Arrests Follow Joint Investigation Between the State Comptroller's Office, the Otsego County District Attorney, the Otsego County Sheriff's Office, the Oneonta Police Department and the U.S. Department of Health and Human Services - Office of Inspector General
August 28, 2023
Three principals of Phinaliz Communications LLC were arrested in connection with a long-running scheme to steal over $1 million from the Medicaid program by billing for fake transportation services, duplicating and inflating costs, and paying kickbacks to Medicaid recipients, State Comptroller Thomas P. DiNapoli announced today on behalf of the joint state, local and federal investigating agencies. The three defendants, Philip Mtui, Mbaga Kaiza, and Tony Taylor, were arrested last Thursday.
"The defendants allegedly engaged in a systematic scam to defraud the Medicaid program of millions of dollars,” said New York State Comptroller Thomas P. DiNapoli. “Medicaid fraud impacts us all and diverts money from those truly in need. Thanks to the partnership between my office, Otsego County District Attorney Muehl, Otsego County Sheriff Devlin, Oneonta Chief of Police Witzenburg and the HHS-OIG, this fraud was uncovered and now these defendants will be held accountable.”
“In initiating this investigation, we immediately realized its impact and importance and are therefore appreciative of the support we received,” Otsego County Sheriff Richard J. Devlin Jr. said. “We commend our local, state, law enforcement and administrative partners, especially Paul White of Viapath Technologies, for their tireless dedication to a comprehensive and thorough investigation. Collectively, this effort identified, disrupted, and dismantled criminal activity that affected every citizen and taxpayer of New York state.”
“The disruption of this criminal behavior and associated kickbacks for fraudulent charges has an impact beyond theft,” Oneonta Police Chief Christopher Witzenberg said. “The kickbacks were undoubtably used to fuel substance abuse issues for vulnerable people, resulting in a host of other complications in our community. It is not just an example of theft and fraud from the public, but the exploitation of people for profit. I would like to thank the Otsego County District Attorney’s Office and the Otsego County Sheriff’s office, as well as the other partners in this investigation, for their cooperation and coordination.”
“HHS-OIG continuously works with our law enforcement partners to investigate individuals who are believed to have exploited federally funded health care programs for their own greed,” said Naomi Gruchacz, Special Agent in Charge with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Individuals and entities that participate in federal and state health care systems are required to obey the laws meant to preserve the integrity of program funds and the provision of appropriate, quality services to patients.”
Phinaliz Communications, based in Otsego County, is enrolled in the Medicaid program as a participating transportation provider for Medicaid recipients. Under Medicaid regulations, patients may use transportation services for legitimate appointments which are billed to the Medicaid program by the provider.
Phinaliz is owned by Mechanicville resident Mtui, 46. Kaiza, 47, is the operational manager and is also a New York state resident. Taylor, 42, is a manager, dispatcher and driver.
The joint investigation revealed that over a four-year period, Mtui and Kaiza defrauded the Medicaid program by claiming payment for rides that never occurred, and double, triple, or quadruple billing for rides that did occur. Investigators found that Medicaid enrollees were being paid kickbacks by the company to use their service and provide their information to facilitate the alleged crimes.
The crime ring was exposed through a multi-year investigation by state, local and federal authorities involving extensive surveillance and the execution of a search warrant on company headquarters. These are the first round of arrests. The investigation is continuing.
Mtui and Kaiza were arraigned in Oneonta City Court on one count of Grand Larceny in the First Degree, theft of over $1 million. Mtui and Kaiza both were held on $250,000 bail. Taylor was arrested on one count of conspiracy in the sixth degree related to the kickback scheme and will be arraigned on Sept. 19.
The Otsego County Department of Probation, the Otsego County Department of Social Services, the New York State Department of Motor Vehicles, the Oneida County Sheriff’s Office, the Saratoga County Sheriff’s Office and the East Greenbush Police Department also assisted in the investigation.
The charges filed in this case are merely accusations and the defendants are presumed innocent unless and until proven guilty in a court of law.
Since taking office in 2007, DiNapoli has committed to fighting public corruption and encourages the public to help fight fraud and abuse. New Yorkers can report allegations of fraud involving taxpayer money by calling the toll-free Fraud Hotline at 1-888-672-4555, by filing a complaint online at https://www.osc.state.ny.us/investigations, or by mailing a complaint to: Office of the State Comptroller, Division of Investigations, 8th Floor, 110 State St., Albany, NY 12236.