Second-hand Fraud


It has been said that one man’s trash is another man’s treasure. (This makes sense when talking about flea markets, but not so much when considering unused prescriptions.) An article posted on tells the story of a New York pharmacist who defrauded Medicare, Medicaid and the New York State-funded AIDS Drug Assistance Program (ADAP) by purchasing previously prescribed drugs, repackaging and then reselling the medication.

The article states that for nearly three years, the pharmacist purchased the drugs – including high-priced HIV medications – from patients who preferred to make money off of the medication rather than treat their illness. The pharmacist repackaged the previously prescribed medication and resold it to new customers as if the new drugs were obtained from a legitimate source. He then submitted claims to Medicare, Medicaid and ADAP for reimbursement. In some cases, patients agreed not to receive the prescribed drugs in exchange for a portion of the reimbursements from the government-funded programs.

The pharmacist received more than $10 million in reimbursements from the scam. (Further research revealed that the government programs had already paid for some of the medication the first time around. Essentially, the government paid for the same drugs twice.)

The 67-year-old pharmacy owner was sentenced to three years in prison and ordered to pay $7.5 million in restitution for the drug diversion scheme. He also was sentenced for tax evasion and will have to pay back taxes and applicable penalties.

Some things are ok to buy used such as automobiles, clothes and furniture. (It’s not a good idea to purchase second-hand drugs.) In this particular case, not only can repackaged drugs jeopardize the health of those who unknowingly purchase them, it also prevents those who qualify for and need prescription medication to treat specific conditions from receiving drugs because the funds are not available. Kudos to the U.S. Attorney’s Office, Federal Bureau of Investigation and the Internal Revenue Service for shutting down this second-hand scam.

Source: Today’s ”Fraud of the Day” is based on a news release titled, ”Port Pharmacist Gets 3 Years, $7M Restitution for Medicare Fraud,” written by Bill San Antonio and posted by on March 30, 2015.

A Port Washington man who illegally sold repackaged prescription drugs out of pharmacies he owned in Queens and the Bronx has been sentenced to three years in prison and ordered to repay more than $7 million in restitution, federal prosecutors said Thursday.

Purna Chandra Aramalla, 67, was arrested in December 2013 on charges he defrauded Medicaid and Medicare of more than $10 million in the scheme, which federal prosecutors said ran from January 2010 to September 2013.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.