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Corner of Middlebelt Rd. & Orchard Lake Rd. 681-9490 Criminal Probe Of Boston Rabbi New York (JTA) — A criminal investigation has been launched by the U.S. Attorney's Office into allegations that a Hasidic rabbi in Brooklyn, his father — the well-known Bostoner rebbe — and their associates systematically bilked Em- pire Blue Cross and Blue Shield out of $22.5 million. A spokesman for the New York State Insurance Department, Wayne Cotter, said the investigation was begun about three weeks ago. He declined to elab- orate. Sources said the Insurance Department had conducted its own investigation to de- termine if safeguards were in place to prevent a repeti- tion of the alleged scam. During that review, fraud investigators determined that there was sufficient evidence to warrant a criminal probe and referred the case to the U.S. At- torney's Office in Brooklyn. The criminal investigation comes 18 months after Em- pire Blue Cross and Blue Shield filed a civil suit against the men in U.S. District Court in Haup- pauge, L.I. The suit alleges that the rabbis and their associates set up an elaborate network of dummy companies and then listed hundreds of Israelis as employees to qualify them for inexpensive health insurance coverage. Named in the suit was Rabbi Pinchas Horowitz, known as the Chuster Ray, of the Boro Park section of Brooklyn; his father, Levi, known as the Bostoner Rebbe and based in Boston; and Reuven Finkelstein. Levi Horowitz is chairman of Rofeh, a Boston-based chari- table organization. Rofeh is Hebrew for doctor. In a statement issued this week, Pinchas Horowitz said: "When I heard of the allegations being made against me and my father in a civil case we contacted Blue Cross and voluntarily arranged to be interviewed in January 1992 by the Blue Cross lawyers to explain our lack of involvement in the matter. "We deny categorically that we did anything that was wrong or that would give rise to civil liability, and we are dismayed that the reputation of a Jewish charitable organization that has been doing exceedingly important work in the field of health care has been tar- nished by the publicizing of baseless allegations." It is alleged that the scam began in 1984 and was not discovered by Empire Blue Cross and Blue Shield until 1991. Harold Vogt, who was re- cently named chairman of the financially troubled health insurance company, was quoted this week as say- ing that Empire was con- sidering settling the suit for a nominal amount because the Chasidic group has few assets. John Kelly, a spokesman for Empire, which has 10 million subscribers and is the largest carrier in the nation, said the "suit is not yet settled." Sources familiar with the case said the suit caught the Jewish community by sur- prise because Rabbi Levi Horowitz has an impeccable reputation and has been widely praised for his altruistic work. "He has a wonderful name among doctors and the whole Jewish community in the Boston area," said someone who has known him for years. "He has given comfort to the ill and helped Jews from across the United States to find specialists. He'd often talk doctors down in price if the person couldn't afford the full fee. "He did a lot of good for the Jewish community and was very interested in health care issues," this person said. Levi Horowitz, who was born in Boston, was re- portedly in Jerusalem this week, where he lives most of the year. One of his sons, Meir, also lives in Israel. Neither Mr. Horowitz nor any of those named in the suit could be reached for comment. A source familiar with Levi Horowitz's work said he "saved 500 to 600" Israelis whom he brought to the United States for medical treatment between 1984 and 1991. The source said that although he did not know of the alleged scam, it was widely known that those Mr. Horowitz helped required expensive medical treat- ment, including bone marrow transplants and