California rehab program rife with fraud


JEWELRY IN A BRAZEN DAYTIME ROBBERY. WE BEGIN WITH REHAB RACQUET, AS YOU’LL SEE STARTING TONIGHT, THAT’S EXACTLY WHAT IT IS. WE’RE TALKING ABOUT THE ABUSE OF A STATE SPONSORED, TAXPAYER FUNDED PROGRAM THAT ON PAPER LOOKS LIKE A NOBLE CAUSE, PRIVATELY RUN REHAB CLINICS, GETTING MEDICAID MONEY BY BILLING FOR EACH ADDICT THAT GETS COUNSELLING. BUT OVER THE PAST YEAR, CNN HAS FOUND A SYSTEM RIDDLED WITH FRAUD AND POOR OVERSIGHT. FROM BILLING TO GOVERNMENT, TO ALLOWING CONVICTED FELONS TO RUN DRUG REHAB CENTERS. OUR INVESTIGATION FOUND IT IS ALL TOO EASY TO TAKE ADVANTAGE OF THE VERY PEOPLE WHO NEED HELP THE MOST. THIS IS NO NICKEL AND DIME FRAUD, IT’S HAPPENING IN CALIFORNIA, WE’RE TALKING ABOUT BIG MONEY. STATE AND FEDERAL TAXPAYERS ARE ON THE HOOK FOR TENS OF MILLIONS OF DOLLARS EVERY SQUEER. I SAID, FEDERAL TAX DOLLARS. TO PUT IT ANOTHER WAY, THAT’S YOUR MONEY. DREW GRIFFIN KEEPING THEM HONEST TONIGHT.>>Reporter: DREW GRIFFIN WITH CNN. GEORGE HAS RUN A TAXPAYER FUNDED DRUG REHAB BUSINESS IN SOUTHERN CALIFORNIA FOR THE PAST SIX YEARS, WHICH IS SURPRISING BECAUSE FOR THE PAST 11 YEARS HE’S BEEN ON A LIST OF PEOPLE BANNED FROM BILLS MEDICAID. CONVICTED OF STUDENT LOAN FRAUD, GEORGE OLUNO SHOULD NEVER HAVE BEEN ALLOWED TO OPEN THIS CLINIC.>>WHAT AM I DOING WRONG?>>I’M ASKING YOU SOME QUESTIONS ABOUT THE DRUG REHAB CASE. HAVE YOU BEEN FAKING SIGNATURES ON TO SHEETS OF PAPER AND BILLING THE STATE FOR THE MONEY?>>GUESS WHAT ELSE, HE’S FACING FELONY CRIMINAL CHARGES FOR RIPPING OFF THE STATE. ALLEGEDLY GETTING PAID BY TAXPAYERS TO REHAB DRUG ABUSERS WHO WEREN’T EVEN THERE. >>EXCUSE ME, SIR. HOW CAN YOU BILL THE STATE FOR CLIENTS THAT DON’T EXIST? MR. OLUNO, JUST ONE SECOND, SIR. WE NEVER SAW OLUNO AGAIN. HIS DRUG REHAB BUSINESS HERE IN SOUTHERN KWCALIFORNIA HAS BEEN PART OF THE LARGEST INVESTIGATION IN THE NATION. A ONE-YEAR INVESTIGATION BY CNN AND THE CENTER FOR INVESTIGATIVE REPORTING, FOUND THE REHAB PORTION OF THAT PROGRAM, CALLED DRUG MEDICAL IS RIPE WITH FRAUD, HAS OPERATORS WHO BILL THE GOVERNMENT FOR MADE UP CLIENTS. AND OFTEN GET AWAY WITH IT. JOY SAW PLENTY OF FRAUD IN THE NINE YEARS SHE SPENT WORKING AS A SUPERVISOR OVER AT DRUG MEDI-CAL. >>I BELIEVE THE WORD GOT OUT THAT THERE WAS EASY MONEY TO BE MADE IN THE OUTPATIENT DRUG FREE SYSTEM.>>HOW BAD IS IT?>>IT’S BAD, IT’S REALED ABOUT. I LEFT STATE SERVICE ABOUT THREE YEARS AGO, AND WE WOULD HAVE ONE PROVIDER THAT WOULD BILL FOR OVER A MILLION DOLLARS IN ONE YEAR, THAT WE BELIEVE WAS 100% QUESTIONABLE BILLING. >>AND THAT ONE PROVIDER WAS NO ISOLATED INSTANCE. OVER AND OVER, WE FOUND EXAMPLES OF FRAUD. NOT HIDDEN FRAUD. THIS WAS HAPPENING IN PLAIN SIGHT. FOR EXAMPLE, GEORGE OLUNO. 19-YEAR-OLD DARSHAY MILES WAS JUST 14 WHEN SHE WENT TO HIS REHAB CENTER ALONG WITH HER MOTHER AND THREE SISTERS. MILES SAID HE PAID HER AND OTHER CLIENTS $5 EACH TIME THEY SIGNED IN FOR GROUP COUNSELLING, ALL SO HE COULD CHARGE MEDICAL BETWEEN 28 AND $61 PER SIGNATURE. >>I DIDN’T KNOW NOTHING ILLEGAL. I THOUGHT IT WAS A THING YOU WERE SUPPOSED TO GET PAID TO GO IN THERE. AND THEN PEOPLE WERE LIKE, DON’T SPEAK OUT LOUD ABOUT THE MONEY.