15 Scammers Sentenced For Stealing $40M From CA Insurers

SANTA CLARA COUNTY, CA — A wide-reaching fraud operation that siphoned tens of millions from insurers, paid kickbacks to doctors and pushed overpriced prescriptions on thousands of Californians ended with the sentencing of 15 people in Santa Clara County this week, according to the district attorney's office.

This week's sentencing was the final step in a lengthy multi-agency investigation, deemed "C.R.E.A.M.," spearheaded by the Santa Clara DA's office and aided by the state Department of Insurance, Board of Pharmacy and district attorneys in San Mateo, Monterey and Los Angeles counties.

According to prosecutors, most of the 15 defendants were residents of Los Angeles and operated a call center in Beverley Hills, a medical device company, and six pharmacies throughout Southern California. The group used the facilities to target patients across California, including the Bay Area.

Investigators said the group bought small pharmacies and turned them into "mills" that produced pain creams and medical devices like neck braces, which they would pay doctors thousands in kickbacks to prescribe to patients. The doctors rarely met with patients, and the group often billed insurers upwards of $4,000 for items worth considerably less.

Utilizing their Beverley Hills call center, prosecutors said the scammers would pose as members of the "Physician's Network" and "Doctor's Network," which were not real companies, to push overpriced or unneeded medications and devices onto the public.

The DA's office said at least five insurance companies lost $40 million in the scheme, including $2.3 million siphoned from insurers in Santa Clara County. The negotiated deal requires $8.3 million in restitution to be paid to victims. Prosecutors hailed the outcome as a victory in the largest medical fraud case ever prosecuted in the county, netting the largest lump sum recovered from the perpetrators.

"This group used people's pain and illnesses to criminally enrich themselves," said Jeff Rosen, the Santa Clara County District Attorney. "They tried to hide behind a maze of dozens of shell corporations and straw owners. We found them anyway — and now they will pay back their victims and be held accountable."

Seven defendants were sentenced on felony charges, and eight for misdemeanors, and some will serve county jail time.