Fraudsters lured homeless addicts to California with free flights, groceries and more: feds

Fraudsters accused of a $1.6 billion phony rehab scheme allegedly used “body brokers” to lure at least 6,000 homeless addicts – including many from other states – into California detox centers, according to court papers and prosecutors.

Los Angeles rehab king David Young, 71, and his son Nathan Young, 39, allegedly offered free flights, groceries and other perks as part of their substance abuse scam to traffic addicts into dozens of California rehab centers, according to Department of Justice prosecutors.

The Youngs directed “body brokers,” including Greenville, Texas couple Honey and Cody Phipps, aged 42 and 36, to mercilessly target homeless addicts, recycling them through their drug facilities and getting them fat insurance policies so they could collect the cash.

The defendants pocketed more than $210 million in the six-year scheme that Assistant Attorney General Colin M. McDonald called “the largest the largest sober home fraud scheme the Department has ever prosecuted.”

All four were arrested in the sweeping anti-healthcare fraud investigation in California that federal authorities unveiled in Los Angeles on Thursday.

To execute the complex con, the Youngs ordered the Phipps and other body brokers to travel to various states to find homeless addicts, get them insured and enrolling them at their rehab centers in Los Angeles, San Diego, the Bay Area and elsewhere in the California, court papers say.

Credit card records showed that victims were flown in from Las Vegas, Cleveland, and Birmingham, Ala., to the Youngs’ rehabs, with names such as Rodeo Recovery and Get Real Recovery.

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First Assistant US Attorney Bill Essayli said the scheme was particularly problematic given California’s homelessness problem.   

“When they couldn’t bill anymore, they’d end up on the streets of California and Los Angeles,” said Essayli of the Youngs’ victims.

“It is a pipeline of addicts and homeless people to here in California.” 

The body brokers offered kickbacks for junkies to enroll at their rehabs “including money, drugs, free airline flights, free or nearly-free accommodations at highly desirable locations, including luxury apartments and houses” in Los Angeles, according to prosecutors.

In some cases, victims were coached “to fabricate and exaggerate their symptoms and substance addictions during intake,” or encouraged to use drugs or alcohol so that they would not pass a urine drug test so they would be eligible for treatment, court papers say.

The Youngs sought patients with insurance police that paid high reimbursements and had those without policies sign up for them, in some cases telling them to claim they were Native American to receive good coverage.

 The Youngs even got jobs for some patients at companies that were known to provide lucrative insurance policies and then kept the cash, according to prosecutors.

Once inside the Youngs’ network of rehab homes, the patients were cycled through different types of treatment centers that corresponded to different levels of sobriety, so the fraudsters could maximize their profits, court papers charge.

But the Youngs’ patients never received treatment, investigators say.   

“Often, as many as approximately 100 patients would be logged into one Zoom session at a time and patients would not be expected to be on camera or to participate in therapy,” court papers state.

“In fact, no therapy would be provided during these Zoom sessions.”

The Youngs also told “employees to take patients to the movies, dinners and other outings, and to document and fraudulently bill those outings as ‘group therapy,’” the papers say.

They also recruited doctors to provide patients with powerful sedatives, and even got some victims hooked, prosecutors allege.

And, to keep them as long as possible, the Youngs had their victims “drugged with medication, cut off from communication with family members, prevented from accessing their belongings, and physically blocked from leaving,” according to court papers.

After they finally escaped the Youngs’ facilities, the patients were on their own.