>>WHAT DID SHE DO WITH THE FIVE DOLLARS GIVEN TO HER BY THE DRUG REHAB CENTER? SHE BOUGHT DRUGS. >>WE WERE GOING TO GET THE MONEY TO BUY WEED. MY WHOLE THING WAS LIKE, YOU ALL WERE PAYING US TO GET HIGH.>>Reporter: THE DAY AFTER OUR INTERVIEW, THE STATE CHARGED OLUNO AND THREE OF HIS EMPLOYEES AT GD MEDICAL WITH GRAND THEFT IN CONNECTION WITH MORE THAN 2,000 PHONY BILLS FOR REHAB. DATING BACK TO 2009. HE’S PLED NOT GUILTY. RECORDS SHOW YOUR TAX DOLLARS STILL PAID HIM, EVEN AFTER HE WAS ARRESTED AND OUT ON BAIL. OLUNO’S ATTORNEY BLAMED THE BILLING PRACTICES ON COUNSELOR’S AND EMPLOYEES WHO WERE NOT WELL SUPERVISED. THE ATTORNEY SAYS OLUNO WAS A CERTIFIED COUNSELOR HIMSELF, WHO WAS ALLOWED TO BILL MEDICAID. DESPITE THAT, THE CLINIC VOLUNTARILY SHUT DOWN JULY 1st, WITHOUT EXPLANATION. CNN AND THE CENTER FOR INV INVESTIGATIVE REPORTING REVIEWED THOUSANDS OF RECORDS INCLUDING PROGRAM AUDITS. WE WATCHED CLINICS UNDER COVER TO SEE WHO WAS GETTING TREATMENT AND WHO WASN’T. THE RESULT, WE FOUND THAT IN THE LAST TWO FISCAL YEARS, HALF OF THE NEARLY 1$186 MILLION SPENT FOR DRUG MEDI-CAL ABOUT 194 MILLION WENT TO BUSINESSES THAT SHOWCASES OF FRAUD. CASE IN POINT, THE MAN WITH THE CIGAR. A CONVICTED FELON.>>HE WAS THE ORGANIZER.>>MARSHALL VOTE WAS THE LEAD INVESTIGATOR WHO HELPED PROSECUTE ALEXANDER BACK IN 2,000, FOR RUNNING A TEXAS BASED CRIME SYNDICATE, THAT STAGED CAR CRASHES, RIPS OFF BIG INSURANCE COMPANIES.>>HE LISTED HIS OCCUPATION AS THE DRIVER OF AN ICE CREAM TRUCK.>>HE WAS SENTENCED TO SEVEN YEARS IN A TEXAS PRISON. HE SERVED JUST ONE YEAR. WAS LET OUT EARLY FOR GOOD BEHAVIOR AND ENDED UP IN CALIFORNIA. EVEN THOUGH FELONS ARE BARRED FROM RUNNING DRUG MEDICAL CENTERS. FERDMAN SOON OPENED A REHAB CLINIC CALLED ABLE SUPPORT. DAZE BEEN EASY MONEY FOR ALEXANDER FERDMAN. HIS CALIFORNIA DRUG MEDI-CAL CONTRACT IS NOW WORTH ABOUT $2 MILLION A YEAR. HIS SALARY, $180,000. EVEN AFTER A 2011 REVIEW BY LOS ANGELES COUNTY, FOUND EVIDENCE OF WHAT IT CONSIDERS TO BE FRAUDULENT PRACTICES AT HIS BUSINESS. FERDMAN WAS ALLOWED TO EXPAND.>>DREW GRIFFIN WITH CNN, HOW ARE YOU DOING?>>I’D LIKE TO ASK YOU SOME QUESTIONS ABOUT YOUR BUSINESS IF I COULD.>>I DON’T HAVE TIME RIGHT NOW.>>HOW CAN A GUY WITH A RECORD LIKE YOU, BE OPERATING A DRUG REHAB CLINIC IN CALIFORNIA. YOU’VE BEEN CONVICTED OF A MAJOR CAR CRASH SCHEME IN TEXAS?>>I WAS CONVICTED, BUT THAT’S NOT WHAT IT SEEMS. WHATEVER HAPPENED, I DON’T KNOW, 50 YEARS AGO, WHAT RELEVANCE DOES IT HAVE TO TODAY.>>DOES THE COUNTY KNOW ABOUT YOUR CRIMINAL RECORD?>>THEY PROBABLY DO, I DON’T KNOW.>>WHAT HAPPENED IN TEXAS, FERDMAN TOLD US, SHOULD STAY IN TEXAS. >>I WAS FACING 99 YEARS, AND I CHOOSE TO TAKE A SMALLER SENTENCE. I COULD HAVE IT MUCH WORSE. BUT THERE WAS NO FRAUD AND THERE WAS NO RECORD OF IT IN ANYWAY.