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The Record (Bergen County, NJ) December 16, 1998; WEDNESDAY; ALL EDITIONS


Copyright 1998 North Jersey Media Group Inc., All Rights Reserved  
The Record (Bergen County, NJ)

December 16, 1998; WEDNESDAY; ALL EDITIONS


LENGTH: 620 words



The state will ask a Superior Court judge Thursday to order North
Jersey neurologist Magdy Elamir to immediately return more than $ 6
million it claims he fraudulently took from his failed health
maintenance organization.

An order to show cause filed Tuesday by the state Attorney
General's Office demands that Elamir return $ 6,115,384.84 the state
alleges he took from the American Preferred Provider Plan or post a bond
in that amount.

The state's latest legal action comes less than a week after a
Superior Court judge allowed state Banking and Insurance Commissioner
Jaynee LaVecchia to take control of the troubled HMO, which has 44,000
members statewide, including 13,000 in Passaic County and 3,000 in
Bergen County.

The state has accused Elamir, who owns the HMO, of siphoning off
state Medicaid funds for personal use, driving the company $ 25 million
into debt.

The show cause order asks Judge Anthony Parrillo in Trenton to
freeze the personal assets of Elamir, who lives in Saddle River, if he
does not return the $ 6 million or post a bond in that amount.

Parrillo rejected the state's request two weeks ago that Elamir's
personal assets be frozen, saying such a step is premature.

Michael Chertoff, a former U.S. attorney who is Elamir's attorney,
said the state's papers don't give the complete picture of the company's

"It's a one-sided picture of what's going on,"he said."It would
be unfortunate if the state's approach is to find someone to punish,
rather than solve the problem."

Chertoff said Elamir would like to work with the state in its
effort to rehabilitate the HMO.

The state's filings in connection with its order to show cause
provide new details about the alleged illegal cash transfers by Elamir.

The state has already accused Elamir of illegally transferring more
than $ 9 million in HMO assets, including $ 4 million in loans, to start
other HMOs in Michigan and Washington.

But Winnie Comfort, a spokeswoman for the state Department of
Banking and Insurance, said Elamir is only being asked to return $ 6
million at the moment, because that's all the state can document so far.

She said auditors are still reviewing the company's books.

The state's papers include a certification by accountant Kevin
Margiatto, who alleges American Preferred Provider Plan paid almost $ 2
million between Dec. 1, 1997, and Sept. 1, 1998, to four entities tied
to Elamir or the HMO without explanation for the payments.

The accountant also found that Elamir was paid a gross salary of
$ 8,000 per week by the HMO between Dec. 1, 1997, and Aug. 28, 1998. But
Margiatto said he could not find any explanation why Elamir was paid an
additional $ 725,000 during that period.

Margiatto also alleged that American Preferred sometime between
December 1997 and September 1998 transferred $ 50,000 of the HMO's assets
to Elamir's private practice, The Jersey City Neurological Center, again
without any explanation.

During that same period, the accountant also found that American
Preferred allegedly transferred another $ 123,506.84 from the HMO to
Elamir and a realty company he owns.

Another $ 50,000, between December 1997 and August 1998, was
allegedly transferred from the HMO to U.S. Limo, which also is owned by
Elamir, the accountant found. The transportation service also was paid
another $ 545,000 by American Preferred for transporting HMO patients.

But Margiatto alleged that there was no documentation to show that the
transportation services were provided.

State officials refuse to say whether they are considering criminal
charges against Elamir.