Charges Include Largest Substance Abuse Treatment Fraud Scheme Ever Prosecuted by the Department of Justice
The Justice Department today announced charges against 15 defendants, including six medical professionals, for health care fraud schemes that collectively resulted in over $1.8 billion in fraudulent claims to government and private health care programs. This includes over $1.6 billion billed in a scheme to lure vulnerable individuals to California for sham substance abuse treatment, the largest case of its type ever prosecuted by the Department; $134 million fraudulently billed to Medicare for unnecessary atherectomy procedures that resulted in injury to patients; and over $138 million fraudulently billed to Medicare in three different hospice fraud schemes where the patients were not terminally ill. In addition, another defendant was indicted after previously being charged by complaint in a $270 million scheme to defraud Medi-Cal, California’s Medicaid program, by submitting pharmacy claims for bogus prescriptions.
Eight defendants were arrested today, six of whom are expected to make their initial appearances this afternoon at the U.S. District Court in downtown Los Angeles, and two of whom are expected to make their initial appearances at a U.S. District Court in Texas.
“These charges include the largest sober home fraud scheme the Department has ever prosecuted, and a scheme involving unnecessary invasive procedures detected through data analytics,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “Our message is simple: if you steal health care dollars from the American taxpayer or abuse your position to harm patients, we are coming for you – and the data will lead us to wherever you are.”
“Today the FBI and our partners executed 8 arrests, with 7 additional defendants charged, after the subjects involved allegedly orchestrated a multi-year healthcare fraud scheme resulting in $1.8 billion in losses,” said FBI Director Kash Patel. “The defendants – including 6 medical professionals – made fraudulent claims to steal from taxpayer funded healthcare and insurance programs, including substance abuse treatment programs, hospice care, and Medicare programs in the Los Angeles area designed to help the most vulnerable. Under President Trump’s leadership with the White House Task Force to Eliminate Fraud, stealing from American taxpayers will no longer be tolerated in this country. This FBI will continue to move aggressively with our Department of Justice to dismantle fraud networks stealing from hard working taxpayers.”
“It is especially egregious when doctors and other health care professionals, who pledged to do no harm, resort to petty greed and criminality,” said First Assistant U.S. Attorney Bill Essayli for the Central District of California. “The cases announced today represent billions of dollars in intended losses. Every dollar drained out of our private and public health insurance systems is one less dollar available to those who truly need it.”
“Healthcare fraud cheats American taxpayers and health care programs out of billions of dollars,” said Patrick Grandy, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI will continue to work with our law enforcement partners to do everything in our power to safeguard our government health care programs and the taxpayers picking up the bill.”
“The magnitude of the fraud alleged in these cases reflects the extraordinary lengths bad actors will go to profit at the expense of patients,” said Acting Deputy Inspector General for Investigations Miranda L. Bennett of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Today’s takedown sends a clear message: no matter how complex the scheme, those who exploit patients and steal from federal health care programs will be identified and held accountable. HHS-OIG remains committed to working with our law enforcement partners to protect beneficiaries, safeguard taxpayer dollars, and preserve the integrity of federal health care programs.”
“Healthcare fraud is not a victimless crime,” said Darren Lian, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office. “It harms patients, drives up healthcare costs, and diverts critical resources away from those who genuinely need care. These investigations demonstrate the unique role IRS Criminal Investigation plays in uncovering complex fraud schemes by following the money. Working alongside our law enforcement and prosecutorial partners, we remain committed to identifying those who exploit healthcare programs for personal gain, protecting the integrity of our healthcare system, and holding offenders accountable.”
Substance Abuse Treatment Fraud
U.S. v. Nathan Young, David Young, Honey Phipps, and Cody Phipps
Nathan Young, also known as “Pablo,” 39, and David Young, also known as “Sancho Lopez,” 71, both of Los Angeles, and Honey Phipps, 42, and Cody Phipps, 36, both of Greenville, Texas, were charged with a years-long scheme to traffic vulnerable patients from around the country to Southern California and elsewhere to receive sham substance abuse treatment that was billed to private insurance companies to the tune of over $1.6 billion.
“By diverting critical funding from a vulnerable community, the accused stripped away a vital lifeline for those seeking addiction recovery support,” said David Olesky, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Los Angeles Field Division. “DEA is honored to be a part of this multi-agency effort investigating and holding accountable those that exploited their positions of trust within the medical community. I am proud of the long hours and tireless commitment our DEA Diversion team and our partners poured into this investigation.”
