A Russia-based criminal syndicate ran one of the largest Medicare frauds in American history out of a quiet Brooklyn storefront, billing the program more than $10.6 billion and collecting roughly $941 million before federal agents unraveled it, according to a recently unsealed superseding indictment. The scheme, dubbed 'Operation Gold Rush' by prosecutors, is believed to have compromised the medical records of over one million Medicare recipients and the stolen credentials of some 7,000 physicians across the United States.
Federal investigators say the operation began in 2022 when a transnational criminal organization based in Russia quietly bought up more than 30 medical supply companies across the U.S. — from California to Texas to Chicago — that were already enrolled in Medicare. The syndicate then recruited young men, primarily from Russia and Estonia, and sent them to the U.S. to act as straw owners of the companies, according to the indictment. The fraudsters then indiscriminately began blanket billing Medicare for supply reimbursements, mostly urinary catheters, using the stolen credentials of physicians and Medicare recipients.
Operation Gold Rush: How the Scheme Worked
The scale of the fraud was staggering. One medical supply company linked to the outfit submitted bills totaling over $250 million for urinary catheters in 2023 alone — amounting to $50 million more than the combined spend of every other medical provider in the country on catheters that year. The entire United States used roughly $200 million worth of catheters in 2023, meaning one fraudulent supplier billed more than the entire legitimate national market.
Thousands of fraudulent bills originated from G&I Ortho Supply in the Gravesend section of Brooklyn, one of two addresses in the borough the gang operated from. From these shell companies, prosecutors say, the gang submitted a jaw-dropping $10.6 billion in fraudulent Medicare claims. They were paid $941 million, which the gang is charged with promptly laundering through China, Israel, Pakistan, Singapore and Turkey. Among the beneficiaries billed by the ring were 67 people who were already dead, and the scheme generated more than 400,000 complaints from victims.
The Straw Owners and Money Laundering Network
The organization recruited low-level operatives to serve as nominal owners of the fraudulent medical supply companies. Aleksandr Lis, a 26-year-old Estonian national, was recruited by the gang and flew to New York where he was put up in a Times Square hotel. He lived there for nine months as nominee owner of Texas' Konaniah Medical Supplies and a Kentucky medical supply business. Instructions on how to do his job were sent to him via text message. The lonely, low-paid money-runner received $17,000 for the nine months he was on the job. Prosecutors said over $6 million in fraudulent funds passed through Lis's hands. He pleaded guilty in 2025, was sentenced to 28 months, and was deported back to Estonia.
The money laundering network was sophisticated and international. Elnar Zarbailov, a 42-year-old Staten Island resident and dual U.S.-Azerbaijan citizen, was sentenced to 37 months in prison for conspiring to launder nearly $1.5 million in illicit health care fraud proceeds on behalf of the organization. Zarbailov deposited fraud proceeds from five DME companies linked to the scheme and transferred the proceeds to accounts overseas. He was arrested at John F. Kennedy International Airport in September 2024 as he attempted to leave the United States for Azerbaijan.
Kremlin Connection and Expert Analysis
While the superseding indictment is thin on details of who was running the scheme from abroad, experts are convinced the operation goes to the top of Russian society. Jay Albanese, a criminology professor specializing in international crime rings at Virginia Commonwealth University, said: 'These are big numbers. I don't see how you become a John Gotti in Russia without the government either giving you permission or controlling what you do.'
Serguei Cheloukhine, a John Jay College professor and former Interpol officer, went further: 'At the very top of the network are the politicians and law enforcement. They are protecting the network.' The scheme has been described by some officials as potentially 'state-sanctioned,' given its scale and the apparent impunity with which it operated.
Government Response and Broader Crackdown
The June 23 announcement of the superseding indictment drew a wall of federal officials, including FBI Director Kash Patel, Acting Attorney General Todd Blanche, Health and Human Services Secretary Robert F. Kennedy Jr., and Medicare and Medicaid Administrator Mehmet Oz. The case is part of a broader Trump administration crackdown on healthcare fraud that has resulted in more than 300 charged defendants and over $14.6 billion in alleged fraud schemes in 2026 alone.
In April, the Centers for Medicare and Medicaid Services issued 1.3 million recipients new ID numbers over the breach. All 12 defendants named in the indictment are now wanted; prosecutors say the gang directed its U.S.-based members to flee across the Mexican border as arrests began. Medicare also imposed a six-month nationwide moratorium blocking new enrollments for most medical supply companies to prevent high-risk suppliers from entering the system.
For the ordinary Americans caught in the fraud, the frustration was that it ran for so long. 'Medicare was aware of it,' said Pamela Ludwig, a Nashville boutique owner whose business name was cloned by the scammers, 'so why the heck were they still paying these claims?'
