Armenian Organized Crime Mobsters Target Medicare Scams Along with Credit Card Fraud, Identity Theft and Mortgage Fraud

Endeavor Diagnostics billed itself as a thriving medical laboratory that performed more than $1 million of work for Medicare patients.

When two FBI agents went to inspect it, they found an empty San Fernando Valley office with only a desk and a fax machine. There were no workers, no patients and no biological samples.

Behind the door of the facade were signs tying the operation to a sprawling network of phantom enterprises allegedly set up by Armenian mobsters to try to defraud Medicare of $163 million for services never provided.

Dozens of arrests around the country Wednesday highlighted a criminal demographic rarely seen, but one that officials say is rooted in California and growing in reach and sophistication.

"They are victimizing our systems, they are victimizing business, they are victimizing private citizens," said Glendale police Lt. Steve Davey, who heads up a task force tackling Eurasian crime. "Their ultimate goal is oligarchy - to see if they can infiltrate government."

Few criminal groups can match the sophistication of Armenian scammers, who developed an uncanny savvy for probing weaknesses in government systems and were hailed as heroes when they exploited their Soviet republic homeland, authorities said. They have been known for devising complex white collar schemes such as credit card fraud, identity theft and mortgage fraud.

Indictments released Wednesday in Los Angeles, New York and elsewhere show how various cells, largely working on their own but often sharing techniques, set up fraudulent medical businesses using stolen physician identities. After becoming licensed Medicare providers and submitting claims, the fake office billed the government, which would pay money to fraudulent bank accounts. Many claims were bogus but sometimes criminals would provide a small service then submit an inflated bill.

In Los Angeles, for example, they would provide a scooter worth about $1,000, but profit after billing Medicare for a top-end electric wheelchair worth six times as much, FBI Supervisory Special Agent Matt McLaughlin said.

The groups have been known to recruit people with a nominal sum to become a fake patient, then bill Medicare for services supposedly rendered.

"It's great camouflage," McLaughlin said. "We have to deconstruct each element to prove a fraud."

Prosecutors also allege that conspirators paid corrupt doctors to carry out unnecessary testing on purported accident victims, then charged the government for the treatment.

In all, $163 million in fraudulent bills were submitted, with Medicare actually paying out $35 million, according to the documents.

The complex operation was allegedly overseen by Armen Kazarian, who melded into Glendale's large Armenian population after arriving as an asylum seeker in 1996 and mostly stayed out of view of the police. Kazarian, 46, who is in custody in Los Angeles, is known by the Soviet term "thief in law," which is the rough equivalent of a "godfather." Authorities say it is only the second time such a figure, known in Russian as a "vor v zakone," has been arrested in the U.S.

Nearly half of Glendale's 200,000 residents have an Armenian background. Following the 1915 massacre of Armenians in Turkey, a diaspora spread around the globe, with many arriving in Fresno and the East Coast.

Successive waves of immigrants followed major geopolitical upheavals, including the 1979 Islamic Revolution in Iran, and a small Armenian community in Hollywood quickly expanded to Glendale and the surrounding areas

In the mid-1980s, sons of Armenian immigrants from the Hollywood area banded together to form a gang called Armenian Power to protect themselves against Hispanic gangs. The community initially saw members as vigilante protectors but the group soon morphed into a street gang like any other, carrying out drive-by shootings and other crimes such as kidnappings, drug deals and burglaries, Glendale Officer Rafael Quintero said. But most crime in the Armenian community is carried out quietly and centers on sophisticated identity theft schemes. Police started picking up on these activities at the end of the 1990s and Glendale's task force was established in 2000, Davey said.

Several police agencies have task forces focused on Eurasian crime but Los Angeles police Lt. Stephen Margolis said this operation illustrates how the law enforcement community overall should pay closer attention.

"The sophistication and the pervasiveness of this type of criminal activity is years in the making," Margolis said. "Hopefully this will serve as a wake up to the extent of the seriousness this problem presents at a national level."

Zaven Kazazian, president of the Los Angeles chapter of the Armenian-American Chamber of Commerce, said much of the crime in the community is carried out by people raised under communist rule in the former Soviet republic of Armenia, where exploiting a corrupt government was seen as fair game. "It is a different cultural background," Kazazian said. "Everybody was out for themselves."

Kazazian stressed that only a handful of Armenians are engaged in criminal enterprises and cautioned against making generalizations. "We are embarrassed by it and we do not have any affiliation with them. They do not represent the true Armenian people," he said. "It's like saying all Italians are part of the Mafia. That's just stupid."

Prosecutors say the crime ring was known as the Mirzoyan-Terdjanian Organization, named after its principal leaders Davit Mirzoyan, 34, of Glendale and Robert Terdjanian, 35, of Brooklyn.

Most of the 44 people charged are from the Los Angeles area and New York but arrests were also made in Georgia, New Mexico and Ohio.

The seven defendants named in the Los Angeles indictment have all pleaded not guilty. Defendants named in the New York portion of the case had either pleaded not guilty or were due to be arraigned Monday.

A call to Kazarian's defense attorney, Vicken Hagopian, was not immediately returned Friday.

As the "thief-in-law" of the operation, Kazarian was touted by authorities as the big catch. But the role of such "vor v zakones" is more subtle than that of a Mafia boss, Lt. Davey said.

Armenian crime bosses typically are nominated by other criminals and their main task is to mediate disputes between groups. Though they describe no actual violence, authorities allege Kazarian helped the Mirzoyan-Terdjanian Organization and would use threats to resolve disputes in the U.S., Armenia and other places.