As alleged in the indictment, father and son David and Nathan Young controlled dozens of purported substance abuse treatment companies in the Los Angeles area and around the country. The Youngs directed “body brokers,” including Honey and Cody Phipps, to target vulnerable populations, such as individuals who were unhoused and in poverty and individuals attending substance abuse support groups. The defendants allegedly sought out individuals whose insurance policies provided the most generous reimbursements, and often fraudulently enrolled individuals in new insurance policies for which they were not eligible, to ensure that they obtained the highest reimbursement for their sham treatment. The defendants lured these prospective patients to Southern California and elsewhere by offering them free flights, money, apartments, hotel stays, cars, gift cards, marijuana, cigarettes, controlled substances (including illegal drugs), and other prescription medications freely dispensed by doctors employed by the Youngs.
Once in California, however, most patients found that the promises made by the conspirators were illusory. Some so-called “premium” patients with high-reimbursing insurance policies received luxurious accommodation, stays in hotels and private apartments, and dinners, among other inducements, whereas the “non-premium” patients lived in cramped, unsanitary, crowded, and often derelict housing described as “trap houses.”
The Youngs would recycle patients through their facilities to continue billing insurance, regardless of whether treatment was medically necessary or actually provided. To keep patients cycling through their facilities, the Youngs directed that patients be drugged with medication — “to knock the client out” — if they tried to leave.
The Youngs also offered drugs to patients, cut them off from communication with family members, prevented them from accessing their belongings, and physically blocked them from leaving the facilities so as to continue billing their insurance policies. For example, when he was informed that a premium patient wanted to leave detox so he could smoke weed, Nathan “Pablo” Young instructed that the patient should be given what he wanted, off-site from the detox, to keep him there:
Text messages in which Nathan “Pablo” Young directs employee to offer drugs to detox patient to keep patient in detox so that the patient’s “premium” insurance could continue to be billed
The conspirators further instructed employees to coach patients to fabricate symptoms so they would be eligible for detoxification services. In some instances, as a result of policies instituted by the Youngs, patients were encouraged to use drugs or alcohol to become eligible for “treatment.” Once patients were out of detox, the Youngs provided substance abuse “therapy” that in reality consisted of Zoom sessions with more than one hundred attendees that patients did not have to participate in except to turn on their cameras. Patients were told that they could “lay out on [the] beach” without having to participate in therapy that was subsequently billed to insurance companies:
Text messages in which Cody and Honey Phipps explain to a prospective substance abuse treatment patient that they will not have to attend Zoom therapy and can instead “stick [the] video back at [the] ceiling” and “Lay out on [the] beach,” all while their insurance is being billed for therapy
The four defendants are charged with conspiracy to commit health care fraud and wire fraud, conspiracy to violate the Eliminating Kickbacks in Recovery Act (EKRA), three counts of health care fraud, and two counts of violating EKRA; Nathan and David Young are charged with an additional five counts of health care fraud and an additional four counts of violating EKRA.
FBI, IRS-CI, and DEA are investigating the case.
Trial Attorneys Siobhan M. Namazi and Erika V. Suhr of the Fraud Division’s Health Care Section and Assistant U.S. Attorney Haoxiaohan Cai for the Central District of California are prosecuting the case. Assistant U.S. Attorney Tara Vavere for the Central District of California is handling asset forfeiture.
U.S. v. Nicholas Moore
Nicholas Moore, 33, of North Myrtle Beach, South Carolina, pleaded guilty to a superseding information charging him with conspiracy to commit health care fraud and wire fraud in connection with the substance abuse treatment fraud allegedly committed by Nathan Young, David Young, Cody Phipps, and Honey Phipps. Moore managed and served as a nominal owner and director of certain of the Youngs’ facilities, and his co-conspirators trafficked vulnerable patients to purported substance abuse treatment facilities in Southern California and around the country to receive sham treatment that was non-existent, medically unnecessary, and procured through illegal kickbacks and bribes. In his role as an “area manager” for several Young facilities, including their detox facilities, Moore admitting to assisting the Youngs in submitting $199 million in fraudulent claims to insurance companies for sham substance abuse treatment.
FBI, IRS- CI, and DEA are investigating the case.
Trial Attorneys Siobhan M. Namazi and Erika V. Suhr of the Fraud Division’s Health Care Section and Assistant U.S. Attorney Haoxiaohan Cai for the Central District of California are prosecuting the case. Assistant U.S. Attorney Tara Vavere for the Central District of California is handling asset forfeiture.
