"Yury Baumblit and Rimma Baumblit lined their pockets by preying on our most vulnerable New Yorkers," said Attorney General Eric T. Schneiderman. "This should serve as yet another reminder that my office will aggressively pursue and prosecute those who seek to get rich by taking advantage of New Yorkers."

In addition to their guilty pleas, the Baumblits each executed civil settlement agreements with the Attorney General's Medicaid Fraud Control Unit. Under the terms of those agreements, each of them agreed to forfeit assets, including two properties they own in Brooklyn: a 5,000 square foot home in Manhattan Beach and a cooperative apartment in Brighton Beach. Each of them also agreed to forfeit luxury goods seized in connection with the civil action against them, including jewelry, watches, over 200 designer handbags, and 21 fur coats. The Attorney General's Office said in a statement that the sale of assets was projected to realize between $1.5 and $2.5 million in civil restitution for the New York Medicaid program.

As part of their guilty pleas, the Baumblits admitted that they had engaged in a kickback scheme with Medicaid-enrolled drug treatment providers Narco Freedom Inc., NRI Group, LLC, and Canarsie A.W.A.R.E. Inc. According to prosecutors, in exchange for monthly payments, the two individuals forced the residents at their three-quarter homes to attend treatment at these three drug programs, irrespective of the residents' actual medical need for drug treatment services, and in violation of numerous state laws. Had the patients refused, the government asserted, they would have been evicted by the Baumblits and left homeless.

Prosecutors said that the payments that the Baumblits received were based on the number of substance-abuse treatment sessions attended by residents of their three-quarter homes. According to the government, during the course of the scheme dating back to 2010, the Baumblits received over $1.5 million in illegal kickbacks through five corporations they controlled: #1 Marketing Service, Inc., R Y B Realty, LLC, Steps to Better Living Inc., Orbit Management Group Inc., and Back on Track Group, Inc. The government asserted that, as a result of this kickback scheme, the Medicaid program also paid over $2 Million to Narco Freedom Inc., NRI Group, LLC, and Canarsie A.W.A.R.E. Inc.

In 2016, NRI Group, LLC, Canarsie A.W.A.R.E. Inc., and the owner of both treatment programs, Anthony Cornachio, an attorney, were indicted by the Attorney General's Medicaid Fraud Control Unit for allegedly participating in the kickback scheme to which the Baumblits now have pleaded guilty. Criminal charges remain pending against NRI Group, LLC, Canarsie A.W.A.R.E. Inc., and Mr. Cornachio. A trial is expected later this year.

Prosecutors said that Narco Freedom was convicted last year of enterprise corruption for defrauding the Medicaid program in an allegedly related scheme.

Four of the Baumblits' corporate entities – #1 Marketing Service, Inc., R Y B Realty, LLC, Steps to Better Living Inc., and Orbit Management Group Inc. – previously were convicted of Grand Larceny in the Second Degree. The other charged corporate entity, Back on Track Group, Inc. previously was convicted of Grand Larceny in the First Degree. All the corporate entities were sentenced to a conditional discharge.

The Baumblits both were previously convicted in 2009 by the Attorney General's Automobile Insurance Fraud Unit for having participated in a no-fault insurance fraud.

Learn more:

New York Attorney Among Those Charged with Medicaid Fraud

"Three-Quarter Housing Operators" Charged with Medicaid Fraud and Money Laundering