The Record (Bergen County, NJ)
December 16, 1998; WEDNESDAY; ALL EDITIONS
Copyright 1998 North Jersey Media
Group Inc., All Rights Reserved
The Record (Bergen County, NJ)
December 16, 1998; WEDNESDAY; ALL EDITIONS
SECTION: NEWS; Pg. A03
LENGTH: 620 words
HEADLINE: STATE
ALLEGES DOCTOR TOOK $6M FROM FAILED HMO
BYLINE: RANDY DIAMOND,
Trenton Bureau
BODY:
The state will ask a Superior Court judge Thursday to order North
Jersey neurologist Magdy Elamir to immediately return more than $
6
million it claims he fraudulently took from his failed health
maintenance organization.
An order to show cause filed Tuesday by the state Attorney
General's Office demands that Elamir return $ 6,115,384.84 the
state
alleges he took from the American Preferred Provider Plan or post
a bond
in that amount.
The state's latest legal action comes less than a week after a
Superior Court judge allowed state Banking and Insurance
Commissioner
Jaynee LaVecchia to take control of the troubled HMO, which has
44,000
members statewide, including 13,000 in Passaic County and 3,000 in
Bergen County.
The state has accused Elamir, who owns the HMO, of siphoning off
state Medicaid funds for personal use, driving the company $ 25
million
into debt.
The show cause order asks Judge Anthony Parrillo in Trenton to
freeze the personal assets of Elamir, who lives in Saddle River,
if he
does not return the $ 6 million or post a bond in that amount.
Parrillo rejected the state's request two weeks ago that Elamir's
personal assets be frozen, saying such a step is premature.
Michael Chertoff, a former U.S. attorney who is Elamir's attorney,
said the state's papers don't give the complete picture of the
company's
finances.
"It's a one-sided picture of what's going on,"he said."It would
be unfortunate if the state's approach is to find someone to
punish,
rather than solve the problem."
Chertoff said Elamir would like to work with the
state in its
effort to rehabilitate the HMO.
The state's filings in connection with its order to show cause
provide new details about the alleged illegal cash transfers by
Elamir.
The state has already accused Elamir of illegally transferring
more
than $ 9 million in HMO assets, including $ 4 million in loans, to
start
other HMOs in Michigan and Washington.
But Winnie Comfort, a spokeswoman for the state Department of
Banking and Insurance, said Elamir is only being asked to return $
6
million at the moment, because that's all the state can document
so far.
She said auditors are still reviewing the company's books.
The state's papers include a certification by accountant Kevin
Margiatto, who alleges American Preferred Provider Plan paid
almost $ 2
million between Dec. 1, 1997, and Sept. 1, 1998, to four entities
tied
to Elamir or the HMO without explanation for the payments.
The accountant also found that Elamir was paid a gross salary of
$ 8,000 per week by the HMO between Dec. 1, 1997, and Aug. 28,
1998. But
Margiatto said he could not find any explanation why Elamir was
paid an
additional $ 725,000 during that period.
Margiatto also alleged that American Preferred sometime between
December 1997 and September 1998 transferred $ 50,000 of the HMO's
assets
to Elamir's private practice, The Jersey City Neurological Center,
again
without any explanation.
During that same period, the accountant also found that American
Preferred allegedly transferred another $ 123,506.84 from the HMO
to
Elamir and a realty company he owns.
Another $ 50,000, between December 1997 and August 1998, was
allegedly transferred from the HMO to U.S. Limo, which also is
owned by
Elamir, the accountant found. The transportation service also was
paid
another $ 545,000 by American Preferred for transporting HMO
patients.
But Margiatto alleged that there was no documentation to show that
the
transportation services were provided.
State officials refuse to say whether they are considering
criminal
charges against Elamir.
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