The charges stem from Operation Skip Trace, a coordinated enforcement action executed on April 8 at twelve locations across Southern California. Five individuals were arrested, two handguns were seized, and investigators recovered more than $757,000 in cash, according to the Attorney General's Office.
The California Department of Justice alleges that conspirators purchased personal identifying information for non-California residents from the dark web and used those stolen identities to enroll fictitious patients in Medi-Cal through Covered California. The defendants then allegedly acquired 14 hospice companies through straw owners to submit billing for phantom enrollees.
Bonta said that over the life of the scheme, not a single legitimate hospice service was ever provided. He described the conduct as a "brazen, calculated scheme that exploited the Medi-Cal system," adding that "this wasn't a mistake or a loophole; it was deliberate fraud."
The California Department of Health Care Services first flagged the scheme, suspended payments, and referred the matter to the DOJ. DHCS Director Michelle Baass said the agency's controls "identified irregularities early, stopped further improper payments, and suspended the fraudulent providers."
The 21 defendants face charges across three separate criminal complaints. The filings include aggravated white-collar crime and aggravated money laundering enhancements, which carry heightened sentencing exposure under California law. All defendants are presumed innocent until proven guilty.
Governor Gavin Newsom issued a statement supporting the prosecution and noted that because these are state charges, former President Donald Trump cannot pardon the individuals. California Health and Human Services Secretary Kim Johnson said the investigation demonstrated what state agencies can accomplish when working together with urgency.
The investigation was a joint effort between the DOJ's Division of Medi-Cal Fraud and Elder Abuse and DHCS, with operational assistance from the California Franchise Tax Board. The Division of Medi-Cal Fraud and Elder Abuse receives 75 percent of its funding through a federal grant from the U.S. Department of Health and Human Services.