A Bronx County jury has convicted John Cornachio, of Oyster Bay, New York, of Grand Larceny in the Second Degree, a class C felony, for holding a "no-show" job in order to steal from Narco Freedom Inc., a former Bronx-based, Medicaid-funded, not-for-profit corporation that was founded to provide substance abuse services throughout New York City.
Cornachio faces up to 15 years in state prison when he is sentenced on March 2, 2018.
Cornachio was remanded to jail pending sentencing.
"The defendant crafted an elaborate scheme in order to hide a no-show job and steal from New York taxpayers – exploiting a Medicaid-funded program that was intended to help those suffering from substance abuse," said Attorney General Eric T. Schneiderman. "We will continue to aggressively pursue those who perpetuate these fraudulent schemes and bring scammers to justice."
During the jury trial before Judge Jeanette Rodriguez-Morick in Bronx County Supreme Court, prosecutors presented evidence that Cornachio had colluded with Narco Freedom's management to have a "no-show" job at Narco Freedom. For over five years, the government asserted, Cornachio collected over $500,000 in salary and benefits paid by Narco Freedom. As part of his "no-show job," Narco provided Cornachio with health insurance and a generous car allowance that he used to lease a Land Rover, among other benefits, according to prosecutors.
The evidence also showed that Cornachio obtained over $300,000 from Narco Freedom through B&C Management, a shell company with no actual business that submitted fake invoices to Narco Freedom for services it never provided to the not-for-profit, the government said. Some of the payments were made in the names of John Cornachio's minor children, who were supposedly rendering substance abuse counseling, according to the charges.
In 2015, the attorney general's Medicaid Fraud Control Unit ("MFCU") indicted Cornachio, Narco Freedom Inc., its chief executive officer, Alan Brand, and 12 other individuals and corporations for defrauding the state Medicaid program. All defendants indicted in connection with Narco Freedom now have been convicted of various crimes including enterprise corruption, grand larceny, and filing false information with government offices.
As part of the Narco Freedom investigation, the attorney general's office also filed a civil action against Narco Freedom Inc. seeking asset forfeiture and other remedies, including treble damages and penalties under the New York State False Claims Act.
As part of its plea and civil agreements, Narco Freedom acknowledged that it stole from Medicaid and admitted to filing false statements with various state agencies, including the New York State Department of Health and the Office of the New York State Attorney General's Charities Bureau, in efforts to deceive and defraud these agencies. Narco Freedom filed for bankruptcy in January 2016. A bankruptcy court approved a $118 million settlement to settle Narco Freedom's outstanding government claims, including those of New York State and the federal governments; the precise amount to be recovered in the bankruptcy proceeding is yet to be determined.