Chicago-area man charged in massive $60 million COVID-19 scam that involved ordering test kits for dead people – Chicago Tribune

A suburban Chicago man was caught up in a massive $60 million COVID-19 fraud. Over a two-month period last year, he billed Medicare for millions for home testing kits, including tests for 4,000 people who were later found dead.

Syed Shaukat Ahmed, 58, was arrested this week on three counts of criminal fraud filed in U.S. District Court: Medicare fraud, transferring fraudulently obtained funds and using illegally obtained money to pay off his mortgage.

Court records show Ahmed was stopped at O’Hare International Airport on Monday as he was scheduled to board a flight to Pakistan with his family. It was later determined that it was a pre-planned annual trip to his home country and not an attempt to evade prosecution.

Still, prosecutors initially wanted to keep Ahmed in custody, but he was released Thursday after posting $5 million bail secured by two homes – including the same Morton Grove home he allegedly paid off last year with a $560,000 cashier’s check, court records show.

Ahmed’s attorney, Eric Pruitt, declined to comment on the charges on Friday.

Syed’s arrest is the latest in a wave of similar schemes that mostly exploit government programs to reduce the cost of pandemic testing for consumers, including the Biden administration’s effort to provide free home test kits to anyone by having providers bill Medicare directly.

The charges against Syed are believed to be the largest single COVID-19 fraud case brought in a Chicago federal court since the pandemic began more than four years ago.

According to the complaint, the investigation began in April 2023 when authorities noticed a massive increase in Medicare billing for COVID-19 home tests from several Chicago-area labs.

Two of those companies, Zoom Lab Co. and Western Labs Company, both based in Chicago, were recently founded by Syed and are responsible for a surge of “astronomical proportions beginning April 17, 2023,” the complaint says.

Over a 52-day period, Syed Two labs billed Medicare a total of $60.3 million for testing more than three million home test kits on behalf of approximately 364,000 Medicare beneficiaries, the charges say.

Many of those who allegedly requested the tests lived out of state and told authorities they never asked for them, the complaint says.

In addition, Syed’s companies issued Medicare bills for around 4,100 people who later turned out to be dead, the lawsuit says. The investigation is ongoing.

When agents visited Zoom Labs’ alleged headquarters in the 2700 block of West Peterson Avenue last year, all they found was an empty storefront with a “For Lease” sign, the complaint says. A similar scenario was found at Western Labs in the 200 block of North Western Avenue, where the address led to a low-rise, vacant brick building behind a gas station.

In total, Medicare paid out $32 million to Syed’s companies before further payments were frozen in a trust account because of suspected fraud, the lawsuit says. While the fraud was ongoing, Syed withdrew hundreds of thousands of dollars from the accounts in the form of cashier’s checks, including a $569,000 check that he used to pay off his mortgage on June 15, 2023, the lawsuit says.

Federal authorities later issued warrants to seize up to $32 million from more than half a dozen bank accounts opened in Syed’s name, the indictment says.

The lawsuit against Syed was filed just a week after the arrest of another man, 46-year-old Fasiur Syed, on similar charges of fraudulently billing Medicare $6.2 million for home Covid tests through his Bensenville-based company, Advanced Diagnostic Solutions.

At Fasuir Syed’s detention hearing last week, Assistant U.S. Attorney Brian Hayes called the COVID testing programs “an epidemic in this district.”

Last year, federal authorities obtained search warrants to seize $43 million in fraudulent Medicare payments for test kits billed by a shell company called SK Diagnostics, whose headquarters were in a vacant storefront on North Cicero Avenue, court records show.

Another warrant from earlier this year sought to withhold $5.1 million in Medicare payments to a company called State Scientific, which, like other companies, had billed for a tremendous amount of testing within a very short period of time, court records show.

According to court documents, on June 5, 2023, police officers went to State Scientific’s so-called headquarters in the 1500 block of North Mannheim Road in Stone Park and found that it was actually a restaurant.

“Directly adjacent to the restaurant was a vacant area with a sign reading ‘For Lease,’ and State Scientific did not appear to be present,” the seizure warrant states.

And in April, Baqar Hussain Razv Syed pleaded guilty in federal court in Chicago to acting as a front man for a fraud involving Schaumburg-based Luna Labs. The company billed Medicare more than $14 million for fraudulent tests in a three-month period in 2023 alone, court records show.

The agreement between Baqar Syed and prosecutors states that his fellow schemers, who were not charged, agreed to pay him $10,000 a month for his services.

Sentencing by U.S. District Judge Matthew Kennelly is scheduled for July 18.

It is not clear whether there is a connection between the defendants.

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