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AG: Black-market drug ring operated through Melville pharmacy

A file photo of New York Attorney General

A file photo of New York Attorney General Eric Schneiderman (June 21, 2010) (Credit: Patrick E. McCarthy)

ALBANY - Two Long Islanders were among four men arrested yesterday for distributing illegally obtained and possibly unsafe medications to HIV patients as part of a $274 million black-market prescription drug ring.

State Attorney General Eric Schneiderman announced the arrests of participants of what he called a “massive” prescription drug ring on Long Island and in Brooklyn.

With two Suffolk County pharmacists allegedly playing central roles, the scheme revolved around illegally obtaining at least $274 million in black-market medications, selling them to HIV and AIDS patients and then billing New York State’s Medicaid program for at least $155 million in otherwise unsaleable drugs.

The pills given to patients may have included stolen and expired medications, Schneiderman said.

In the process, the defendants pocketed millions of dollars, according to Schneiderman.

Glenn Schabel, 51, a Melville resident and the supervising pharmacist at the Melville branch of MOMS Pharmacy, was accused of accepting bribes to purchase in excess of $274 million in black-market HIV medications from shell companies created around the nation.

Pharmacist Ira Gross, 58, of Babylon, who operated his own drug services company, brokered the sale of illegally obtained drugs between Schabel and another defendant, Stephen Manuel Costa, 27, a Florida resident who ran the distribution companies, Schneiderman said.

Harry Abolafia, 64, of San Antonio, Texas, created false invoices to make the transactions appear legitimate, according to an indictment.

Schneiderman said Costa operated the shell companies and paid the others from his profits: $21 million to Gross, $5 million to Schabel and $1.4 million to Abolafia.

The defendants face charges including bribery, money laundering, conspiracy, grand larceny and criminal diversion of prescription medications, all felonies. One corporation, Nuline Pharmaceuticals, also was indicted.

“The ringleaders of this complex scheme not only cheated the state Medicaid program out of millions of dollars, but preyed on some of New York’s most vulnerable patients just to make a quick buck,” Schneiderman said in a statement. “These crimes are intolerable, and the perpetrators will be held accountable for breaking the law.”

MOMS officials said they had no knowledge of Schabel’s alleged activities until contacted by law enforcement, and then cooperated with the investigation. Schneiderman aides confirmed the account. The company said that after learning of investigation, it helped remove any illegal products from the store.

“MOMS Pharmacy was a victim of this crime and will continue to cooperate fully with the New York State authorities to see that those involved are brought to justice,” Anthony Luna, president of MOMS Pharmacy, said in a statement. “The health and safety of our patients is our first priority, and we are doing all we can to make sure nothing like this happens again.”

Luna said that there is no evidence to date that medications distributed to MOMS’ patients have caused any health problems. Schabel has been fired.
Attempts to reach Schabel were unsucessful. Gross didn’t return a phone call forcomment.

The conspiracy began in 2008 and continued until February, when law enforcement intercepted a delivery of more than $1 million in illegal medications to the MOMS branch at 45 Melville Park Road, the attorney general's office said.

MOMS, headquartered in Melville, is a subsidiary of Melville-based Allion Health Care Inc., one of numerous companies named in the civil indictment.

Tags: Eric Schneiderman

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