Government Sentencing Letter — United States v. Arkadiy Khaimov (E.D.N.Y., Dkt. 51, May 3, 2022)

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A sentencing letter dated May 3, 2022 from the government to the Honorable Joan M. Azrack in United States v. Arkadiy Khaimov, Criminal Docket No. 20-267 (JMA), Document 51, filed 05/03/22; sentencing is scheduled for May 26, 2022. It states that Khaimov pleaded guilty on August 12, 2020 to conspiracy to commit mail and wire fraud and organized a scheme to defraud a pharmaceutical manufacturer (John Doe Company 1) of approximately $7.2 million through a Co-pay Coupon Program. The government asks for a sentence within the Guidelines range of 51-63 months' imprisonment, followed by three years of supervised release, with a forfeiture judgment of $489,534.25 and restitution of $7.2 million. It is signed /s/ Bradley T. King for United States Attorney Breon Peace.

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Case 2:20-cr-00267-JMA-SIL Document 51 Filed 05/03/22 Page 1 of 7 PageID #: 446

                                                  U.S. Department of Justice


                                                  United States Attorney
                                                  Eastern District of New York
BTK                                               610 Federal Plaza
F.#2020R00154                                     Central Islip, New York 11722



                                                  May 3, 2022

By ECF and E-mail

The Honorable Joan M. Azrack
United States District Court
Eastern District of New York
100 Federal Plaza
Central Islip, New York 11722

              Re:    United States v. Arkadiy Khaimov
                     Criminal Docket No. 20-267 (JMA)

Dear Judge Azrack:

                The government respectfully submits this letter regarding defendant Arkadiy
Khaimov, whose sentencing is scheduled for May 26, 2022. On August 12, 2020, the
defendant pleaded guilty to conspiracy to commit mail and wire fraud in violation of Title
18, United States Code, Sections 1341, 1343 and 1349. (See Sept. 30, 2020 United States
Probation Dep’t (“Probation”) Presentence Investigation Report (“PSR”) at ¶ 1). Between
February 2017 and July 2018, the defendant organized a scheme to defraud a pharmaceutical
manufacturer (“John Doe Company 1”) of approximately $7.2 million by submitting false
claims under a Co-pay Coupon Program (the “Co-pay Program”) that John Doe Company 1
instituted to provide the uninsured and those in need of financial assistance with access to a
“groundbreaking therapy” (the “Medication”) that treated a disease afflicting millions of
people who faced “serious and life-threatening consequences” without access to the
Medication. (See PSR at ¶¶ 5-9; Oct. 27, 2020 Second Addendum to the Presentence Report
(“APSR 1”) at 1). Because of the defendant’s scheme, funds intended for the needy were
instead diverted to the defendant and his co-conspirators, who lined their pockets with stolen
cash. As described below, the Court should impose a sentence within the United States
Sentencing Guidelines (“Guidelines”) range of 51-63 months’ imprisonment, to be followed
by three years of supervised release. In addition, the Court should enter a forfeiture
judgment of $489,534.25 and enter an Order of Restitution of $7.2 million in favor of John
Doe Company 1.
Case 2:20-cr-00267-JMA-SIL Document 51 Filed 05/03/22 Page 2 of 7 PageID #: 447




I.     Procedural Background

              On August 12, 2020, before the Honorable A. Kathleen Tomlinson, the
defendant pleaded guilty to a single-count Indictment, charging him with conspiracy to
commit mail and wire fraud. (PSR at ¶ 1).

II.    The Offense Conduct

               Between 2017 and 2018, the defendant organized a scheme to defraud John
Doe Company 1 of Co-pay Coupon Program payments that were intended to lower the cost
of the Medication, a “priceless breakthrough” that offered a “potential [] cure” to more than 2
million people suffering the effects of a disease with “serious and life-threatening
consequences.” (APSR at 1). Exploiting John Doe Company 1’s “commitment to making its
therapies available to people who are uninsured or need financial assistance to cover the
treatment cost,” the defendant and his co-conspirators used the computers of pharmacies that
they operated in Queens and Manhattan, New York, to submit false Co-Pay Program claims
for amounts of the Medication that the pharmacies never actually dispensed. (PSR at ¶¶ 4, 8,
64). 1

               As intended, to assist patients in need of the Medication, John Doe Company 1
agreed to cover a portion of patients’ out-of-pocket costs for the Medication. (Id.). When
patients presented coupon cards to purchase the Medication, pharmacies would apply the
benefit amount to the patient’s co-payments and then request reimbursement from John Doe
Company 1’s program administrator, John Doe Company 2. (PSR at ¶¶ 4, 8, 64).