Patient Harm Caused by Invasive Surgical Procedures on Arteries
U.S. v. Harold Tabaie and Hany Malek
Dr. Harold Tabaie, 78, of Anaheim, California, a cardiothoracic surgeon, and his business partner, Hany Malek, 61, of Tarzana, California, a chiropractor, were charged by indictment with a $135 million scheme to bill Medicare for medically unnecessary arterial procedures.
As alleged in the indictment, Tabaie and Malek billed for unnecessary atherectomies — an invasive procedure in which a bladed catheter is used to clear plaque from arteries — performed at two Los Angeles-based clinics they co-owned and operated, West Regional Cardio Thoracic and Vascular Surgeons and Angelus Medical Clinic Multi Specialty Group. Malek, posing as a medical doctor, allegedly diagnosed patients with arterial disease and recommended that they receive atherectomies. Tabaie then performed the procedures on patients who did not actually have disease in their arteries. He also performed repeat atherectomies on patients who he previously treated unsuccessfully with the procedure. Some of these procedures resulted in patients experiencing extreme pain and discomfort.
To conceal the unusually high volume of procedures performed by Tabaie, the defendants allegedly fraudulently billed for atherectomies under the names of other medical providers who did not actually perform the surgeries. The indictment further alleges that Tabaie and Malek induced Medicare beneficiaries to receive services from their clinics by offering illegal kickbacks in the form of free transportation, groceries, household goods, gift cards, and utility bill payments. Additionally, at Malek’s direction, clinic employees allegedly convinced patients to disenroll from their existing insurance plans and reenroll in specific Medicare plans to maximize the clinics’ reimbursements for atherectomies.
This case was identified through data analytics that indicated Tabaie was an extreme outlier for billing atherectomy procedures in the United States, as depicted in the chart below.
Chart depicting how Dr. Harold Tabaie was an extreme outlier for atherectomy procedures billed to Medicare in the United States from 2016 through 2023
Tabaie and Malek’s clinic where patients were initially seen before being referring for unnecessary atherectomy surgeries
Clinic in Inglewood where Tabaie performed unnecessary atherectomy surgeries
Malek is also charged with submitting fraudulent Paycheck Protection Program (PPP) loan applications. According to the indictment, Malek diverted revenue from the clinics to a company he owned that was used to pay clinic employees and did not independently generate revenue. In 2021, Malek submitted a PPP loan application on behalf of the company falsely claiming that the business experienced a reduction in gross receipts of more than 25% between 2019 to 2020. While he represented that the loan would be used for covered business expenses like payroll, Malek allegedly used the loan proceeds for personal expenses, other business ventures, family credit card payments, and the purchase of coins.
Tabaie and Malek are charged with four counts of health care fraud, and Malek is charged with an additional two counts of bank fraud.
FBI, HHS-OIG, IRS-CI, and U.S. Marshals Service are investigating the case.
Trial Attorney Kelly R. Churnet of the Fraud Division’s Health Care Fraud Section and Assistant U.S. Attorney David Y. Pi for the Central District of California are prosecuting the case.
The Fraud Division uses the Victim Notification System to provide victims with case information and updates related to this case. Victims with questions may contact the Fraud Division’s Victim Assistance Unit by calling the Victim Assistance phone line at 1-888-549-3945 or by emailing victimassistance.fraud@usdoj.gov. To learn more about victims’ rights, please visit: www.justice.gov/criminal-vns/victim-rights-derechos-de-las-v-ctimas. If you believe you are a victim in this case, please visit: https://www.justice.gov/criminal/criminal-vns/case/united-states-v-harold-tabaie-and-hany-malek.
Hospice Fraud
U.S. v. Geoffrey Jimenez
Geoffrey Jimenez, 60, of Los Angeles, was charged by complaint with health care fraud for allegedly operating a fraudulent hospice scheme through Transitions Hospice, Inc. As alleged, Jimenez enrolled non‑terminal Medicare beneficiaries into hospice care and submitted claims for medically unnecessary and often unprovided services, resulting in approximately $9.8 million billed to Medicare and more than $8.3 million paid out. Transitions allegedly had a non‑death discharge rate of roughly 85% — more than four times the national average — indicating that beneficiaries were not terminally ill.
