Hudson Valley Taxi Company Owners Stole $3.8M From Medicaid

ORANGE COUNTY, NY — The owners of an Orange County taxi company have admitted to a multimillion-dollar Medicaid fraud scheme.

New York Attorney General Letitia James announced on Thursday that three Orange County men and their transportation companies have pleaded guilty to stealing more than $3.8 million from the state's Medicaid program through fake billing and illegal kickbacks, as well as engaging in money laundering and other fraudulent schemes to conceal their crimes.

39-year-old Muhammad Rizwan Khan, 40-year-old Muhammad Usman Khan, and 29-year-old Farhan Khan, and their related companies pleaded guilty on Wednesday in Orange County Court.

Muhammad Rizwan Khan and Farhan Khan will be sentenced to two and one-third to seven years and one to three years in state prison, respectively. Muhammad Usman Khan will be sentenced to six months in jail concurrent with five years of probation. The three men will also pay $2 million to Medicaid in restitution for their crimes.

"Exploiting vulnerable New York patients to steal millions of taxpayer dollars is illegal and reprehensible," James said. "Funds that should have been used to provide health care and services to New Yorkers in need were instead diverted because of fraudulent schemes. Not only did these individuals steal from Medicaid, they undermined the businesses of honest transportation providers, putting crucial patient services at risk. My office will continue to root out fraud and abuse in our health care system."

Medicaid recipients who do not have access to transportation are able to use approved transportation providers to travel to and from covered medical services. The transportation providers then receive reimbursements from Medicaid.

Between September 2019 and October 2023, the Khans and their companies submitted claims for fictitious trips and added fake tolls to trips that were far above any real toll that could be incurred in the service area, regularly adding costs of up to $50 per trip.

A key part of their operation was an illegal kickback scheme involving Medicaid patients that allowed the companies to recruit patients who they could then use to fraudulently bill more expensive trips to Medicaid. The Khans and their companies made weekly kickback payments to Medicaid recipients, who gave them the identification numbers needed to submit false claims.

They also engaged in money laundering using shell companies they operated, which allowed them to obtain their fraudulent Medicaid payments in cash and distribute kickbacks to the Medicaid recipients they had recruited.

Muhammad Rizwan Khan, Farhan Khan, and their companies Tristate Express NY, Inc., Meditrans NY, Inc., and Empire Trans NY, Inc. pleaded guilty to felony first degree grand larceny. Muhammad Usman Khan pleaded guilty to felony third degree grand larceny. Corporate defendant A1 Class Car, Inc. (A1 Class) pleaded guilty to felony second degree money laundering.

As a result of their convictions, each defendant will be barred from being a provider in all government-funded health programs, including Medicaid and Medicare.

James thanked the following government and private sector partners for their assistance and cooperation in the investigation: the United States Department of Health and Human Services – Office of the Inspector General, the Federal Bureau of Investigation, 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, and the Town of Crawford Police Department.

Reporting Medicaid Provider Fraud: MFCU defends the public by addressing Medicaid provider fraud and protecting nursing home residents from abuse and neglect. Anyone who believes they have information about Medicaid provider fraud or about an incident of abuse or neglect of a nursing home resident, can file a confidential complaint online or call the MFCU hotline at 800- 771-7755.