Twenty-one people are facing charges as part of a massive hospice fraud scheme that prosecutors say bilked California’s medical system out of $267 million.
Atty. Gen. Rob Bonta on Thursday announced the results of an investigation called Operation Skip Trace. Five principal conspirators were arrested on suspicion of a host of felonies, including insurance fraud, money laundering, conspiracy and identity theft for their alleged role in a sophisticated hospice scam operating across Southern California.
If convicted, each could face at least a decade behind bars.
State prosecutors allege the defendants purchased on the dark web the personal identifying information of non-California residents and, without their knowledge, enrolled them in Medi-Cal through Covered California. The defendants then bought hospice companies and began billing the state for services they never rendered,…
Investment fraud targets the human desire for financial growth by promising high returns with “low to no risk.”
- Ponzi Schemes: Named after Charles Ponzi, these schemes pay “returns” to earlier investors using the capital brought in by newer investors. There is no actual underlying business; the system collapses when new recruitment slows down.
- Pyramid Schemes: Similar to Ponzi schemes, but participants are usually required to sell a product or service. The primary “profit” comes from the recruitment fees of new members rather than actual product sales.
- Pump and Dump: Fraudsters spread false, positive rumors about a cheap stock (the “pump”) to drive up the price. Once the price peaks, they sell their shares (the “dump”), leaving other investors with worthless stock.