The Justice Department and the FBI have charged 15 people in a sprawling healthcare fraud crackdown centered in the Los Angeles area, tying the defendants to nearly $2 billion in fraudulent claims against American healthcare programs. The charges, announced Thursday, reach six medical professionals, and officials say the cases were built with the same data-driven dragnet the Trump administration has been using to hunt fraud across the country. Eight of the defendants were arrested in coordinated early-morning takedowns in Los Angeles, Dallas and Chicago.
At the center of the case sits a substance-abuse treatment operation that prosecutors say billed more than $1.6 billion, making it the largest sober home fraud scheme the Justice Department has ever prosecuted. According to the department, father and son David Young, 71, and Nathan Young, 39, controlled dozens of purported treatment companies and directed "body brokers," including Texas recruiters Honey Phipps and Cody Phipps, to lure vulnerable people — the homeless and the addicted, some recruited straight out of support groups — to California with free flights, cash and drugs. The patients were cycled through facilities and trap houses regardless of need, told they could "lay out on the beach" while insurers were billed for therapy that never happened, and in some cases drugged when they tried to leave. One area manager, Nicholas Moore, has already pleaded guilty, admitting he helped submit $199 million in fraudulent claims. Beverly Hills sued Nathan Young and his Rodeo Recovery operation in 2020, and insurer Aetna followed with a $40 million civil suit in 2023, alleging the sober home was "nothing more than a drug den."
"Under the leadership of President Trump and the White House Fraud Elimination Task Force, this country will no longer tolerate theft from American taxpayers." — FBI Director Kash Patel
A second case reaches into the operating room. Cardiothoracic surgeon Dr. Harold Tabaie, 78, of Anaheim, and his business partner Dr. Hany Malek, 61, a Tarzana chiropractor, are charged in an alleged $134 million scheme to bill Medicare for medically unnecessary atherectomies — invasive procedures in which a bladed catheter scrapes plaque from arteries. Prosecutors say Malek posed as a medical doctor, diagnosed patients with arterial disease they did not have, and steered them to Tabaie with kickbacks that included free transportation, groceries, gift cards and utility payments, while billing data flagged Tabaie as a national extreme outlier for the procedure. Some patients were subjected to the procedure again and again and left with lasting injury and pain. It was Malek's gated Tarzana mansion that FBI agents hit before dawn on Thursday, cutting through the security gate, putting ladders against the walls, setting off flash-bangs and leading him out in handcuffs.
Three further cases allege more than $138 million billed to Medicare by hospice operations that enrolled patients who were not terminally ill — some of whom did not even know they had been placed in hospice. Another defendant was indicted after previously being charged in a $270 million scheme to defraud Medi-Cal, California's Medicaid program, through pharmacy claims for bogus prescriptions.
"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." First Assistant U.S. Attorney Bill Essayli for the Central District of California added: "It is especially egregious when doctors and other health care professionals, who pledged to do no harm, resort to petty greed and criminality. Every dollar drained from our private and public health insurance systems is one less dollar available to those who truly need it."
The takedown was carried out by the FBI alongside IRS Criminal Investigation, the Drug Enforcement Administration and the Department of Health and Human Services Office of Inspector General, and it lands in the middle of the administration's wider war on healthcare fraud: in June, the department charged 455 people in cases involving more than $6.5 billion in false claims nationwide, and a White House task force led by Vice President JD Vance has pushed the Los Angeles cases forward. "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," Patel said. "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."
The charges are allegations, and every defendant is presumed innocent unless and until proven guilty in court. The arrested defendants began making their initial appearances Thursday in federal court in downtown Los Angeles, with others appearing in Texas and Illinois. Patel closed with the administration's promise: "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."