Case Study: California Clinic Operators Lose Medical License, Face Restitution, and Are Sentenced to Over Five Years in Prison
Healthcare fraud prosecutions in California are among the most serious and complex cases in the criminal justice system. They involve vast amounts of money, complicated billing and documentation practices, and an intricate web of state and federal regulations. When the government decides to pursue healthcare fraud charges, it brings to bear the full weight of its investigative and prosecutorial resources, something recently demonstrated in a major case prosecuted by the California Attorney General’s Office.
Last June, California Attorney General Rob Bonta announced the sentencing of a Southern California clinic operator for his role in a large-scale prescription medication diversion scheme that defrauded the Medi-Cal program of more than $20 million. The case, prosecuted by the California Department of Justice’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA), illustrates the enormous investigative and prosecutorial resources the state deploys in healthcare fraud cases.
For any healthcare professional facing investigation or charges, this case serves as a powerful reminder: the government has vast resources and expertise on its side; you need experienced, board-certified defense counsel on yours. If you find yourself under investigation or indictment for healthcare fraud in Los Angeles, call The Law Offices of Stanley L. Friedman in Beverly Hills for advice and representation from a California healthcare fraud defense lawyer certified as a specialist in criminal law by the State Bar of California.
The Case: $20 Million Prescription Medication Diversion Scheme in Southern California
In a striking example of the scope and severity of healthcare fraud prosecutions in California, Attorney General Rob Bonta recently announced the sentencing of Oscar B. Abrons III, a Southern California healthcare clinic operator, for his role in a large-scale prescription medication diversion scheme that defrauded the Medi-Cal program of more than $20 million. The case, prosecuted by the California Department of Justice’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA), illustrates the enormous investigative and prosecutorial resources the state deploys in healthcare fraud cases.
According to the Attorney General’s Office, Abrons was sentenced by the Orange County Superior Court to four years in jail, and he stipulated that Medi-Cal suffered losses exceeding $20 million as a result of the scheme. A restitution hearing is pending to determine the final amount he may be required to repay. Two co-conspirators—Steven Derrick Fleming and Mohamed Waddah El-Nachef, M.D.—were previously convicted and sentenced. Fleming received a five-year state prison sentence, while Dr. El-Nachef received a five-year local custody sentence and surrendered his medical license as part of the proceedings.
The three individuals worked together to operate “God’s Property,” an unlicensed clinic in Southern California that served as the hub of their fraudulent operation. Between June 2014 and October 2016, Medi-Cal beneficiaries were paid cash in exchange for obtaining prescriptions for medications that were medically unnecessary—including HIV medications, antipsychotic drugs, and controlled substances. These prescriptions were written by Dr. El-Nachef, who during that period became the top prescriber of HIV medications in California, a red flag that later drew the attention of state investigators.
Once the prescriptions were filled, the medications were diverted and sold on the illicit market, generating millions of dollars in illegal profit. The defendants’ actions not only drained public healthcare funds but also exploited vulnerable patients and contributed to the dangerous resale of powerful prescription drugs outside legitimate medical channels.
Attorney General Bonta emphasized that such conduct undermines both public trust and the healthcare system itself:
“When healthcare operators take advantage of Medi-Cal for personal gain, not only are they stealing from taxpayers, but they are also undermining the health and trust of our communities,” Bonta said. “We will not tolerate this unlawful behavior and will continue to ensure that Medi-Cal services are delivered to those who need them most and hold any individual or entity accountable that exploits this program.”
The DMFEA spearheaded the investigation and prosecution, working to trace the fraudulent claims, analyze prescription data, and recover evidence of kickbacks and false billing. The division’s work in this case demonstrates its capacity to handle complex, multi-defendant prosecutions involving sophisticated fraud schemes and extensive financial losses.
The Division of Medi-Cal Fraud & Elder Abuse: A Powerful Enforcement Arm Against Healthcare Providers
The Division of Medi-Cal Fraud and Elder Abuse (DMFEA) operates within the California Department of Justice and plays a central role in investigating and prosecuting healthcare fraud statewide. The division’s mission is to protect both the integrity of California’s Medi-Cal program and the safety of vulnerable populations, including elderly and dependent adults.
