Because he was listed as the owner of a 4,100-bed nursing home, Jamestown pharmacist Anthony T. Rizzo was allowed to purchase millions of dollars worth of prescription drugs at huge discounts.
But there was a problem, federal prosecutors said: Rizzo didn't own the nursing home.
In fact, there was no such nursing home.
The 52-year-old Jamestown man was indicted Friday on federal charges of wire fraud, mail fraud, health-care fraud, conspiracy and money laundering after a lengthy investigation coordinated by the U.S. attorney's office. Assisting in the probe were the U.S. Food & Drug Administration, FBI, U.S. Postal Inspection Service, Internal Revenue Service Criminal Division and Jamestown Police.
Interim U.S. Attorney Denise E. O'Donnell said the alleged "phantom nursing home scheme" allowed Rizzo to join a buyers' group called the Managed Healthcare Associates Inc. and get 60 percent discounts on a variety of drug purchases.
"The indictment charges that he got a 60 percent discount on $3 million worth of drugs, which he then sold to his customers at a profit," Prosecutor John E. Rogowski said.
"The buyers' group he was allowed to join was set aside for hospitals, nursing homes and other institutions. They were only supposed to use their drugs for treatment of their own patients. It was not a program for pharmacies that retail drugs."
The indictment also charges Rizzo, owner of Union Pharmacy at 83 Allen St., Jamestown, with using another scheme to bilk four Jamestown employers and Blue Cross & Blue Shield out of $117,000 from employee health-care programs.
He is accused of obtaining the names and medical information of people who worked in Jamestown and then using those names to submit false billings to health-care programs for prescriptions that were never ordered.
"He would get people to come in to his pharmacy and purchase a prescription. Then he would submit their names and make billings for other prescriptions that were not ordered," Rogowski said, quoting court papers. "There were about 50 employees involved, and some of the bogus prescriptions were over $300 for one order."
The 50 people worked for the City of Jamestown, the Jamestown Board of Public Utilities, Crawford Furniture and Hope's Architectural Products.
"Some of these people never once set foot in his pharmacy," Rogowski said.
Rizzo, who also faces fraud allegations that were filed against him in August by the state Attorney General's Medicaid Fraud Bureau, declined to discuss the latest charges.
His attorney, Lawrence Hochheiser of New York City, said he had not yet seen the indictment.
In the state case, he is accused of defrauding the state Medicaid system out of $2 million and the EPIC (Elderly Pharmaceutical Insurance Coverage) program out of $65,000 by submitting 8,000 phony prescriptions for reimbursement.