Armenia has said it will cooperate with the U.S. in its investigation and Foreign Ministry spokesman Tigran Balayan has said his nation was sorry.

Thanks to Thomas Watkins

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Reputed Mafia Godfather, Armen Kazarian, Alleged to Have Led Massive Medicare Cheating Scam

A vast network of Armenian gangsters and their associates used phantom health care clinics and other means to try to cheat Medicare out of $163 million, the largest fraud by one criminal enterprise in the program's history, U.S. authorities said Wednesday.

Federal prosecutors in New York and elsewhere charged 73 people. Most of the defendants were captured during raids Wednesday morning in New York City and Los Angeles, but there also were arrests in New Mexico, Georgia and Ohio.

The scheme's scope and sophistication "puts the traditional Mafia to shame," U.S. Attorney Preet Bharara said at a Manhattan news conference. "They ran a veritable fraud franchise."

Unlike other cases involving crooked medical clinics bribing people to sign up for unneeded treatments, the operation was "completely notional," Janice Fedarcyk, head of the FBI's New York office, said in a statement. "The whole doctor-patient interaction was a mirage."

The operation was under the protection of an Armenian crime boss, known in the former Soviet Union as a "vor," prosecutors said. The reputed boss, Armen Kazarian, was in custody in Los Angeles.

Bharara said it was the first time a vor — "the rough equivalent of a traditional godfather" — had been charged in a U.S. racketeering case.

Kazarian, 46, of Glendale, Calif., and two alleged ringleaders — Davit Mirzoyan, 34, also of Glendale, and Robert Terdjanian, 35, of Brooklyn — were named in an indictment charging racketeering conspiracy, bank fraud, money laundering and identity theft.

The indictment accused Terdjanian and others of hatching other schemes involving stolen credit cards, untaxed cigarettes and counterfeit Viagra. It also alleges that during a meeting last year at a Brighton Beach restaurant, Terdjanian pulled a knife on someone who owed him money "and threatened to disembowel the individual if the debt was not paid."

A judge jailed Terdjanian without bail on Wednesday at a brief hearing. Afterward, his attorney said his client denies the charges.

Kazarian and Mirzoyan were scheduled to appear in court Wednesday in Los Angeles.

Authorities began the New York-based investigation after information on 2,900 Medicare patients in upstate New York — including Social Security numbers and dates of birth — were reported stolen.

The defendants in the New York case also had stolen the identities of doctors and set up 118 phantom clinics in 25 states, authorities said. The names were used to submit fake bills for care that was never given, they said.

Some of the phony paperwork was a giveaway: It showed eye doctors doing bladder tests; ear, nose and throat specialists performing pregnancy ultrasounds; obstetricians testing for skin allergies; and dermatologists billing for heart exams.

In the New York portion of the case, more $100 million in fraudulent bills were submitted and Medicare paid out at least $35 million, sometimes by wiring it to the clinics' banks accounts, investigators said.

Most of the defendants "were Armenian nationals or immigrants and many maintained substantial ties to Armenia" and criminals there, the indictment said. Couriers would often carry cash proceeds from the fraud back to Armenia, it added.

Prosecutors were seeking forfeiture of real estate in Las Vegas; Palm Springs, Calif.; and elsewhere, and of a 2007 Maserati and a 2006 Jaguar.

Thanks to Tom Hays

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Mafia Princess Challenges Coco Giancana to Take a DNA Test to Prove She's Granddaughter of Sam Giancana

The daughter of assassinated Chicago mob boss Sam Giancana is challenging a Las Vegas woman to take a DNA test to prove she's Giancana's granddaughter.

Antoinette "Mafia Princess" Giancana, one of the mobster's three daughters, said she does not believe the claim by Coco Giancana, who identified herself as a granddaughter during a Tony Curtis-related interview last week with Vegas Confidential.

"This has really been upsetting to me and my sisters," said Antoinette Giancana, who moved from Chicago to Las Vegas about 14 months ago to be involved in the Las Vegas Mob Experience at the Tropicana . She added, "We don't know her or of her. I'd like to have a DNA test done. I just don't believe it."

Coco Giancana, who operates a local concierge service, said, "I don't have to prove anything to anybody. If she doesn't like it, that's tough."

According to Coco Giancana, Sam Giancana had an affair with a woman from Oak Park, Ill., who was a film star. "They had a baby. That was my mother."

The mobster visited the family home more than 100 times, said Coco Giancana. "I know where my mother came from and I know who came to our house and I know where the checks came from."

Coco Giancana moved here about 20 years ago, she said, after a career as a top model in New York City for Wilhelmina modeling agency. She grew up across from Jilly Rizzo's joint in New York and was befriended by Rizzo and Sam Giancana's friend Frank Sinatra, "who would take us backstage when I was 16."

Sam Giancana was killed at his Chicago home in 1975 in what appeared to be a mob hit. He was 67.

"There are so many people who claim they are related to us," said Antoinette Giancana.

Coco Giancana said she kept her grandfather's name "because I'm proud of it." She added that she's never taken a DNA test to confirm her link to the organized crime chief.

Her father, whom she did not identify, was a partner with Arnie Morton, who founded Morton's steak restaurants empire. She wasn't shy about filling in the blanks in her biography. During her modeling days, she said she dated the Cincinnati Reds' Hall of Fame catcher Johnny Bench over a 10-year period starting in the 1970s.

Thanks to Norm!

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