Babylon Pharmacist Implicated in $274M Medicaid Fraud

A Babylon pharmacist was one of four men arrested and indicted last week for his alleged involvement in what New York's Attorney General called "a massive scheme to distribute black market prescription HIV drugs and defraud the Medicaid Program of $155 million."

Ira Gross, a licensed pharmacist, is accused by Attorney General Eric T. Schneiderman of allegedly brokering the sales of illegally obtained HIV prescription drugs, which were then sold through MOMS pharmacy locations in Brooklyn and Long Island.

According to the indictment, the black market drugs, some expired, were purchased by Glenn Schabel, the supervising pharmacist and compliance officer for MOMS pharmacy and Melville resident, from Stephen Manuel Costa, a Florida resident who set up four shell wholesale companies as part of the scheme. The fourth defendant, Harry Abolafia of Texas, created false invoices for Costa's transactions. The black market drugs may have been mislabeled, no longer effective, or otherwise tampered with, leading to adverse reactions for patients.

Anthony D. Luna, president of MOMS Pharmacy, said in a statement that "MOMS Pharmacy was a victim of this crime and will continue to cooperate fully with the New York state authorities to see that those involved are brought to justice."

The Attorney General's office reported that Schabel purchased $274 million worth of black market HIV medications in total, and Schabel, Gross and Abolafia were all paid a portion of Costa’s profit. Gross is accused of receiving $21,165,374 from September 2008 until earlier this year, when the defendants' assets were seized as part of the investigation.

The indictment was unsealed on April 4 in Suffolk County New York State Supreme Court. “The ringleaders of this complex scheme not only cheated the state Medicaid program out of millions of dollars, but preyed on some of New York’s most vulnerable patients just to make a quick buck. These crimes are intolerable, and the perpetrators will be held accountable for breaking the law,” said Schneiderman.

The ringleaders are charged with several felonies including grand larceny, criminal diversion of prescription medication, money laundering, commercial bribery and conspiracy. Ira Gross, who is listed as the Chief Executive Officer of as company called Medical Products Supply, Inc. in Babylon, was arrested on April 4 in Hauppauge.

The charges against the defendants are merely accusations and the defendants are presumed innocent until and unless proven guilty in a court of law.