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Fraud

California Man Pleads Guilty to Defrauding Medicare of Nearly $16 Million

Strategic Insights

— 2 min read

A California man has pleaded guilty to his role in defrauding Medicare of nearly $16 million through sham hospice companies and laundering the fraudulent proceeds. Juan Carlos Esparza, 33, of Valley Village, schemed with others, including co-defendants Petros Fichidzhyan and Karpis Srapyan, to bill Medicare for hospice services that were not medically necessary and never provided. The defendants operated four sham hospices between July 2019 and January 2023, with Medicare paying nearly $16 million for services that were not provided.

Key Takeaways:

  • Esparza and his co-defendants operated four sham hospices, one of which was owned by Esparza, while the other three were controlled by the defendants despite being listed as owned by foreign nationals.
  • The defendants used foreign nationals' personal identifying information to open bank accounts, submit information to Medicare, and sign property leases, concealing the scheme and laundering the fraudulent proceeds.
  • Medicare paid the sham hospices nearly $16 million for services that were not medically necessary and never provided.
  • Esparza and his co-defendants spent the fraudulent proceeds on various assets, including a residential property, and laundered the funds through shell companies and bank accounts.
  • Esparza faces a maximum penalty of 10 years in prison for healthcare fraud and 10 years in prison for transactional money laundering.
  • Co-defendants Petros Fichidzhyan, Mihran Panosyan, Karpis Srapyan, Susanna Harutyunyan, and Juan Carlos Esparza have also pleaded guilty to various charges related to the scheme.
  • The Justice Department's ongoing effort to combat hospice fraud in the greater Los Angeles area has led to recent convictions and sentencing of defendants involved in the scheme.
  • The FBI and HHS-OIG are investigating the case, with trial attornies from the Criminal Division's Fraud Section prosecuting the case.

Statistics:

  • The defendants collectively billed Medicare nearly $16 million for services that were not medically necessary and never provided.
  • The sham hospices were operated between July 2019 and January 2023.
  • Esparza spent $90,000 in fraudulent proceeds to purchase a vehicle.
  • The Justice Department's Health Care Fraud Strike Force Program has charged over 5,800 defendants, resulting in a total of $30 billion billed to federal health care programs and private insurers.

Sources:

  • The United States Department of Justice
  • The California man's guilty plea and indictment
  • The Fraud Section leads the Criminal Division's efforts to combat health care fraud through the Health Care Fraud Strike Force Program
  • Centers for Medicare & Medicaid Services (CMS)
  • Department of Health and Human Services Office of Inspector General (HHS-OIG)

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