Jay Clayton, United States Attorney for the Southern District of New York, announced on Apr. 1 the arrest of Zhan Petrosyants, also known as “Johnny,” following the unsealing of an indictment that charges him with operating a large-scale no-fault insurance fraud scheme and laundering its proceeds. Petrosyants was taken into federal custody and is scheduled to appear before U.S. Magistrate Ona T. Wang in Manhattan Federal Court.
The case highlights ongoing efforts by law enforcement to address fraudulent activities that impact insurance costs for consumers. According to authorities, such schemes can increase premiums and reduce benefits for policyholders across New York.
“As alleged in the indictment, Zhan Petrosyants orchestrated a complex scheme to cheat insurance providers out of millions of dollars,” said U.S. Attorney Jay Clayton. “No-fault insurance fraud schemes raise costs for everyone and reduce benefits to consumers, an unnecessary burden we all unfortunately share. Today’s arrest demonstrates this Office’s continuing commitment to rooting out this pernicious type of fraud that imposes costs on all New Yorkers.” FBI Assistant Director in Charge James C. Barnacle, Jr., added: “Zhan Petrosyants allegedly stole money by submitting fabricated medical claims to receive millions of dollars in unauthorized payments. The FBI remains dedicated to dismantling fraudulent schemes that exploit benefits at the expense of New Yorkers.”
The indictment alleges that under New York State law every vehicle must have no-fault automobile insurance which provides up to $50,000 per person for accident injuries regardless of fault; patients may assign reimbursement rights from insurers directly to clinics or providers if those entities are properly owned by licensed practitioners.
Authorities allege that Petrosyants and co-conspirators submitted false claims for services never provided or billed under names not controlled by licensed professionals as required by state regulations—resulting in tens of millions being billed improperly—and used shell companies and financing arrangements with a funding company affiliated with a law firm both as cover and as means for laundering proceeds.
Petrosyants faces multiple counts including conspiracy to commit healthcare fraud, wire fraud, aggravated identity theft (which carries a mandatory two-year consecutive sentence), and conspiracy to commit money laundering—all carrying significant maximum sentences if convicted; however sentencing will be determined by a judge based on congressional guidelines.
Clayton praised the work of the FBI in investigating this matter. The prosecution is being handled by Assistant U.S. Attorneys Cecilia Vogel, Christopher Brumwell, and Eli J. Mark from the Illicit Finance and Money Laundering Unit.
