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Last week a Queens grand jury handed up the first criminal indictments from the probe, charging ten people with cheating Medicaid out of $3.6 million since 1986. The leaders of the ring were Surinder Panshi, 39, a Queens physician, and his father Gurdial Panshi, 68. The Panshis allegedly launched their scheme by buying three clinics that were authorized to conduct tests for Medicaid patients. They then established a network of blood collectors who combed poor neighborhoods for people willing to sell their blood for about $10 for 20 vials. The Panshi ring allegedly paid their collectors a lucrative $25 a vial, to which the suspects attached the forged signature of a physician who was supposedly requesting a test on the blood, along with the name of a legitimate Medicaid recipient. The Panshi labs would perform tests on the blood to generate legitimate-looking data, and the Government was billed as much as $2,000 a sample. Surplus vials of the blood were trafficked to other illicit clinics at a markup.
-- In one of the first uses of racketeering laws against securities traders, a federal grand jury indicted six men on criminal charges that they evaded taxes through dozens of fraudulent stock deals. The accused -- five top officers of Princeton/Newport, an investment partnership with offices in New Jersey and California, and a former trader for the Wall Street firm Drexel Burnham Lambert -- could face prison terms of up to 20 years each and fines totaling $19 million.
They allegedly used a technique called stock parking, in which an investor sells shares temporarily to someone else to hide their real ownership from Government agencies like the Internal Revenue Service. In this case, Princeton/Newport was allegedly parking stocks at Drexel so that the New Jersey firm could claim short-term tax losses on the sale. The laws against racketeering, which involves repeated crimes carried out by a person or a business, have traditionally been used against the Mafia. Bringing racketeering charges against stock swindlers is an aggressive new tactic in the war on white-collar crime.
-- The probe of insider trading based on purloined early copies of Business Week magazine expanded to include at least 16 suspects on both coasts. In the most fully investigated case so far, former Merrill Lynch Broker William Dillon, 33, is believed to have paid employees at a magazine printing plant in Connecticut to give him copies of Business Week a full day before the issue was available to the general public so he could buy stocks recommended in the "Inside Wall Street" column before the price went up. Dillon typically paid $30 an issue, but allegedly reaped profits of $2,000 or more a week.
. Merrill Lynch fired Dillon late last month after it discovered his suspicious trading pattern. Prudential-Bache, detecting an apparently separate but very similar scam, late last month fired a broker in its Anaheim, Calif., office whom it has accused of getting early copies of Business Week from a printing plant in Torrance, Calif. Last week the company that operates both plants, R.R. Donnelley & Sons (which also prints some copies of TIME), fired three workers; a fourth resigned.