The DMFEA investigates and prosecutes cases involving:
- Fraudulent billing and false claims to the Medi-Cal program
- Kickbacks for patient referrals or unnecessary services
- Substandard care or neglect in skilled nursing facilities
- Abuse or exploitation of elderly or dependent adults
In addition to these enforcement actions, the DMFEA provides extensive support to local law enforcement agencies and helps recover millions of dollars in stolen Medi-Cal funds each year.
What makes the DMFEA particularly formidable is not only its mandate but also the vast resources it commands. The division is funded in part by a federal grant from the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG), administered through the Centers for Medicare & Medicaid Services (CMS). In fact, 75% of the division’s annual funding comes from federal sources, while the remaining 25% is supplied by the State of California. For fiscal year 2025, the federal grant came to nearly $70 million, with the state kicking in approximately $23 million, totaling over $90 million in all.
This joint state-federal partnership allows for substantial funding and significant coordination between California’s prosecutors and federal agencies such as the FBI, HHS-OIG, and the U.S. Department of Justice. As a result, the DMFEA has access to nationwide investigative networks, data analytics, and specialized task forces designed to detect and prosecute healthcare fraud.
With this level of financial and logistical support, the DMFEA can conduct complex, multi-year investigations that cross state lines, involve multiple providers, and include hundreds of thousands of documents and witness interviews. This is not a small enforcement unit; it is a sophisticated prosecutorial machine backed by the federal government and dedicated to rooting out healthcare fraud in all its forms.
Many healthcare providers are shocked to learn just how broad the government’s definition of “healthcare fraud” can be. While deliberate fraud certainly exists, many cases arise from errors, misinterpretations of billing codes, or administrative mistakes. However, prosecutors and investigators often view such mistakes as intentional misconduct.
The DMFEA and similar federal units use powerful tools such as data mining, whistleblower tips, and billing pattern analysis to flag potential fraud. Providers who unknowingly submit inaccurate claims or rely on flawed billing practices may find themselves facing serious criminal charges, including:
- False Claims Act violations
- Health & Safety Code §14107 (Medi-Cal fraud)
- Insurance fraud under Penal Code §550
- Conspiracy and money laundering related to healthcare billing schemes
Once a case is referred to the Attorney General’s Office or a federal task force, the stakes rise dramatically. The government may seek restitution, civil penalties, exclusion from government programs, and even imprisonment, as can be seen in the case described here.
For these reasons and others, any provider under investigation must act immediately to secure qualified defense counsel, someone who understands not only criminal law but also the highly regulated healthcare landscape.
Why You Need a Board-Certified Criminal Law Specialist
When your career, license, and reputation are on the line, experience matters. Attorney Stanley L. Friedman is a California Board-Certified Specialist in Criminal Law, a distinction held by only a small percentage of lawyers in the state. Certification by the California Board of Legal Specialization means that the attorney has demonstrated exceptional expertise, substantial trial experience, and a proven record of ethical practice in the field of criminal defense.
In complex healthcare fraud cases, this certification is not just a credential; it’s a safeguard. A board-certified specialist understands how to challenge government evidence, cross-examine expert witnesses, and present a compelling defense grounded in medical, financial, and regulatory realities.
Attorney Friedman’s extensive background in defending healthcare providers against criminal and administrative actions allows him to identify weaknesses in the prosecution’s case and to work proactively to protect his clients from criminal exposure, loss of licensure, or exclusion from Medi-Cal and Medicare.
The Bottom Line: Preparation and Defense Are Everything
The California Attorney General’s Office and its Division of Medi-Cal Fraud and Elder Abuse represent an immense enforcement effort backed by both state and federal funding. They are well-staffed, well-funded, and highly motivated to pursue alleged healthcare fraud. Once an investigation begins, it can lead to search warrants, indictments, asset seizures, and prison time.
For healthcare providers, the takeaway is clear: prevention and preparation are critical, and early legal intervention can make all the difference. If you or your organization are under investigation—or even suspect you may be—contact experienced defense counsel immediately.
The Law Offices of Stanley L. Friedman represents healthcare professionals throughout Los Angeles and across California facing allegations of fraud, kickbacks, false claims, or related offenses. With decades of criminal defense experience and board certification in criminal law, Attorney Friedman provides the skilled and strategic representation necessary to protect your career, your license, and your freedom. Contact us today for immediate assistance.
