New York Attorney General Letitia James announced the indictments and arrests of five Medicaid-contracted transportation providers and their seven companies for stealing over $4.4 million from New York’s Medicaid program through fictitious billing and illegal kickback schemes, as well as engaging in fraud and money laundering. Muhammad Rizwan Khan, Muhammad Usman Khan, and Farhan Khan of Orange County and their related companies, Tristate Express NY, Inc. (Tristate), Meditrans NY, Inc. (Meditrans), Empire Trans NY, Inc. (Empire), and A1 Class Car, Inc. (A1 Class), were charged with stealing over $3.8 million from Medicaid. John Gouzos and Richard Sehl of Rensselaer County, and their related companies Medi Cab Corp. (Medi Cab), Jay Auto Care, Inc. (Jay Auto Care), and Hojo Detail Center, Inc. (Hojo) were charged for stealing over $650,000 from Medicaid. Both sets of defendants were also charged with money laundering of their illegally obtained profits.
“Using vulnerable patients to personally profit at the expense of New York taxpayers is reprehensible,” said Attorney General James. “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. The illegal schemes these defendants engaged in not only exploited New Yorkers seeking care, but also undermined honest health care providers. My office will continue to root out fraud and abuse in our health care system to protect New Yorkers.”
Medicaid reimburses approved transportation providers for transporting Medicaid patients to and from covered medical services. Both sets of defendants allegedly operated schemes in which they illegally overcharged Medicaid for their transportation services. 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. Between December 2021 and March 2023, Guozos and Sehl and their respective companies also engaged in fraud, submitting false claims for transporting patients from addresses that were substantially farther away than where they really lived. In total, they overcharged Medicaid by over $650,000.
A key part of both sets of defendants’ operations was allegedly establishing kickback schemes involving Medicaid patients. These schemes allowed the defendants and their companies to illegally recruit customers who they could then use to fraudulently bill more rides to Medicaid. The Khans and their companies made 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 paid 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, both sets of defendants allegedly engaged 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 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.
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 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. Attorney General James thanks them all for their partnership and assistance.
The investigations were conducted by Detective Supervisors John Benshoff and Jeffrey Pitts and Detectives Aleksandr Lipkin, Katelyn Matousek, Brendan Ryan, and Thomas Walker, with assistance from Deputy Chief William Falk. The financial analysis was conducted by Principal Auditor Investigators Sandra Iskowitz and Lora Pomponio, Senior Auditor Investigators Shannon Taylor, Gregory Reinhart, Sandra Alverez, and Auditor Investigator Kate Levins, with the assistance of Regional Chief Auditor Sarah Finning. Supporting the investigation were Robert Bashaw, David Hilbert, and Maria Castro of MFCU’s Electronic Investigative Support Group and Administrative Assistant Joshua Spellman. The criminal cases were presented by Special Assistant Attorneys General Samantha McCullagh, Patrick Scully, and Kathleen Boland with assistance from MFCU Regional Director Todd Pettigrew and MFCU Chief of Criminal Investigations Thomas O’Hanlon. MFCU is led by Director Amy Held and Assistant Deputy Attorney General Paul J. Mahoney. The Division of Criminal Justice is led by Chief Deputy Attorney General José Maldonado under the oversight of First Deputy Attorney General Jennifer Levy.
Reporting Medicaid Provider Fraud: MFCU 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.
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