Ex-Doctor Gets Prison for Fraud

A former doctor who masterminded major health-care fraud rings on both coasts was sentenced Monday to 16 years in state prison for using Southern California clinical laboratories to cheat the Medi-Cal program out of millions of dollars.

The sentence imposed on Surinder Singh Panshi for conspiracy, fraud, tax evasion and other felonies was the longest in the history of California’s health program for the poor, said Atty. Gen. Bill Lockyer.

Labs controlled by Panshi, 54, spawned a black market for blood and stole the identities of patients and doctors, Lockyer said. They billed Medi-Cal for bogus tests sometimes performed on blood drawn from unsuspecting patients at medical clinics or purchased from runaway children, the homeless and drug addicts.

In sentencing Panshi, Orange County Superior Court Judge Ronald P. Kreber also ordered him to return more than $2.5 million to Medi-Cal, and to pay $124,000 in back taxes to the state Franchise Tax Board. Officials say Panshi was charged with stealing $11 million, but fraud by his labs may have exceeded $20 million.

“This organized ring operated a sophisticated scam in which they stole patient identity information and illegally trafficked human blood on the streets ... to fleece the Medi-Cal program out of tens of millions of dollars,” Lockyer said in a statement. “Medi-Cal fraud is responsible for a huge chunk” of the state budget problem.

Although officials say Medi-Cal fraud is a multibillion-dollar problem, Panshi’s case stands out because of his previous record of health-care fraud convictions.

“He had the gall and brashness to try it again,” said Collin Wong, chief of the attorney general’s bureau of Medi-Cal fraud. “He has a place in the pantheon of seriously depraved criminals.”

Panshi was twice convicted of health-care fraud in New York, and served five years in prison in the 1980s. Authorities say he came to California several years ago, and gained control of more than 15 medical laboratories in Los Angeles, Orange and Riverside counties. Rather than listing himself as the owner, Panshi used confederates to operate the labs and called himself “Dr. Kahn.”

State health investigators found that, from 1997 to 2000, the labs submitted false bills for thousands of tests authorized by two dozen doctors whose identities had been stolen. They learned that some tests that Medi-Cal had paid for had been performed on old, useless blood samples or had not been done at all.

As billings sailed through, Panshi and some of his partners traveled from coast to coast. Many Medi-Cal reimbursement checks were laundered through a small store in New Jersey, where Panshi maintained a home, and through a Panshi-controlled laboratory equipment company with offices in Anaheim and Signal Hill.

The scheme, Panshi’s girlfriend told investigators, allowed him to live well. Medi-Cal money was used to buy her a $75,000 Porsche and a spacious Diamond Bar home purchased for $350,000 at a Los Angeles County auction.

After a two-year investigation by California, New Jersey and federal agencies, Panshi was arrested in 2002 and charged, along with more than two dozen individuals and businesses.

Panshi pleaded guilty in January. He will serve his sentence in California concurrently with an 18-year state prison sentence in New Jersey, where he was convicted of money laundering in connection with the scheme. His attorney, K. Sean Singh of Orange, could not be reached for comment.

Earlier this year, one of Panshi’s co-defendants, Yakoob Habib, 54, who operated a money transfer business in Anaheim, was sentenced in absentia to three years in prison for illegally sending money to Pakistan, and was fined $60,000. Muhammad Yasin, 30, of New Jersey received an eight-year sentence for fraud and tax violations, and was ordered to repay $510,000. His brother, Shazad Ahmed, 22, of New Jersey, was sentenced to three years and ordered to pay $67,000. A cousin, Saeed Ahmed, 35, of New York, was sentenced to 16 months and ordered to pay $20,000. Four co-defendants have pleaded guilty and are awaiting sentencing. Two others face trial, and two are fugitives.

Deputy Atty. Gen. Hardy Gold, who is prosecuting the case, said most of the millions of dollars that flowed through the labs was still missing.

“When Panshi was asked where all the money had gone, he pointed the finger at his co-defendants,” Gold said. “It is ridiculous. At least two defendants live in a trailer park.”