Billion-Dollar Scam: How Russian Gangs And MS-13 Are Exploiting New York’s Immigrants

By Maria Angelino | Monday, 17 June 2024 09:30 AM
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Image Credit : Getty Images

In a city renowned for its diversity, a new breed of scam is taking root, involving an unlikely alliance of Russian mobsters, members of the notorious MS-13 gang, and a network of corrupt medical and legal professionals.

This intricate scheme revolves around fraudulent personal injury lawsuits, where immigrants are coerced into undergoing unnecessary surgeries to inflate the value of their bogus accident claims. This information comes from court records, insurance investigators, and law enforcement sources, as reported by The New York Post.

The scam typically involves a healthy individual staging a minor fall, either on the street or at a construction site, and then claiming a severe injury necessitating multiple surgeries. A corrupt surgeon then performs spinal fusion surgeries on healthy vertebrae, paving the way for a lawsuit against a business, landlord, or both. Settlements usually start at $1 million but can escalate significantly. "One-five is now on the cheap side," an anonymous insurance industry lawyer told The New York Post.

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These fraudulent operations are facilitated by law firms handling hundreds of such cases, high-profile doctors, unscrupulous lending firms pressuring immigrants into borrowing to cover costs, and a network of "runners" who recruit victims and orchestrate their falls. The scheme thrives on a seemingly endless supply of low-income individuals willing to risk their health for a quick payout. "They're regularly recruiting migrants and homeless people and in some cases are proactively arranging for them to come to New York," a private investigator disclosed to The New York Post.

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The orchestrators of these scams, known as "shot callers," pocket the majority of the settlement money, leaving those posing as injured with as little as $1,000 each. Their share is further diminished by exorbitant interest rates on loans they're told are necessary for medical and legal expenses. Some, however, can collect up to six figures.

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Russian criminals are suspected of running lending firms that finance these fraudulent lawsuits and surgeries, often at grossly inflated rates to increase settlement figures. "They're well-versed in this kind of thing," a recently retired NYPD supervisor told The New York Post. MS-13 leaders, on the other hand, provide a steady stream of Hispanic migrants, some of whom are brought to New York specifically to fake injuries.

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However, MS-13 leaders lack experience in white-collar crime and struggle to execute phony injury fraud. "That's where the Russians come in," said Lou Savelli, a gang expert and founder of the NYPD gang unit. "They have the lawyers."

The Russian-MS-13 partnership is described as a "perfect marriage" by a second ex-NYPD source. This alliance has resulted in an integrated operation involving doctors, lawyers, lenders, and physical therapists, all operating from the same office building. Despite this, authorities have been unable to build a case against the group.

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The financial impact of these scams is staggering. Insurance insiders claim losses have tripled since the pandemic, with payouts so massive they're driving up the cost of living for all New Yorkers. Tradesman Program Managers insurance firm, a carrier covering contractors and construction companies in the city, reported paying out $142 million in 2022, three times the $36 million it paid out in 2018. The firm claims it has been hit with 650 allegedly fraudulent suits over the last four years. "We're talking billions collectively across the city," an anonymous insurance executive told The New York Post.

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The ripple effects of these scams are felt across various sectors, including insurance, housing, construction, food, utilities, and basic living expenses. New York already has the third highest average car insurance rate in the country, the fifth highest rates for individual health insurance, and the second highest workers compensation costs. "Every contractor is affected because their rates go up every year and they pass along the costs," said defense lawyer Steven Katz. "It affects every single building. It's an undisclosed tax."

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Despite the scale and sophistication of these scams, law enforcement has struggled to curb them. However, one case brought by the feds revealed details on how they work. Dr. Sady Ribeiro, a Manhattan surgeon, was sentenced to three years in prison last March for performing unnecessary back operations as part of an insurance scam. "It was always a back injury," testified Peter Kalkanis, a former chiropractor who pocketed $2 million for orchestrating more than 200 accidents over four years. If someone balked at having fusion, "the case would be dropped," he said.

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Among the accused is "Dr. Bo," Gbolahan Okubadejo, a Johns Hopkins-trained spinal surgeon from Nigeria with offices in Manhattan and New Jersey. He allegedly performed unnecessary fusion operations on patients to inflate payouts for them and make money for himself. Okubadejo was "fully aware that by…recommending surgery on those referrals from the Wingate firm, that their cases significantly increased in value," according to court papers.

The victims of these scams often end up worse off than before. Lesly Ortiz, a native of the Dominican Republic who came to New York in 2018, found herself caught up in this web of deceit. After a minor fall, she was directed to Dr. Michael Gerling, an orthopedic surgeon who performed two surgeries on her. "The pain is unbearable since the operation on my lower back," Ortiz told The New York Post. "I feel like a 60-year-old woman in the situation I find myself in. I don't know how I will continue working."

As the city grapples with this escalating problem, rumors of a potential federal probe have circulated among lawsuit litigants for weeks. One confidential source told The New York Post he has shared information with the FBI. However, until law enforcement can effectively dismantle these operations, the cost of these scams will continue to be borne by the city's residents.

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