               The defendant manipulatively abused John Doe Company 1’s sincere
commitment to those in need by submitting false Co-pay Program claims through pharmacies
that he controlled with his co-conspirators. (PSR at ¶ 6). To maximize the amount of money
he could steal, the defendant organized his scheme to request reimbursement for an 18- or
21-day supply of the Medication, instead of the standard 28-day supply. This allowed the
defendant and his co-conspirators to submit more than one reimbursement application per
month. (Id.). In the overwhelming majority of cases, the defendant and his co-conspirators
requested more than $23,000 in reimbursement for each 18- or 21-day supply of the
Medication. Once in receipt of the fraudulently obtained reimbursement, the defendant
would immediately disburse the money to various companies in an effort to conceal his
fraud. (Id.).




       1
          Although the PSR states that prescriptions were generated to support the defendant’s
fictitious claims, the government’s investigation showed that the defendant and his co-
conspirators made claims on behalf of patients, many of whose identities were entirely
fictitious, that were not supported by any documented prescriptions. (See PSR at ¶ 6).

                                              2
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                For example, on May 1, 2018, the defendant fraudulently obtained a $3.5
million Co-pay Program check and then caused nine checks totaling $2.4 million to be issued
from the bank account of one of the pharmacies that he controlled, Pharmacy 1, to various
companies over the next two days. (PSR at ¶ 7). By the time John Doe Company 2 detected
the fraud, the funds had already been disbursed and could not be recovered. (Id.).

               In addition, the defendant engaged in similar conduct with two other
pharmacies. As with Pharmacy 1, between February 2017 and January 2018, the defendant
and his co-conspirators accessed these pharmacies’ computer systems to submit fabricated
Co-pay Program claims, totaling approximately $4.8 million. (PSR at ¶ 8). As with
Pharmacy 1, the defendant directed his co-conspirators to deposit checks into bank accounts
that he controlled and would then liquidate the accounts quickly so the funds could be
disbursed before his fraud was detected. (Id.). Ultimately, the defendant’s scheme was
revealed and he was arrested on June 11, 2020 at John F. Kennedy International Airport,
where he was about to board a flight to Switzerland. (Id.).

               During his pretrial release on a substantial and restrictive bond, the defendant
continued to flout rules regulating his behavior. Specifically, between August 7, 2020 and
October 17, 2020, the defendant violated his home detention conditions ten times by failing
to provide his supervising officer with an itinerary of sites he visited when he was only
approved to leave his residence to travel for religious services. (APSR at 3). On December
21, 2020, the defendant was remanded following his arrest in a case pending before the
Honorable Ann M. Donnelly and, on or about April 14, 2022, this Court and Judge Donnelly
ordered him released on bond pending sentence in this case.

III.   The Defendant’s Guidelines Range and Criminal History

               In his plea agreement, the defendant stipulated to a total Guidelines offense
level of 24, based upon the same Guidelines calculation that the Probation Department has
concluded is appropriate here. (PSR at ¶¶ 23, 68). Because the defendant’s Criminal History
Category is I, the applicable Guidelines’ range of imprisonment is between 51 and 63
months. (Id. at ¶¶ 26, 68).

IV.    A Guidelines Sentence Is Appropriate

              A.      Legal Standard

                 In United States v. Booker, the Supreme Court held that the Guidelines are
advisory and not mandatory, and the Court made clear that district courts are still “require[d]
. . . to consider Guidelines ranges” in determining sentences, but also may tailor the sentence
in light of other statutory concerns. 125 S. Ct. 738, 743 (2005); see 18 U.S.C. § 3553(a).
Subsequent to Booker, the Second Circuit held that “sentencing judges remain under a duty
with respect to the Guidelines . . . to ‘consider’ them, along with the other factors listed in
section 3553(a).” United States v. Crosby, 397 F.3d 103, 111 (2d Cir. 2005). Although the

                                               3
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Court declined to determine what weight a sentencing judge should normally give to the
Guidelines in fashioning a reasonable sentence, the Court cautioned that judges should not
“return to the sentencing regime that existed before 1987 and exercise unfettered discretion
to select any sentence within the applicable statutory maximum and minimum.” Id. at 113.

