused to be submitted at least $1.7 million in false claims for reimbursement to Medicaid.
The persons and corporations were arraigned on counts of Grand Larceny in the First Degree, Money Laundering in the Second Degree, and a violation of Social Services Law prohibit kickbacks under the State’s Medicaid program. Schneiderman also announced a judicial order freezing the bank accounts and other property owned by the defendants and attaching up to $5,221,649.28 of those assets.
This incident typifies a common criticism of such three-quarter housing in the City. A growing problem recognized by the City Council, three-quarter houses are mostly illegal because the Building Code prohibits the cohabitation of four or more unrelated persons. As a result, such housing arrangements receive nearly zero oversight. An extensive study performed by the Prisoner Reentry Institute found that nearly all three-quarter house residents interviewed reported that their houses mandated substance abuse treatment as a condition of residency. Referrals were made by landlords with no diagnostic training or authority, and tenants were illegally evicted upon successful completion of the treatment programs.
In October 2016, the City Council’s Committee on General Welfare and the Committee on Housing and Buildings held a joint hearing to discuss the epidemic and consider six bills related to the issue. Those bills remain laid over in committee and no further action is scheduled to date. For CityLand’s prior coverage of that hearing and the three-quarter house epidemic, click here.
By: Jonathon Sizemore (Jonathon is the CityLaw Fellow and a New York Law School Graduate, Class of 2016).