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A 49-year-old local woman was found guilty Tuesday for her role in an elaborate $20-million healthcare fraud scheme that officials say involved Manor Medical Imaging Clinic in south Glendale and pharmacies in and around the San Gabriel Valley. This is the first case in the nation alleging an organized scheme to defraud government health care programs through fraudulent claims for anti-psychotic medications, a type of scheme that investigators say is on the increase around the nation. Court documents outline a conspiracy in which Manor operated a bogus clinic authorized to make claims to Medicare, employed a doctor to write prescriptions, and had close relationships with pharmacies and a fraudulent drug wholesale company that was used to funnel prescription drugs back to the pharmacies participating in the scheme.

Nurista Grigoryan, a Glendale resident, allegedly fraudulently used an American doctor’s name and license number when she saw homeless patients at Manor Medical Imaging Clinic in the 200 block of North Central Avenue, according to a statement from the U.S. Attorney’s Office. Grigoryan, who reportedly only holds an Armenian medical license, allegedly filled out phony prescriptions, which were already signed by physician Kenneth Johnson. He was reportedly paid for allowing his name to be used for the bogus prescriptions.

U.S. District Judge S. James Otero described the defendants as having “preyed upon the poor [and] used them as pawns,” according to the statement. Johnson, 47, of Ladera Heights and Artak Ovsepian, 32, of Tujunga were also convicted in the fraud scheme.

The plot involved so-called “prescription harvesting,” in which the clinic and other San Gabriel Valley pharmacies allegedly re-billed government healthcare programs repeatedly for expensive anti-psychotic medications, according to a federal criminal complaint. The clinic’s operators funneled prescription drugs back to participating pharmacies and black-market wholesalers, where the drugs were relabeled, repackaged and dispensed again, according to the criminal complaint.

The anti-psychotic medications that are the subject of the fraudulent prescriptions alleged in this case include Abilify, Seroquel and Zyprexa. Ninety-pill bottles of these drugs can bring a pharmacy reimbursements of up to $2,800, which is why there is a wholesale black market for these products where the drugs can be purchased for as little as several hundred dollars.The primary pharmacy involved in the case, Huntington Pharmacy in San Marino, saw a huge spike in claims to Medi-Cal – going from just under $45,000 in 2009 to nearly $1.5 million in 2010 – and the vast majority of claims were the result of prescriptions written by Manor’s in-house doctor, according to the criminal complaint, which alleges that the owners of Huntington Pharmacy were receiving kickbacks and “structuring” cash deposits totaling hundreds of thousands of dollars into their personal and business accounts.

During the three-week trial, federal prosecutors presented evidence showing how patients’ files were doctored to show that they needed medication and they were treated. Employees at the clinic reportedly used stolen identities to create thousands of prescriptions, according to the criminal complaint. They also recruited veterans, low-income seniors and Medicare and Medi-Cal beneficiaries to bill the government for illegitimate services and prescriptions.

Grigoryan and Ovsepian are scheduled to be sentenced on June 9. Johnson is expected to be sentenced on June 30. They face a mandatory two-year sentence for identity theft, but Grigoryan and Johnson also face the maximum sentence of 30 years in federal prison.

The investigation in this case, which was called Operation “Psyched Out,” was conducted by the San Marino Police Department; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; the United States Food and Drug Administration, Office of Criminal Investigations; IRS – Criminal Investigation; the United States Department of Health and Human Services, Office of the Inspector General; U.S. Immigration and Customs Enforcement; the Glendale Police Department, Organized Crime Team; and the California Department of Health Care Services, Audits and Investigations Branch.