              Later, in Gall v. United States, the Supreme Court elucidated the proper
procedure and order of consideration for sentencing courts to follow: “[A] district court
should begin all sentencing proceedings by correctly calculating the applicable Guidelines
range. As a matter of administration and to secure nationwide consistency, the Guidelines
should be the starting point and the initial benchmark.” 552 U.S. 38, 49 (2007) (citation
omitted). Next, a sentencing judge should “consider all of the § 3553(a) factors to determine
whether they support the sentence requested by a party. In so doing, [the Court] may not
presume that the Guidelines range is reasonable. [The Court] must make an individualized
assessment based on the facts presented.” Id. at 49-50 (citation and footnote omitted).

                   B. Argument

               The government respectfully submits that the Court should impose a sentence
within the advisory Guidelines range of imprisonment because such a sentence is appropriate
to account for the “nature and circumstances of the offense” and to “reflect the seriousness of
the offense, to promote respect for the law, and to provide just punishment for the offense.”
18 U.S.C. § 3553(a)(1)-(2)(A). A sentence within the Guidelines range will also promote
specific and general deterrence. See id. at § 3553(a)(2)(B).

              1.     Nature and Circumstances of the Offense

               In a greedy gambit to enrich himself, the defendant elected to cynically steal
more than $7 million from a company that sought to make a lifesaving medication widely
available to the neediest among us. His post-hoc self-serving claims of contrition aside, the
defendant was the organizer of this scheme and showed no signs of remedying his fraud until
he was caught by law enforcement officers while en route to Switzerland. Although the
defendant has agreed to pay restitution, the Victim Impact Statement that John Doe Company
1 submitted demonstrates that the defendant caused damage to John Doe Company 1 in the
form of more than $7 million in losses and costs incurred in deploying “significant employee
time investigating and remedying the fraud,” which the defendant perpetrated by exploiting
John Doe Company 1’s concern for some of our Nation’s neediest citizens. As such, the
defendant’s lies not only harmed a company dedicated to providing cutting-edge therapies to
people suffering with a life-threatening disease, it also took resources away from vulnerable
patients who depend on John Doe Company 1’s medication reimbursement program to
survive. When pharmaceutical companies suffer financial losses because of scams
perpetrated by individuals concerned solely with lining their pockets, like the defendant,
there is potential for medication prices to rise and become even more out of reach of the poor
and sick. In short, the defendant’s fraud was egregious and demands the significant
punishment set forth in a Guidelines sentence.

                                              4
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              2.     Seriousness of the Offense and Deterrence

                A Guidelines sentence is necessary to reflect the seriousness of the offense,
promote respect for the law and provide general deterrence. As noted above, the defendant
orchestrated his scheme to seek reimbursement of 18- or 21-day supplies of the Medication
so that he and his co-conspirators could submit an additional fraudulent claim for around
$23,000 per supply of the Medication each month. In so doing, the defendant demonstrated
that his sole focus was on maximally exploiting the largess of program designed to provide
life-saving medication to the poor and needy. Given the defendant’s willingness to so
blatantly place his greed above the interests of those most vulnerable, a Guidelines sentence
is necessary to both deter him from committing additional frauds in the future and to send a
message to those who would exploit beneficent programs for personal gain that the decision
to do so will be met with the significant consequences reflected in a Guidelines sentence. 2

                Additionally, given that criminal conduct like the defendant’s is typically
difficult to detect and prosecute, there is a greater need for general deterrence. See, e.g.,
Harmelin v. Michigan, 501 U.S. 957, 988 (1991) (noting that “since deterrent effect depends
not only upon the amount of the penalty but upon its certainty, crimes that are less grave but
significantly more difficult to detect may warrant substantially higher penalties”). Moreover,
because “economic and fraud-based crimes are more rational, cool and calculated than
sudden crimes of passion or opportunity, these crimes are prime candidates for general
deterrence.” See, e.g., United States v. Martin, 455 F.3d 1227, 1240 (11th Cir. 2006)
(quoting Stephanos Bibas, White–Collar Plea Bargaining and Sentencing After Booker, 47
Wm. & Mary L. Rev. 721, 724 (2005)) (internal quotation marks omitted)); United States v.
Heffernan, 43 F.3d 1144, 1149 (7th Cir. 1994) (“Considerations of (general) deterrence argue
for punishing more heavily those offenses that either are lucrative or are difficult to detect
and punish, since both attributes go to increase the expected benefits of a crime and hence
the punishment required to deter it.”); Drago Francesco, Roberto Galbiati & Pietro Vertova,
The Deterrent Effects of Prison: Evidence From a Natural Experiment, 117 J. of Political
Econ. 257, 278 (2009) (“Our findings provide credible evidence that a one-month increase in
expected punishment lowers the probability of committing a crime. This corroborates the
theory of general deterrence.”).

