MEDI-CAL FRAUD: Investigators Track Down $9.4M
California Medicaid fraud investigators have recovered $9.4 million stolen from the state's $21 billion Medi-Cal program, ending a 10-year investigation, the Los Angeles Times reports. Marcus Fontaine, the leader of the fraud ring under investigation, admitted stealing $13 million from Medi-Cal by creating fake medical supply companies and submitting "phony billings" to Medi-Cal during the 1980s. At the time of his arrest, Fontaine had spent "several million dollars" of the stolen money and deposited the remainder in foreign bank accounts. Investigators tracked the money to a Liechtenstein bank, but have spent "several years" in court trying to get the money back. The Liechtenstein government would not seize or freeze the funds unless "there was a connection to illegal drug deals." California officials filed a civil lawsuit against Fontaine's financial trustees in Liechtenstein. The case finally went to trial in June and Liechtenstein trustees agreed to return the money. Deputy Attorney General David Haxton said, "Unfortunately for [Fontaine], we just didn't give up. It took 10 years, but we've gotten all that he had hidden in Liechtenstein."
The recovery represents a "sweet victory" for the California attorney general's office and follows the "dramatic turnaround" of the office's Bureau of Medi-Cal Fraud and Elder Abuse, which has experienced a 239% increase in fraud convictions and an 88% increase in the number of pending investigations in the past year. The FBI estimates that fraudulent activity has taken at least $1 billion out of Medi-Cal in the "past several years." Fraud bureau Director Collin Wong said, "I think that criminals out there have come to the belief that Medi-Cal is a golden cash cow and one that is easily ripped off. I think the problem of Medi-Cal fraud is very pervasive and its magnitude can't be overstated." Attorney General Bill Lockyer (D) is seeking a $4 million increase in his budget to "beef up the [fraud] bureau's enforcement staff," which Gov. Gray Davis (D) approved, contingent on the passage of AB 1098, a measure that would mandate increased penalties for fraud convictions (Ellis, 8/22).