COUNTY ATTACKS WELFARE FRAUD; GRAND JURY WANTS TO `CLOSE FLOODGATES'.
Choked by the constraints of communism, Dr. Yenok Ordoyan fled the Republic of Armenia to chase a better life in America nearly a decade ago.
Landing in sunny Los Angeles, Ordoyan immediately went to work, putting in 14 hours a day as a medical assistant in North Hollywood.
In just eight years, Ordoyan and his wife, Armenui, amassed a small fortune, including homes in Reseda and Tarzana, a Lexus, co-ownership in a North Hollywood pharmacy, and nearly $155,000 that they stashed in the bottom of a desk drawer.
They embraced the American Dream to be sure, but prosecutors charge the Ordoyan's success story is flawed: It was based on cheating the system.
The couple is accused of stealing more than $58,000 from welfare rolls to finance their lavish lifestyle. Ordoyan also is being investigated by the state for how he handled Medi-Cal reimbursements at a North Hollywood medical center, officials said.
``All the truly greedy need do to steal from the truly needy - and you, the taxpayers - is to lie,'' said Steven L. Cooley, the director of the Los Angeles County District Attorney's Welfare Fraud Division.
The Ordoyans' attorneys said the couple denies any wrongdoing, but prosecutors insist that the case reflects a welfare system fraught with abuse.
``I can assure you,'' Cooley said, ``that lying and cheating to defraud public benefit programs is occurring on a grand scale, particularly here in Los Angeles County.''
The Daily News has learned from two sources that a Los Angeles County grand jury plans to hand down a series of ``significant reform recommendations'' next month to overhaul the way the Department of Public and Social Services distributes government benefits.
``The grand jury wants to close the floodgates on welfare fraud,'' one source said.
The estimates are alarming.
Based on recent studies of welfare fraud in Orange and San Diego counties, at least 30 percent of Los Angeles County's $1.2 billion in welfare claims are bogus, authorities said.
Of the estimated $396 million in fraudulent benefits paid to Los Angeles County residents last year, officials said, the county recovered $35 million.
Cooley declined to comment on the grand jury investigation, but he described the county verification system as ``extremely flawed'' because it no longer requires home checks of each applicant.
``There is something wrong with the system that's now in place. It is built on self-disclosure and trust. That's a false assumption. A lot of people go down there and lie to get money,'' Cooley said.
Last year, fraud or misrepresentation was found in 19,500 cases, and another 10,500 recipients were deemed ineligible and lost their benefits, said Shirley Christensen, the director of the Department of Public and Social Services fraud prevention and investigation.
The major fraud cases, involving at least $50,000 or linked to other criminal activity, are referred to the District Attorney's Office.
Awash in fraudulent claims, District Attorney Gil Garcetti ordered the Welfare Fraud Division's 20 investigators to focus only on major cases two years ago.
``The ideal thing is to go out and start doing the home checks again,'' Garcetti said. ``By spending money in the beginning of the process to prevent the crime, you will save a lot of money at the end.''
Using surveillance and search warrants, the division has arrested more than 50 welfare kings and queens, and seized more than $1 million in property and assets in the past two years.
That does not include the Ordoyans.
A struggling family?
On paper at least, the Ordoyans appeared to be a struggling family of five.
Between 1992 and 1998, they never reported an income of more than $200 a month to the county and received $58,017 in welfare benefits in the form of cash and food stamps, according to court papers.
But during the same period, the couple had enough money at their fingertips to make monthly mortgage payments of more than $1,300 on their $205,000 home in Reseda, according to search warrant documents that included bank statements.
In October 1997, Ordoyan even applied for a state permit for Saturn Pharmacy and Medical Supplies Inc. in North Hollywood. In the application to the state pharmacy board, he is identified as a 25 percent shareholder and the company estimated its annual gross sales at $300,000, according to court records.
Notified of the apparent welfare scam by the state, the district attorney's investigators examined the Ordoyans' tax records, credit reports, welfare application and Department of Motor Vehicle records, eventually compiling enough evidence to take action.
When senior investigators Teresa Carver and George Mueller searched the Ordoyans' detached single-story house in Reseda in September, they found $154,933 tucked away in white envelopes at the bottom of a desk drawer, a $15,000 Lexus, airline tickets, 14 credit cards, documents listing bank accounts in the names of the Ordoyans and a semiautomatic 9 mm Luger pistol.
County regulations prohibit welfare recipients from owning a vehicle valued at $4,650 or higher or possessing more than $2,000 in personal property or cash.
In court documents, the Ordoyans argue they received the car as a gift and were able to meet their mortgage payments and save money through loans from family members.
Held on $500,000 bail, 47-year-old Yenok Ordoyan has been in a state prison for five months. Armenui Ordoyan, 41, was released on her own recognizance, in part to care for her three children all under 5, officials said.
The two will be reunited today during the closing arguments in a hearing to determine whether there is enough evidence to try them on charges of welfare fraud, which is a felony, and 21 counts of perjury.
Many of their assets have been seized; their bank accounts are frozen, and things could get much worse for Yenok Ordoyan.
Investigators from the state Attorney General's Office are investigating Ordoyan's role in Medi-Cal billing out of the Universal Family Medical Center in North Hollywood.
Richard A. Moss, a Pasadena attorney representing Ordoyan, described the state's treatment of his client as ``grossly unfair.''
``The investigation has been going on since September. If they had enough evidence to charge him, they should have done it,'' Moss said. ``They've had enough time.''
And in court papers, family and friends paint the Ordoyans as hard-working but down-on-their-luck parents who were in desperate need of government help to feed their three young children.
In one letter to the court, Glendale architect Armen R. Tor-Oganesian, a friend of Yenok Ordoyan's for more than 20 years, wrote, ``Yenok looked for any job, even newspaper delivery.''
Statements like those make Cooley, the hard-charging prosecutor responsible for catching welfare kings and queens, cringe.
Tipped off by a significant paper trail in the Ordoyans' home, investigators obtained a search warrant for the North Hollywood medical center where they found hundreds of photocopied State of California Benefits Identification Cards stuffed in brown paper bags, according to court records.
The cards are used by welfare and Medi-Cal recipients to obtain free medical care from state-authorized clinics.
Altogether, the state Attorney General's Office seized 78 boxes of patient charts, bills, identification cards, and files, as well as a hand-written document that defined medical conditions, treatments, and listed Medi-Cal billing codes, according to search warrants.
The documents could be used to bill the state for $1.2 million in Medi-Cal reimbursements, officials said.
``The information allows a nonmedically trained person to prepare a false billing statement to create an apparently legitimate claim,'' investigator Harry Blair explained in the search warrant.
Malcolm Venolia, supervising deputy attorney general, said Ordoyan's steep bail was based largely upon the strength of the state's ongoing investigation, which is expected to conclude in two to three months.
Cooley said the case against the Ordoyans is typical: There was no attempt to hide the lavish lifestyle.
``But it's important the public doesn't lose faith in the programs. There are truly needy people in the county who need these benefits,'' he added. ``We want to make sure the money and help is going to them.''
PHOTO (1 -- 2) Yenok and Armenui Ordoyan are shown in police mug shots following their arrest for welfare fraud. The couple is accused of stealing more than $58,000 from welfare rolls to finance their lavish lifestyle.
(3) Teresa Carver and Steven Cooley of the District Attorney's Office show a seized gun and cash.
Tina Gerson/Daily News
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||Mar 8, 1999|
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