Case Highlights Law Enforcement Efforts to Investigate and Prosecute “Pain Clinics" that are Fronts for Criminals Who Divert Pharmaceutical Drugs
Baltimore, Maryland - Michael Resnick, a/k/a Michael Reznikov, age 54, and his wife, Alina Margulis, age 49, both of Brooklyn, New York, along with Daniel Alexander, age 53, of Pikesville, Maryland pleaded guilty today to conspiracy to distribute oxycodone and alprazolam. Margulis also pleaded guilty to money laundering, and Resnick also pleaded guilty to structuring currency deposits.
The guilty pleas were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Assistant Special Agent in Charge Don A. Hibbert of the Drug Enforcement Administration, Baltimore District Office; Special Agent in Charge Thomas Jankowski of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; Chief James W. Johnson of the Baltimore County Police Department; and Baltimore County State’s Attorney Scott Shellenberger.
“State and federal authorities are working to shut down ‘pain clinics’ that are really just fronts for criminals who divert pharmaceutical drugs," said U.S. Attorney Rod J. Rosenstein. “Michael Resnick and his wife Alina Margulis operated a clinic in which they hired Daniel Alexander to prescribe opioid drugs to people who had no medical need for the drugs. Pharmaceutical pills can be just as harmful as illegal drugs when they are used without proper oversight."
“Those who facilitate the illegal use of controlled substances negatively impact our entire community and will be held accountable," said Thomas Jankowski, Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office.
According to their plea agreements, in late 2010 and early 2011, Resnick and Margulis traveled to Florida to learn how to operate a pain clinic under the direction of co-defendant Gerald Wiseberg, who owned and operated Total Care Medical Center in Deerfield Beach, Florida. Wiseberg told Resnick that operating a pain clinic would be a lucrative business and that no medical experience was required.
By early 2011, Resnick, Margulis and Wiseberg agreed to open a similar pain management clinic in Maryland. In March 2011, the defendants opened Healthy Life in Owings Mills. Healthy Life later moved to larger space in Timonium, Maryland, until it closed on May 15, 2012. Both Healthy Life locations attracted large and unruly crowds. Customers caused disturbances outside the locations, used narcotics and engaged in narcotics transactions. Over 80% of the customers who received a prescription from Healthy Life were from out of state, and approximately 97% of the customers received at least one prescription for oxycodone.
Wiseberg hired an individual to serve as the medical director at Healthy Life because Wiseberg believed that the individual would write prescriptions for narcotics to customers without a legitimate medical need. This individual resigned as the medical director in August 2011, when the Maryland Board of Physicians-the agency authorized to issue licenses to practice medicine in Maryland and to discipline licensees-initiated an investigation into the individual’s prescribing practices. This investigation ultimately led the Maryland Board of Physicians to suspend the individual’s medical license.
In September 2012, Resnick, Margulis and Wiseberg hired another medical director, Daniel Alexander, because they believed that Alexander would likewise write drug prescriptions to customers without a legitimate medical need. Specifically, Margulis told Alexander that Healthy Life only prescribed pills and did not offer any alternative therapies.
In order to increase profits, Alexander spent a limited amount of time with each patient so that he could see a very large number of patients each day. From September 2011 to March 2012, Alexander issued prescriptions to 627 patients on 946 separate office visits. Of those 946 visits, the customer received a prescription for oxycodone 97% of the time, and a prescription for alprazolam 23% of the time, despite Alexander’s knowledge that many of the customers did not have a legitimate medical need for the drugs. In a few instances, Alexander prescribed oxycodone to customers who he simultaneously discharged from Healthy Life, based on indications they were abusing illicit drugs. Alexander was paid $150 an hour, and received a total of $30,000 for his activities in the scheme.
Just as with Total Care, Resnick, Margulis and Wiseberg, who were not doctors, established the standard operating procedures for Healthy Life, including which drugs the prescribing physician could prescribe and the maximum dosage amounts of these drugs. Healthy Life also accepted cash payments in exchange for providing prescriptions for large amounts of oxycodone, alprazolam and other drugs, to customers who did not have a legitimate medical need for the drugs.
To maximize profits, they also encouraged the prescribing physicians to prescribe the maximum amount of oxycodone to each customer; and established that prescriptions would be written for 28-day cycles as opposed to 30-day cycles. Additionally, Margulis and Resnick handled complaints by Healthy Life customers who were unhappy with the prescriptions they received, particularly when a medical provider might prescribe less oxycodone than the customer wanted. In those instances, Margulis and Resnick would intervene and ask the prescribing medical provider to reconsider, knowing it would lead the provider to give the customer what the customer wanted.
Margulis and Resnick knew when customers would fail a urinalysis screening, either because the customers had illicit drugs (such as cocaine) in their system or because their sample lacked any indication of oxycodone, thereby signaling they were diverting their previous prescription or taking more doses than indicated by their previous prescription and thereby causing them to run out of oxycodone before their next appointment. Resnick and Margulis arranged that some of these customers who failed their urinalysis screen could simply retake the test at a later time so that the customers would continue to return to Healthy Life.
Margulis and Resnick received 28% of the net profits from Healthy Life, obtaining a total of $280,000. Wiseberg received 30% of the net profits. Margulis kept the accounting books for the business. From June 2011 to April 2012, Margulis wrote monthly checks of $12,000 to an entity Wiseberg controlled. Additionally, Resnick and Margulis paid Wiseberg $165,000 in cash in 2011 for Wiseberg’s 30% share.
In order to evade currency transaction reporting requirements, Resnick and others at his direction deposited cash accumulated from customers in amounts less than $10,000 into several bank accounts for Healthy Life. Resnick admitted that he engaged in a pattern of illegal structuring involving more than $100,000 in a 12-month period.
Resnick and Margulis have agreed to the entry of an order to forfeit $280,000, the amount of illicit profits they received from the scheme. Alexander has agreed to the entry of an order to forfeit $30,000, the amount he was paid for his activities at Healthy Life.
Resnick and Margulis face a maximum sentence of 20 year in prison for the drug conspiracy. Margulis faces a maximum sentence of 10 years in prison for money laundering; and Resnick faces a maximum sentence of 10 years in prison for structuring currency deposits. Alexander and the government have agreed that if the Court accepts his plea agreement, Alexander will be sentenced to between 36 and 72 months in prison. Chief U.S. District Judge Catherine C. Blake has scheduled sentencing for Margulis and Resnick for March 18, 2016 at 10:30 a.m. and noon, respectively, and sentencing for Alexander on March 25, 2016 at 10:30 a.m.
Gerald Wiseberg, a/k/a Gerry Wiseberg and Jerry Wiseberg, age 82, of Boca Raton, Florida pleaded guilty on Oct. 15, 2015 to his participation in the conspiracy and is scheduled to be sentenced on March 7, 2016 at 9:15 a.m.
United States Attorney Rod J. Rosenstein commended DEA, IRS-CI, Baltimore County Police Department and Baltimore County State’s Attorneys’ Office for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorneys Jason D. Medinger and Peter J. Martinez, who are prosecuting this Organized Crime Drug Enforcement Task Force case.
Source: U.S. Department of Justice, Office of the United States Attorneys