               Congress recognized the need to afford adequate deterrence as “particularly
important in the area of white collar crime” when it adopted Section 3553. See S. Rep. No.

       2
         The defendant’s reference to his medical conditions in his sentencing submission
only further underscores the need for specific deterrence here. That the defendant’s
longstanding experience as a medical patient did nothing to deter him from stealing blatantly
from a program designed to help less fortunate individuals, who were dealing with the
significant effects of a life-threatening disease, only further underscores the need for the
Court to impose a Guidelines sentence to ensure that the defendant will not commit future
frauds.

                                              5
Case 2:20-cr-00267-JMA-SIL Document 51 Filed 05/03/22 Page 6 of 7 PageID #: 451




98-225, at 76 (1983), reprinted in 1984 U.S.C.C.A.N. 3182, 3259. Congress rightly was
disturbed that “white collar criminals often are sentenced to small fines and little or no
imprisonment,” and noted that, “[u]nfortunately, this creates the impression that certain
offenses . . . can be written off as a cost of doing business.” Id.

               In adopting the Section 3553 sentencing factors, Congress emphasized the
essential deterrent value of imprisoning white collar criminals, even when those criminals
themselves might be unlikely to reoffend:

                The Committee is of the view that in the past there have been many cases,
                particularly in the instances of major white collar crime, in which probation
                has been granted because the offender required little or nothing in the way of
                institutionalized rehabilitative measures . . . and because society required no
                insulation from the offender, without due consideration being given to the fact
                that the heightened deterrent effect of incarceration and the readily perceivable
                receipt of just punishment accorded by incarceration were of critical
                importance. The placing on probation of [a white collar criminal] . . . may be
                grossly inappropriate . . . in cases in which the circumstances mandate the
                sentence’s carrying substantial deterrent or punitive impact.

Id. at 91-92.

              In short, medical scam operators who seek to profit from fraud and deception,
which costs companies, patients, and the pharmaceutical industry more than $7 million,
should know that their decision to cheat and steal will result in stern consequences.

                3.     Promote Respect for the Law and Provide Just Punishment

               A Guidelines sentence should be imposed to reflect the seriousness of the
offense, promote respect for the law and provide just punishment. Although the defendant
elected to plead guilty, he played a major role as the organizer of a fraudulent scheme, which
caused significant harm to John Doe Company 1’s life-saving mission. As explained in John
Doe Company 1’s Victim Impact Statement, the more than $7.2 million that the defendant
stole would have been used to support patients suffering from a “serious and life-
threatening” disease. (APSR at 1-2). These effects demand a significant punishment that is
reflected in the Guidelines range of between 51 and 63 months’ imprisonment. Such a
sentence would be in keeping sentences imposed upon similarly-situated defendants. See,
e.g., United States v. Murray, 14-CR-613 (RMB) (S.D.N.Y. 2015) (63-month sentence
imposed upon defendant for orchestrating a substantial Medicaid fraud resulting in losses of
over $1 million in Medicaid disbursement).




                                                6
Case 2:20-cr-00267-JMA-SIL Document 51 Filed 05/03/22 Page 7 of 7 PageID #: 452




V.     Conclusion

              For the reasons discussed above, the government respectfully requests that the
Court impose a Guidelines sentence of between 51 and 63 months’ imprisonment to be
followed by three years’ supervised release and that the Court enter a forfeiture judgment in
the agreed-upon amount of $489,534.25 and enter a restitution order of $7.2 million in favor
of John Doe Company 1.

                                           Respectfully submitted,

                                           BREON PEACE
                                           United States Attorney
                                           Eastern District of New York

                                    By:    /s/ Bradley T. King
                                           Bradley T. King
                                           Assistant U.S. Attorney
                                           (631) 715-7900


cc:    Isabelle A. Kirshner & Wayne E. Gosnell, Esqs. (by ECF and E-mail)
       Probation Officer Steven S. Guttman (by E-mail)




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