Eric Schneiderman for Attorney General

NYT: “Operator of Notorious Flophouses Pleads Guilty to Medicaid Fraud”

February 26, 2018

As published by The New York Times, on February 15, 2018.

A man who ran flophouses that preyed on poor addicts and the mentally ill faces up to five years in prison after pleading guilty to Medicaid fraud and illegally removing tenants from their homes, law enforcement officials said on Thursday.

Yury Baumblit, 67, was part of a 2015 New York Times investigation into so-called “three-quarter houses,” unregulated residences in a gray area between regulated halfway houses and permanent homes. Three-quarter houses cater to people who struggle with addiction and mental illness, and to poor people who cannot afford to live in the city.

The homes were often filled with vermin, mold and even the very drug abuse that some tenants were seeking to escape. Operators crammed bunk beds into tiny rooms and blocked fire exits. Dozens of men often stayed in what had been single-family homes, usually in neglected pockets of Brooklyn, Queens and the Bronx.

Mr. Baumblit and his wife, Rimma Baumblit, 61, each pleaded guilty to two counts of grand larceny, the state attorney general’s office said. The couple admitted that they ran a kickback scheme with the Medicaid-funded treatment providers Narco Freedom, the NRI Group and Canarsie Aware, which paid the Baumblits every month for providing clients.

In return for a bed, the Baumblits’ tenants were often forced to attend outpatient drug treatment programs from the providers. If tenants did not go, Mr. Baumblit would try to evict them illegally, often successfully. Over about five years, the Baumblits received more than $1.5 million in illegal kickbacks, the attorney general’s office said.

“Yury Baumblit and Rimma Baumblit lined their pockets by preying on our most vulnerable New Yorkers,” Attorney General Eric T. Schneiderman said in a statement.

Mrs. Baumblit, 61, who had few daily dealings with tenants or the running of the homes, is expected to be sentenced to up to four years in prison.

As part of the plea deal, the couple also agreed to forfeit assets, including a 5,000-square-foot house and apartment in Brooklyn, more than 200 designer handbags, 21 fur coats, jewelry and watches. Their sale is expected to bring as much as $2.5 million in restitution for the state Medicaid program.

In a separate deal, Mr. Baumblit also pleaded guilty in Brooklyn Supreme Court to scheming to defraud tenants by evicting them illegally, putting their belongings on the street, removing their mattresses and preventing them from cooking by breaking stoves. He faces up to three years in prison, which will run concurrently with the Medicaid fraud sentence.

The Brooklyn district attorney, Eric Gonzalez, said in a statement that Mr. Baumblit treated his tenants “inhumanely”: ”They were used to make him a profit and then literally thrown to the curb.”

After the Times’ investigation, the city formed a task force to inspect three-quarter homes. The city also adopted new laws to regulate the industry, which flourished in part because the cost of rent in New York far outpaced what poor people could afford to pay. The state’s housing allowance for single people on public assistance is $215 a month, not enough for even a single room in New York City.