Mikhail Zemlyansky, Alleged Ringleader Of No-Fault Insurance Scheme, Convicted On Racketeering And Other Charges
One of the alleged ringleaders of the largest no-fault auto insurance fraud schemes ever busted, Mikhail Zemlyansky, was convicted last week on racketeering, conspiracy, securities fraud, mail fraud and wire fraud charges.
Zemlyansky was convicted on March 19 for his role in the insurance fraud scheme, which bilked the insurers out of more than $100 million, as well as for operating two investment firms that stole more than $18 million from investors, according to U.S. Attorney Preet Bharara. Prosecutors say Zemlyansky also organized high-stakes illegal poker games in Mill Basin that netted thousands of dollars per game. Called “Russian Mike,” Zemlyansky is a known competitive poker player, having won more than $100,000 on the Texas Hold ‘Em circuit.
“Mikhail Zemlyansky now stands convicted of spearheading three fraud schemes: one in which the defendant and his co-conspirators billed insurance companies for over $100 million in fraudulent medical treatments, and two that swindled investors out of over $18 million,” said Bharara in a press release. “Worse yet, Zemlyansky laundered the fruits of his crimes through check-cashing entities and shell companies, and invested his criminal proceeds on luxury items. Today’s verdict ensures that he will be punished for the vortex of fraud he orchestrated.”
When sentenced in July, Zemlyansky, 37, potentially faces more than 100 years in prison.
According to prosecutors, Zemlyansky spearheaded a massive scheme to defraud auto insurance companies under New York’s no-fault insurance fraud between 2007 and 2012.
As we reported upon the sentencing of local doctor Tatyana Gabinskaya earlier this month for her role in the same ring:
The break-up of the 36-member ring in February 2012 was the largest such bust in history, spurring the government to use the Racketeer Influenced and Corrupt Organizations Act – or RICO – an anti-organized crime law allowing the prosecution of racketeering activity. All 36 were charged with conspiracy to commit mail fraud and health care fraud and some were charged with racketeering and money laundering.
According to the 2012 indictment, Zemlyansky and [Michael] Danilovich were the ringleaders of the scheme, employing “runners” who recruited those who have been in automobile accidents for a kickback. Those patients were sent to clinics they controlled through “straw owners” including Gabinskaya for unnecessary tests and medical procedures. Those medical professionals then referred every patient they saw for “modality treatments,” including physical therapy or acupuncture, sometimes as often as five times per week for each patient. The “modality clinics” were also owned by or associated with Zemlyansky and Danilovich, according to investigators.
Zemlyansky and Danilovich then referred patients to personal injury lawyers who filed bogus lawsuits, coaching them on what injuries to claim to get additional treatments. The lawyers paid the clinic controllers kickbacks for the referrals.
In addition to the insurance fraud conviction, Zemlyansky was convicted for operating two investment fraud schemes that swindled investors out of approximately $18 million. Through two phony entities – Lyans Ward & Associates and the Rockford Group – Zemlyansky ran a boiler room operation claiming to invest in lawsuits in return for a portion of future settlements. The companies doctored up phony documents and account statements used by cold callers. According to prosecutors, however, there was no investment fund at all; instead they pocketed the money and laundered it through overseas shell companies in Eastern Europe.
Zemlyansky is the 34th member of the ring to be convicted, and was detained immediately after the verdict.