According to the complaint, Jimenez and his marketers recruited seniors at community centers with offers of free medical services and, in many cases, illegal kickbacks. Jimenez purportedly avoided the word “hospice,” instead describing “palliative services,” took photographs of beneficiaries’ identification, and completed paperwork outside their presence. Beneficiaries consistently reported they had never been diagnosed with the terminal conditions listed on claims, had received little to no care despite dozens of visits billed, and only discovered their enrollment when contacted by Medicare or their primary care providers.
The complaint further alleges that Jimenez controlled more than a dozen additional hospice entities that collectively billed over $107 million in similar fraudulent claims, many showing non-death discharge rates above 75% and, in some cases, exceeding 90%. Bank records indicate that Jimenez personally received more than $444,000 in direct transfers and routed hundreds of thousands more to family members, associates, and marketers. Fraud proceeds were also allegedly used to make payments on vehicles purchased or financed in a beneficiary’s name without consent.
FBI and HHS-OIG are investigating the case.
Assistant U.S. Attorneys Kerry Quinn and Alexandra Michael for the Central District of California are prosecuting the case.
U.S. v. Richard Keech
Dr. Richard Keech, 83, of Torrance, California, was charged by information in connection with a scheme to defraud Medicare by causing over $10 million in false and fraudulent claims for unnecessary hospice services. As alleged in the information, Keech, a physician and the medical director for at least two hospice companies, Blue Cross Hospice and Atlantica Management, signed documents referring Medicare beneficiaries to the hospices to receive hospice care and signed Certificates of Terminal Illness (CTIs) falsely certifying that those same beneficiaries were terminally ill with a life expectancy of six months or less. Keech signed CTIs for Medicare beneficiaries who had not elected hospice care and were not aware that they had been placed on hospice, knowing that Blue Cross and Atlantica would submit claims for reimbursement for hospice care to Medicare based on those false certifications.
FBI and HHS-OIG are investigating the case.
Trial Attorney Sandor Callahan of the Fraud Division’s Health Care Fraud Section and Assistant U.S. Attorney Jordan Patterson for the Central District of California are prosecuting the case.
U.S. v. Armani Raffi
Armani Raffi, 59, of Van Nuys, California, was charged by information with health care fraud for orchestrating a multi-entity hospice fraud scheme through four interconnected hospice providers — Golden Age Hospice & Palliative Care, St. Mary’s Hospice & Palliative Care, CA Hospice Care, and Miracle Hospice & Palliative Care, all located in Sherman Oaks, California. As alleged, Raffi used nominee owners, falsified physician certifications, and illegal kickback-driven recruitment to admit non-terminal Medicare beneficiaries and bill for medically unnecessary or nonexistent services.
According to court documents, Raffi and his associates shared patients, marketers, and physicians across the four hospices, fabricated clinical records to justify hospice eligibility, cycled beneficiaries through multiple agencies to prolong billing, and laundered millions in Medicare proceeds through personal payments, cash withdrawals, and transfers among related entities. The scheme resulted in approximately $21 million in false claims submitted to Medicare and over $17.5 million paid out, with non-death discharge rates three to five times the national average — indicating widespread admission of patients who were not terminally ill.
Marketers were allegedly paid $1,500–$1,800 per referral, sometimes with direct payments to beneficiaries, and physician certifications were routinely falsified or incomplete. Beneficiaries often did not know they had been placed on hospice, causing disruptions in their legitimate medical care. Raffi used fraud proceeds to pay for personal expenses, including mortgage payments on a Temecula property subject to forfeiture.
FBI and HHS-OIG are investigating the case.
Assistant U.S. Attorney David Y. Pi for the Central District of California is prosecuting the case.
Illegal Health Care Kickbacks
U.S. v. Hassan Badday and U.S. v. Robby Ayoub
Two California doctors, Hassan Badday, 48, of Los Angeles, and Robby Ayoub, 52, of Huntington Beach, California, were charged in separate indictments for allegedly accepting illegal kickbacks from in exchange for authorizing millions of dollars in medically unnecessary genetic testing orders. Each doctor is charged with a conspiracy to defraud the United States and to pay and receive health care kickbacks. According to the indictments, the defendants received illegal kickbacks in cash and wire transfers from a marketer representing ApolloMDx, a laboratory based in Houston.
The illegal payments were allegedly structured and paid out on a per-patient basis in exchange for the doctors’ agreement to allow the marketer access to their Medicare patients to collect DNA samples and for the doctors’ signatures on genetic testing orders. The marketer then submitted these DNA samples and doctors’ orders to ApolloMDx, which billed Medicare for the genetic tests, which are alleged to be medically unnecessary and rarely, if ever, used to manage or treat the patient’s actual medical conditions. According to the indictments, Badday authorized genetic testing orders that resulted in ApolloMDx submitting more than $4.2 million in fraudulent claims to federal health care programs, yielding over $2.8 million in reimbursements. Ayoub allegedly authorized testing orders that led to more than $1.3 million in billed claims, resulting in over $900,000 in federal reimbursements.
