A Manhattan Beach couple was arrested Wednesday for running an illegal Medicaid kickback scheme that targeted tenants living in the couple’s flophouses, Attorney General Eric Schneiderman announced.
Yury and Rimma Baumblit, whose three-quarter house business was the subject of a New York Times investigation last year, were led out in handcuffs from of their 5,250-square-foot mansion on Corbin Place. They have been charged with grand larceny, money laundering and Medicaid fraud.
Authorities are seeking $1.9 million in damages for the scam. The Baumblits face 15 years in prison if convicted.
Prosecutors allege the couple engaged in a kickback scheme that preyed on some of Brooklyn’s most vulnerable. They allegedly received monthly payments for forcing tenants in their flophouses to attend certain Medicaid-enrolled drug treatment providers, even if the tenants did not need drug treatment. The Baumblits received more than $600,000 from the scam, according to authorities.
“Our complaint demonstrates that over several years, the Baumblits carried out a deliberate and illicit scheme to defraud taxpayers, rip-off Medicaid, and force residents into programs and services that benefited no one but themselves. We will deliver swift justice to the Baumblits once and for all,” said Schneiderman.
The couple lived large in their Manhattan Beach home, even while keeping their tenants in “deplorable” conditions, according to the Attorney General. Residents were crammed into small rooms, sometimes with as many as four people in the same space, and went without heat in the winter, air conditioning in the summer, and had to deal with infestations, persistent leaks, and broken windows. Tenants were also subject to threats and even violence from the Baumblits and their house managers, who kept residents locked inside for much of the day, the investigation revealed.
Meanwhile, authorities seized a hoard of jewels, designer bags, fur coats and a Mercedes from the couple’s $3 million home, the Daily News reports. At the arraignment, Assistant State Attorney General Megan Friedland reportedly said the Baumblits lived an “ostentatious lifestyle paid for by the state, in essence.”
The Baumblits flophouse business, also called “three-quarter” homes, came under scrutiny last year when the Times published a detailed investigation about the squalid living conditions their tenants face. The houses take in people recovering from drug addiction or with mental illness and receive money from the state so the residents can avoid homelessness. However, lack of regulatory oversight has attracted unscrupulous operators, like the Baumblits, seeking to rip off both their wards and the government.
The Times investigation revealed this isn’t the first time the Baumblits have had run-ins with the law. They spent time in jail for defrauding insurers through fake injury claims. Yury has also been ordered to repay $880,000 to five Atlantic City casinos for cashing bad checks during a gambling spree, according to the Times.
A judge at Thursday’s arraignment set bail at $300,000 cash for Yury and $150,000 cash for Rimma, according to the Daily News.
A lawyer for the Baumblits reportedly said his clients had been “vilified” and blamed regulators for a “lack of rules regarding the types of establishments that they own.”
“The interpretation of the rules get muddy,” he said.