A suburban Chicago man has been charged in a massive $60 million COVID-19 fraud scheme that billed Medicare for millions of at-home test kits over a two-month period last year, including tests for at 4,000 people who were later determined to be dead.
Syed Shaukat Ahmed, 58, was arrested this week on a three-count criminal complaint filed in U.S. District Court with Medicare fraud, transfer of fraudulently obtained funds, and using illegally obtained money to pay off his mortgage.
Agents stopped Ahmed Monday at O’Hare International Airport, where he was scheduled to board a flight to Pakistan with his family, according to court records. It was later determined that it was a pre-scheduled annual trip back to his home country, not an attempt to flee prosecution.
Still, prosecutors initially sought to have Ahmed held in custody pending trial. But he was released Thursday after posting a $5 million bond secured by two homes — including the same Morton Grove house he allegedly paid off with a $560,000 cashier’s check last year, court records show.
Ahmed’s attorney, Eric Pruitt, declined to comment on the charges Friday.
Syed’s arrest is the latest court action to stem from a wave of similar schemes, mostly taking advantage of government programs to ease costs for consumers for pandemic-related testing, including an effort by the Biden administration to provide free at-home test kits to anyone by having the providers directly bill Medicare.
The charges against Syed are believed to be the biggest single COVID-19 fraud scheme to be charged in federal court in Chicago since the onset of the pandemic more than four years ago.
According to the complaint, the investigation began in April 2023 when authorities detective a massive spike in Medicare billings for at-home COVID-19 tests emanating from several Chicago-area labs.
Two of those companies, Zoom Lab Co. and Western Labs Company, both in Chicago, had been recently founded by Syed and were responsible for a spike of “astronomical levels beginning in on April 17, 2023, the complaint stated.
Over a 52-day period, Syed two labs billed Medicare for a total of $60.3 million for tests for more than three million at-home test kits on behalf of about 364,000 Medicare recipients, the charges stated.
Many of those purported to have requested the tests lived out of state and told authorities they never asked for them, according to the complaint.
What’s more, Syed’s companies billed Medicare on behalf of about 4,100 people who turned out to be dead, the complaint stated. The investigation was ongoing.
When agents visited Zoom Labs’ purported headquarters in the 2700 block of West Peterson Avenue last year, all that was there was an empty store front with a “for lease” sign, the complaint stated. A similar scenario was found at Western Labs in the 200 block of North Western Avenue, where the address led to a low, vacant brick building behind a gas station.
In all, Medicare paid out $32 million to Syed’s companies before further payments were frozen in an escrow account due to suspected fraud, the complaint stated. While the fraud was ongoing, Syed withdrew hundreds of thousands of dollars from the accounts in the form of cashier’s checks, including one check for $569,000 that he used on June 15, 2023, to pay off his home mortgage, the complaint alleged.
Federal authorities later filed warrants to seize up to $32 million from more than half a dozen bank accounts set up in Syed’s name, the charges stated.
The complaint against Syed was filed just a week after another man, Fasiur Syed, 46, was arrested on similar allegations that he fraudulently billed Medicare for $6.2 million in home COVID tests through his company, Advanced Diagnostic Solutions of Bensenville.
At Fasuir Syed’s detention hearing last week, Assistant U.S. Attorney Brian Hayes called the COVID test schemes “an epidemic in this district.”
Last year, federal authorities filed warrants to seize $43 million in fraudulent Medicare payments for test kits billed by a shell company called SK Diagnostics, which was headquartered in an empty store front on North Cicero Avenue, court records show.
Another warrant earlier this year sought to hold $5.1 million in Medicare payments to a company called State Scientific, which like other companies had billed a massive amount of tests in a very short time period, court records show.
On June 5, 2023, law enforcement went to State Scientific’s so-called headquarters in the 1500 block of North Mannheim Road in Stone Park and found that it was actually a restaurant, court records show.
“Immediately next to the restaurant was a vacant area with a sign that read, ‘For Rent,” with no apparent presence of State Scientific,” the seizure warrant stated.
And in April, Baqar Hussain Razv Syed pleaded guilty in Chicago’s federal court to being the front man for a fraud involving Schaumburg-based Luna Labs, which in one three-month period in 2023 billed Medicare for more than $14 million in fraudulent tests, court records show.
Baqar Syed’s plea agreement with prosecutors stated his co-schemers, who have not been charged, agreed to pay him $10,000 a month for his services.
He is scheduled to be sentenced by U.S. District Judge Matthew Kennelly on July 18.
It’s not clear if any of the defendants are related.
jmeisner@chicagotribune.com
