AG: Jersey City man pegged as ringleader of $11M meds-for-cash operation, 19 arrested

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A Jersey City man is one of two men being pegged as the ringleader of an $11 million medicine for cash operation that largely took place in Hudson County and New York City, New Jersey Attorney General Gurbir Grewal announced.

Ahmed Mohamed. Photo courtesy of the New Jersey Attorney General’s Office.

By John Heinis/Hudson County View

According to court documents, the scheme exploited the fact that pharmacies that purchase prescription drugs from wholesalers or distributors can return those drugs for a partial refund if the drugs expire before being sold.

Pharmacies can recoup up to 85 percent of the price they paid for the drugs.

Authorities said that Medicaid beneficiaries obtained and filled prescriptions for expensive, lifesaving drugs to treat HIV, Hepatitis C, and other diseases.

Under the Medicaid program, the patients received the drugs from pharmacies for free, with the government reimbursing the pharmacies for the wholesale cost of drugs—sometimes more than $20,000 for a single 30-day prescription, officials said.

Instead of taking their drugs as prescribed, the Medicaid beneficiaries allegedly sold the unopened boxes of pills, inhalers, and other forms of medication, on the street to a “runner,” typically for $20 to $100 in cash.

The runner delivered the drugs to the scheme’s ringleader, who then held the drugs until their expiration date passed.

Finally, the ringleader used his status as a pharmacy owner to return the expired drugs to wholesalers and distributors, seeking refunds under the false pretense that his own pharmacy had legitimately purchased the drugs.

The ringleader typically received refunds up to 85 percent of the wholesale price, allowing him to pocket thousands of dollars for each prescription obtained by the runner.

The criminal enterprise was dismantled after a months-long joint investigation between OIFP’s Medicaid Fraud Control Unit (“MFCU”) and the Jersey City Police Department.

The investigation was conducted with assistance from the U.S. Food and Drug Administration, the New Jersey Office of Homeland Security and Preparedness, and the New York Attorney General’s Medicaid Fraud Control Unit.

The investigation also resulted in the recovery of more than $6.8 million in diverted prescription medications and more than $4 million in alleged illegal profits from the scheme.

“Medicaid is designed to provide much-needed medical care to lower-income Americans, not to line the pockets of fraudsters and cheats,” Grewal said in a statement.

“By cracking down on this type of fraud, we’re not just protecting taxpayers, we’re protecting the integrity of our medical system.”

The alleged ringleader of the scheme is Elfatih Ibrahim, 58, of Brooklyn, a New York- licensed pharmacist who owns Maxwell Pharmacy in Manhattan.

Additionally, Ahmed Mohamed, 62, of Jersey City, allegedly served as the scheme’s runner who bought and transported drugs to Ibrahim’s pharmacy on a regular basis between January and August 2018.

Ibrahim and Mohamed are both charged with second- and third-degree conspiracy, second-degree possession with intent to distribute prescription legend drugs, and third-degree Medicaid fraud.

The ring trafficked and diverted an array of prescription drugs, including those used to treat illnesses requiring expensive therapies like HIV, Hepatitis C, pulmonary disease, and type 2 diabetes.

These drugs are of little value to street users, but are sought-after commodities on the prescription black market.

Among the most trafficked drugs in the scheme were HIV medications Atripla and Truvada. According to national wholesale price averages, single 30-day prescriptions of these drugs cost about $2,735 and $1,567, respectively.

The most expensive drugs trafficked were Hepatitis C medications Vosevi, Epclusa, and Zepatier. According to national wholesale price averages, single 30-day prescriptions of these drugs cost about $24,920, $24,344, and $18,200, respectively.

Five who allegedly collected and sold prescription drugs in the scheme were indicted on charges of second-degree conspiracy and third-degree Medicaid fraud. They are:

Constance Douglas, 52, of Jersey City
Kendall Brown, 55, of Jersey City
Hiram Estrada-Garcia, 37, of Jersey City
Mohamed Gaafar, 62, of Jersey City
John Schmalberger, 60, of Morganville

Furthermore, 12 individuals who allegedly sold their own prescription drugs in the scheme were charged with third-degree conspiracy and third-degree Medicaid fraud. They are:

Michelle Hazelwood, 50, of Jersey City
Dawn Jackson, 50, of Jersey City
Marcus Colon, 38, of Jersey City
Rhonda Hoffman, 49, of Jersey City
Julissa Borges, 48, of Bayonne
Margaret Moore, 47, of Jersey City
Michael Garland, 49, of Jersey City
Sobhy Eid, 60, of Bayonne
Wayne Jones, 58, of Jersey City
Shawn Morris, 47, of Jersey City
Alexander Cotto, 37, of Kearny
Brenda Noel, 60, of Newark

Second-degree charges carry a sentence of five to 10 years in state prison and a fine of up to $150,000, while third-degree charges carry a sentence of three to five years in prison and a fine of up to $15,000.

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