A property that was purchased by a pharmacist’s family member with proceeds of alleged PBS fraud has been seized by the Australian Federal Police
In 2017 the Australian Federal Police (AFP) sought orders against Pharmacy Depot Hurstville, as well as pharmacists Yaakop (Jacob) Youssef and Hamza Amin Zoghbi, who are the shareholders and directors of the pharmacy.
The orders arose out of an investigation involving suspected fraudulent Pharmaceutical Benefit Scheme (PBS) claims made by Pharmacy Depot in respect of a specialised formula for children and adults, a product manufactured by Vitaflo Australia.
Between 30 November 2013 and 12 March 2015, Pharmacy Depot allegedly made 4,743 PBS claims for 17 different Vitaflo products.
Department of Health records show that Pharmacy Depot was identified as the top distributor in Australia for nine of the products. As a result of the claims, $18,660,260 was paid to the Pharmacy Depot account nominated for PBS payments.
Meanwhile Pharmacy Depot only ever received two invoices for the purchase of these types of products, for a total value of $2276.
The AFP sought the orders based on the suspicion that the defendants, Mr Youssef and Mr Zoghbi, had committed offences including obtaining financial advantage from the Commonwealth by deception; and/or dealing with money with a value in excess of $100,000 and which is reasonably suspected of being the proceeds of crime.
While the Supreme Court of NSW has found that there are reasonable grounds to suspect that the defendants have committed serious offences, Mr Youssef and Mr Zoghbi have not yet been found guilty of any crime.
Criminal proceedings are pending against Mr Zoghbi. Court attendance notices have been filed in respect of Mr Youssef but have not been served – as he has left the country and has not returned.
In 2015 the AFP obtained a custody and control order against the Pharmacy Depot property and further proceeds.
A further restraining order was made in 2017 in respect of a property in Arncliffe, NSW, belonging to Mr Youssef’s sister Zeinab Haidar and her husband Hussein Haidar.
In the NSW Supreme Court this year, Ms Haidar applied for her home to be excluded from the restraining order.
The home had been purchased with $558,000 that had been received from Pharmacy Depot.
Mr and Ms Haidar argued that the money was received from Pharmacy Depot by way of loans and that they were “completely ignorant” of the possibility that it may have been derived from any unlawful activity.
Her brother and Mr Zoghbi had offered to lend them money for a property after she unexpectedly fell pregnant with her fourth child in mid-2014, leaving the couple under significant financial pressure.
The Court found that the money had been deposited into the couple’s account in two instalments: $250,000 in August 2014, and $308,000 in December 2014.
However while Mr and Ms Haidar claimed they had signed two written loan agreements regarding the money, they were unable to produce either of them.
Neither of the directors of Pharmacy Depot were called to support their assertion that there were loans.
An AFP agent gave evidence to the court, saying that purported “loans” are often used by criminals to justify unexplained wealth or to disguise suspicious financial transactions.
In his experience, there were a number of common features, such as there being no loan documentation; loan documentation being ‘back-dated’ or created after the transfer of funds; no evidence of the purported lender considering the ability of the purported borrower to repay or service interest instalments, nor evidence of adequacy of security; and the purported loan often being extended to a friend or relative on a non-commercial basis.
The AFP added that “Pharmacy Depot was in the business of operating a pharmacy. It was not in the business of providing loans.”
There is no suggestions that Mr and Ms Haidar had committed any offence.
Counsel for the couple argued that the consequences of not excluding the applicants’ family home from restraint would be “potentially ruinous for them financially, they being a married couple with very modest incomes who now have five children”.
It was submitted that such consequences should be considered in the light of there being no suggestion of criminal wrongdoing on their part.
Rather they are “innocent participants” in “an incredible series of events”, argued counsel.
NSW Supreme Court Justice Robert Hulme was not persuaded that funds provided by Pharmacy Depot to Mr and Ms Haidar could be considered to be loans.
Justice Hulme noted: “While it would be easy to decide this application on the basis of sympathy, the reality is that the applicants became the registered proprietors of the property on a completely wrong basis.”
Their application for exclusion of the property from the restraining order failed.