Federal law enforcement officials report they arrested Zhan Petrosyants, charging him with operating an extensive no-fault automobile insurance f
raud scheme that involved submitting tens of millions of dollars in fraudulent medical claims and laundering the proceeds.
Petrosyants, 44, also known as “Johnny,” of Edgewater, New Jersey, is charged with conspiracy to commit healthcare fraud, conspiracy to commit wire fraud, aggravated identity theft, and conspiracy to commit money laundering.
The scheme was allegedly carried out between 2018 and 2023, causing insurance providers to be billed tens of millions of dollars in fraudulent no-fault medical claims.
The arrest of Petrosyants, who media reports describe as a restaurateur and close friend of former New York City Mayor Eric Adams, comes as lawmake
rs in Albany are currently embroiled in budget negotiations where one sticking point has been a serie
s of auto insurance reforms proposed by Gov. Kathy Hochul that are aimed in part at combating no-fault insurance fraud.
NY Lawmakers Urged to Have Faith in Auto Insurance Reform Numbers. But Do They?
A lawyer for Petrosyants told The New York Times that he had pleaded not guilty and intends to “vigorously” defend against the charges.
This is not the first instance of auto insurance related charges involving Petrosyants. In 2014, he and his twin brother, Robert, pleaded guilty to a check
cashing scheme designed to evade anti-money laundering reporting requirements. The scheme involved no-fault accident claims.
Current Indictment
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In the indictment filed yesterday in federal district court in Manhattan, prosecutors maintain that insurance claims submitted by Petrosyants and his co-conspirators were
for services that were never provided, services that were unnecessary and excessive, and services that were billed under the names of
medical corporations that were not actually owned, operated, and controlled by licensed medical professionals, as required by state law.
According to prosecutors, to carry out the scheme, Petrosyants recruited purported physicians, psychologists, and other clinicians under whose names the fraudulent no-fault insurance claims were submitted. Prosecuto
rs say the conspirators frequently used the license information and signatures of licensed psychologists and medical professionals.
If insurance companies had known that the medical corporations were owned and controlle
d by non-medical professionals, or that the claims were inflated with testing or services that were not medically necessary, they would have denied payment for the claims, prosecutors stated.
According to the indictment, after claims were submitted, Petrosyants allegedly then used them to obtain a portion of the claim amounts through financing agreements with funding companies. One such company that was affiliated
with an unnamed law firm provided quick access to advances and “provided a veneer of legitimacy to the scheme,” the indictment says.
Petrosyants received a referral fee from the funding company as well as kickback payments from his co-conspirators, according to the indictment. Further, prosecutors say the funding company paid millions in advances on no-fault medical claims to two shell corporations and was then
transferred to a bank account nominally held by a jewelry business based in the Diamond District of midtown Manhattan.