FBI and HHS-OIG are investigating the case.
Trial Attorneys Andrew Tamayo and Kelly R. Churnet of the Fraud Division’s Health Care Fraud Section are prosecuting the case.
U.S. v. Steven Mladinich
Thomas Steven Mladinich, 38, of Newport Beach, California, was charged by information with receiving illegal kickbacks for patient referrals to a clinical treatment facility in violation of federal anti-kickback law. As alleged in the information and admitted in the plea agreement, Mladinich received illegal kickback payments, including a $33,000 check in exchange for referring drug-addicted patients to a licensed rehabilitation facility that billed patients’ private insurance plans for services. The owner of the facility required patients to stay at the facility for at least 21 days before recruiters such as Mladinich were paid. Mladinich’s associates offered patients a share of the kickback money if they stayed for the 21-day period. Many patients left exactly on day 21, against medical advice.
To conceal the scheme, Mladinich and the facility owner entered into a sham contract for “marketing services,” but payments were actually calculated based on the number of patients referred and their insurance coverage. In total, Mladinich received between $150,000 and $250,000 in kickbacks for patient referrals.
FBI is investigating the case.
Assistant U.S. Attorney Nandor F.R. Kiss for the Central District of California is prosecuting the case.
Medi-Cal Pharmacy Fraud
U.S. v. Christina Mareik
Christina Mareik also known as “Christina Sanchez Hernandez,” 61, of Whittier, California, was charged for her role in a nearly $270 million scheme to defraud Medicaid of California (Medi-Cal). Mareik was previously charged in June 2026 by criminal complaint. As alleged in the indictment, Mareik, patient marketer Paul Randall, pharmacy owner Kyrollos Mekail, nurse practitioner Patricia Anderson, and others took advantage of Medi-Cal’s suspension of its requirement that health care providers obtain prior authorization before providing certain health care services or medications as a condition of reimbursement. The suspension of the prior authorization requirements was part of an ongoing transition of Medi-Cal’s prescription drug program to a new payment system.
Through Monte Vista Pharmacy, Mareik and her co-schemers exploited the suspension by billing Medi-Cal tens of millions of dollars per month for dispensing medically unnecessary, high-reimbursing, non-contracted, generic drugs. As alleged in the complaint affidavit, Mareik arranged for the submission of thousands of fraudulent prescriptions for these medically unnecessary medications to Monte Vista so that Monte Vista could submit claims to Medi-Cal. Over the course of the fraudulent scheme, Mareik and her co-conspirators caused the submission of approximately $269,130,000 in false and fraudulent claims to Medi-Cal, of which Medi-Cal paid at least approximately $178,746,000. Mareik received at least approximately $279,000 in fraud scheme proceeds.
Mareik is charged with conspiracy to commit health care fraud and wire fraud and four counts of health care fraud.
FBI, HHS-OIG, and the California Department of Justice are investigating the case.
Trial Attorney Siobhan M. Namazi of the Fraud Division’s Health Care Fraud Section and Assistant U.S. Attorney Roger A. Hsieh for the Central District of California are prosecuting the case. Assistant U.S. Attorney James Dochterman for the Central District of California is handling asset forfeiture.
Illegal Drug Distribution
U.S. v. Dejun Wang
Dejun Wang, 62, of Walnut, California, was charged by indictment for the prohibited sale of prescription drug samples. As alleged, Wang, a physician, sold sample drugs — including Rybelsus, Ozempic, and Mounjaro — to the owners of pharmacies in the San Gabriel Valley, who repackaged and dispensed them to customers. Drug samples are prescription drugs that are not intended to be sold and are intended to promote the sale of the drug.
FBI and HHS-OIG are investigating the case
Assistant U.S. Attorney Sebastian Bellm for the Central District of California is prosecuting the case.
About the National Fraud Enforcement Division
On April 7, the Department of Justice announced the creation of the Fraud Division. The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.
The Department of Justice’s Health Care Fraud Strike Force Program, currently comprised of nine strike forces operating in federal districts across the country, has charged more than 6,200 defendants who collectively billed federal health care programs and private insurers more than $45 billion since 2007. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.