>>HOW — IT’S A VERY LONG STORY — >>THAT’S WHAT THEY TRIED TO BUILD IT, IT WASN’T WHAT IT SEEMS.>>CAN YOU TELL ME HOW YOU LEFT TEXAS AND DECIDED TO GET INTO THIS BUSINESS? HOW EASY OR HARD WAS THAT?>>I DON’T WANT TO TALK ABOUT IT RIGHT NOW.>>WITH SUCH APPARENT WIDESPREAD FRAUD IN THE PROGRAM. FORMER SUPERVISOR SAYS IT’S NOT JUST TAXPAYERS WHO ARE BEING CHEATED.>>I’M NOT A — YOU KNOW, THE EMPLOYEE ANY MORE. THAT HAS TO LOOK AT THIS EVERY DAY, I’M A TAXPAYER THAT KNOWS THIS IS GOING ON, AND IT ANGERS ME. AND THERE’S STORY AFTER STORY AFTER STORY ABOUT MEDICINE OKAYED DOLLARS BEING CUT FROM PEOPLE WHO NEED THE SERVICES.>>IT’S AN INCREDIBLE INVESTIGATION. IT’S JUSTINFURIATING, BECAUSE THERE’S A LOT OF PEOPLE THAT DO NEED HELP, AND THERE’S BAD CLINICS OUT THERE THAT GIVES A BAD NAME TO THE INDUSTRY. IS THE STATE DO ANYTHING ABOUT IT?>>THE STATE IS CRACKING DOWN. ONCE THEY REALIZE THE DEPTH OF OUR REPORTING. THE STATE ANNOUNCED A STATEWIDE CRACKDOWN, ALEXANDER FERDMAN’S CLINIC. HIS CLINIC HAS BEEN SHUT DOWN. 16 OTHERS TEMPORARILY SUSPENDED. AND CALIFORNIA HAS ANNOUNCED A STATEWIDE REVIEW OF THE ENTIRE REHAB CLINIC PROGRAM. ALTHOUGH THE DETAILS ARE A BIT SKETCHY RIGHT NOW.>>WHY DID IT TAKE SO LONG, THOUGH.>>THAT WAS MY FIRST QUESTION TO THE STATE OF CALIFORNIA. AND AS WE CONTINUE OUR REPORTING, IT’S GOING TO BE YOUR QUESTION AND OUR VIEWER’S QUESTION. REPORT AFTER REPORT. INVESTIGATION AFTER INVESTIGATION. YEAR AFTER YEAR FINDS THE COUNTY AND STATE INVESTIGATORS WERE FOUNDING THIS FRAUD. FINDING THESE QUESTIONABLE BILLING PRACTICES AND YET THE CLINICS REMAINED OPEN, AND WE BELIEVE KEPT BILLING TAXPAYERS FOR THIS.>>THAT’S THE THING, IT’S TAXPAYER MONEY. AND THE PEOPLE WHO NEED HELP AREN’T GETTING IT.>>WE’RE GOING TO HAVE THAT PART TWO TOMORROW NIGHT. YOU ALSO CAN MAKE A DIFFERENCE, HAVE YOU A TIP FOR DREW, LET HIM NO, GO TO

13 thoughts on “California rehab program rife with fraud

  1. They couldn't find drug addicts in Southern California that need treatment? Something doesn't add up here. Sorry, couldn't resist…

  2. This story embodies what MSM is SUPPOSED to do. protect the taxpayer, expose fraud and prosecute thieves who are siphoning taxpayer dollars illegally. I am very impressed with Anderson cooper and his investigative staff.

    I can only hope they continue with this trend and end the crony capitalism relationship between media and state once and for all.

    Break boundaries and protect the ordinary citizen from scams like these and you will go far. Mr. Cooper. Fantastic story and reporting . BZ.

  3. Sorry but there's a very few good rehabs out there at the end he says there's a lot of good ones there's not a lot of good ones there's very few good ones

  4. We don't need FOREIGNERS to come here and also steal money from our government…..We have enough crazy theifs who was born here!

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