State Contractor Charged In Manhattan Federal Court For Defrauding The New York State Department Of Health Out Of Over $700,000 In Funding For Low-Income Cancer Screening

Preet Bharara, the United States Attorney for the Southern District of New York, and Thomas P. DiNapoli, the New York State Comptroller, today announced charges against JOSEPH L. JUNKOVIC for allegedly engaging in a scheme to defraud the New York State Department of Health (“NYSDOH”) out of more than $700,000 dedicated to providing cancer screening services to low-income New Yorkers. JUNKOVIC allegedly used a not-for-profit corporation that he controlled, Cancer Service Network, Inc. (“CSN”), to obtain more than $25 million in federal and state funding to administer cancer screening services, and then billed the NYSDOH for thousands of hours that he did not in fact work. He was arrested at his residence this morning and will be presented in Manhattan federal court before U.S. Magistrate Judge Ronald L. Ellis this afternoon.

Manhattan U.S. Attorney Preet Bharara said: “By diverting over $700,000 intended for low-income New Yorkers to his own pocket, Joseph Junkovic allegedly cheated the Department of Health and cynically exploited individuals in need of potentially lifesaving services. We intend to continue our work with Comptroller DiNapoli’s office – whose audit was instrumental to uncovering this alleged fraud. We will not tolerate abuse of government funding and are committed to rooting out and prosecuting the perpetrators of such fraud.”

New York State Comptroller Thomas P. DiNapoli: “As alleged, Mr. Junkovic willfully exploited impoverished clients to finance his globe-trotting, gambling and lavish shopping sprees. Working with U.S. Attorney Preet Bharara, we were able to expose this scam and plan to restore more than $700,000 to state coffers. We will continue to work together to fight public corruption and hold wrongdoers accountable.”

According to the allegations in the Complaint unsealed today in Manhattan federal court:

From April 2008 through September 2011, JUNKOVIC used CSN to obtain more than 18 separate contracts with NYSDOH, totaling more than $25 million, to provide cancer screening services for indigent New Yorkers. The $25 million was funded in part by the United States Department of Health and Human Services. CSN, however, was merely a pass-through organization run out of JUNKOVIC’s home in the Bronx, and JUNKOVIC directed the monies CSN received from NYSDOH to administer the cancer screening programs to his personal consulting company, JLJ Consulting Group, Ltd. (“JLJ”). In billing NYSDOH for his services, JUNKOVIC submitted separate invoices for each contract listing the total number of hours he claimed to have worked each month. When added together, JUNKOVIC frequently billed NYSDOH for well over 600 hours per month – more than 140 hours per week – for his purported services, even while he was frequently on vacation, spending thousands of dollars at various casinos, or making purchases at high-end clothing stores.

For some months, JUNKOVIC claimed he had worked so many hours on multiple contracts simultaneously that he was billing a total of more than 24 hours a day for his services. On other occasions, JUNKOVIC claimed he worked hundreds of hours while he was overseas. For example, for the month of August 2010, CSN billed NYSDOH for more than 590 hours of JUNKOVIC’s time, even though travel and bank records show that JUNKOVIC traveled to Vienna, Austria, on August 6, 2010 and did not return until August 30, 2010. Overall, the Comptroller’s Office, which performed an audit of JUNKOVIC’s invoices to NYSDOH, conservatively estimates that from April 2008 through May 2011, JUNKOVIC defrauded NYSDOH’s cancer services program out of more than $700,000.

JUNKOVIC, 48, of the Bronx, New York, is charged with one count of mail fraud, which carries a maximum sentence of 20 years in prison, and one count of theft of U.S. government property, which carries a maximum sentence of 10 years in prison.

Mr. Bharara praised the investigative and audit work of the Office of the New York State Comptroller.

This case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorney Andrew D. Goldstein is in charge of the prosecution.

The charges contained in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.

U.S. v. Joseph Junkovic Complaint