Russian criminals used NKY business in ‘massive’ Medicare fraud scheme

Quinlan Bentley

Cincinnati Enquirer

USA TODAY NETWORK

When Estonian national Aleksandr Lis arrived in the U.S. more than two years ago, it was with the promise of a legitimate job.

Instead, prosecutors say, Lis became embroiled in a multibillion-dollar, nationwide Medicare fraud conspiracy orchestrated by a Russia-based criminal organization.

While his attorneys argued 25-year-old Lis came to the U.S. to make a better life for his family back home, prosecutors said in court filings that he was part of a 'massive and highly sophisticated international health care fraud scheme.'

It was partially carried out through a medical business in Northern Kentucky, with Lis listed as the owner.

Lis was sentenced on Nov. 18 in federal court in Covington to 28 months in prison for his role in the scheme. He pleaded guilty in January to conspiracy to commit money laundering.

U.S. District Judge David Bunning granted Lis credit for the nearly 21 months he’d already been incarcerated. He’ll likely be deported after his release. The judge also ordered that Lis be on the hook for more than $6 million in restitution.

Legal filings and statements made in court detail how Lis went from an out-of-work young adult in his home country to a pawn in a complex and well-coordinated international criminal enterprise.

Lis played a ‘very important but very small role’ in fraud conspiracy

The organization recruited Lis to travel to the U.S. He arrived in June 2023 to live in New York City.

On the same day Lis entered the country, prosecutors said, he was asked to sign documents making him the 'straw owner' of two medical businesses – a Texas company and Alexandria Durable Medical Equipment in Campbell County.

The organization used the businesses to submit $1.8 billion in fraudulent claims to Medicare and other health insurance programs for medical equipment that was never distributed.

Court filings state Lis falsely documented himself in state records as the owner of the companies, opened financial accounts under those businesses, deposited fraudulently obtained proceeds into the accounts and transferred the funds to the organization.

Lis had never met his accomplices in person and didn’t know their real names, prosecutors said, adding that he was directed via the Telegram messaging app to visit specific bankers to open accounts.

Prosecutors stated that his crimes affected more than 500 health insurance programs and even Google reviews accused the companies of committing fraud.

Between July 2023 and February 2024, according to court filings, Lis conducted financial transactions involving health care and wire fraud totaling more than $6 million.

He was arrested in New Jersey while trying to flee the country in February 2024.

While prosecutors said Lis was the first person to be charged in the conspiracy, he isn’t the only one to face federal prosecution. Other members have been charged in federal courts in New York and New Jersey.

Bunning said that Lis played a 'very important but very small role' in the organization’s overarching scheme.

How a Russian criminal organization orchestrated $10 billion Medicare fraud scheme

The organization relied heavily on foreign nationals, like Lis, by paying them to serve as front owners of durable medical equipment companies.

It acquired dozens of such companies from legitimate owners across the country to submit more than $10 billion in fraudulent Medicare claims, according to federal prosecutors in New York.

The organization created fake corporate records to falsely indicate that the foreign nationals it recruited controlled the companies, prosecutors said, when the strings were being pulled by its leadership overseas.

Once its operatives in the U.S. opened financial accounts, the organization funneled fraud proceeds from insurance providers into those accounts as money that was seemingly 'clean,' according to court filings.

The funds were then siphoned off to shell companies and foreign bank accounts in China, Singapore, Pakistan, Israel and Turkey.

The organization also stole the identities and personal information of more than a million Americans nationwide. Many of them raised concerns after obtaining forms showing that they’d been issued medical equipment they never received, prescribed by doctors they had never visited and delivered by companies they were unfamiliar with.

Prosecutors added that the organization used 'virtual private servers' for the digital aspects of the scheme, enabling it to conceal the locations of its members, mask its digital footprint and scale its operations internationally.

When federal agents closed in on various members of the organization, prosecutors said, its supervisory members directed those conducting business in the U.S. to flee the country.

Despite attracting the attention of law enforcement, Assistant U.S. Attorney Sara Porter said, the organization continues to recruit individuals for its criminal operations.

'They couldn’t have done it without his name on those businesses,' Porter said in court about Lis’ role in the conspiracy.

Estonian national came to the U.S. for a job, didn’t know it was illegal

Lis was born in Narva, Estonia, a Russian-speaking city situated in the Baltic nation’s northeastern corner.

In a presentence court filing, his attorneys said Lis does not have a prior criminal history. He obtained a trade degree to work in mining after primary school and served a brief stint in his country’s military.

He was 23 years old and unemployed when a friend and former soccer teammate offered Lis a position managing a small business in the U.S., a job the friend had left after being forced to return home, the attorneys said.

Lis, who spoke little to no English, was given a plane ticket to New York, put up in a small hotel room near Times Square and sent instructions via text message on how to perform his job, largely in the New York City area.

'This was not a life of glamour that he was leading in New York,' said Daniel Wachtell, one of Lis’ attorneys.

His attorneys described the scope of Lis’ work as unremarkable, saying he was instructed to 'file these documents here; take this money there; collect these checks from this person; open an account here; ask for this or that Russian-speaking bank clerk by name; deposit funds here or there; repeat.'

They argued that Lis profited only around $50,000 during the roughly nine months he worked for the organization. He believed the job was legitimate.

However, the lawyers acknowledged there were times when Lis’ suspicions might’ve been raised, like when he visited the Alexandria business in the summer of 2023 and found 'only a lightly used storefront, with one employee.'

When Lis texted his supervisors asking where all the medical equipment was being stored, he was told it was sent directly from manufacturers to Medicare beneficiaries, the court filing states.

Late in 2023, Lis had discussions with an Estonian friend also working for the organization, according to the court filing. The pair questioned the motivations and identities of those running the scheme, but had no evidence that the business was illegitimate.

It wasn’t until his supervisors instructed Lis to leave the country in early 2024, and he learned of news reports about a U.S. Department of Justice investigation, that he realized his work was illegal.

'I truly deeply regret what I did,' Lis told the judge through a Russian interpreter at sentencing .