SAN JOSE — The breakup of a network of telemarketers and scammers who fraudulently billed insurance carriers to the tune of $40 million — after fooling thousands of Californians into obtaining unneeded drugs and devices — concluded Tuesday with the sentencing of the final defendant, authorities said.
Investigators with the Santa Clara County District Attorney’s Office led a multi-agency operation that probed a scheme run out of Southern California: Between 2015 and 2020, the group sold pain creams, neck braces and similar products through phone solicitations to residents across the state, according to a DA’s news release.
Without offering additional explanation, the release stated that the wide-ranging criminal investigation was dubbed “C.R.E.A.M. (Cash Rules Everything Around Me),” a title most closely associated with the iconic hip-hop song of the same name featured on the Wu-Tang Clan’s landmark 1993 debut album “Enter the Wu-Tang (36 Chambers).”
The scam was predicated on confusion and obfuscation, with callers claiming affiliations with the nonexistent “Physician’s Network” and “Doctor’s Network,” prosecutors said. A person agreeing to buy one of the items mentioned in the solicitation was then issued a prescription by a doctor on the payroll of the illicit network.
That prescription would be filled exclusively by one of six pharmacies set up by the scammers. The stores only carried the products the group was pushing — selected specifically for having high insurance reimbursement rates — and the scam operators would then overbill insurance carriers.
“For instance, the defendants would bill insurance companies upwards of $4,000 for medication that could be purchased for a few hundred dollars,” the DA release states. “The prescribing doctors rarely met with or spoke to the patients.”
The 15 defendants in the case, primarily from Los Angeles, collectively called themselves The Care Group, prosecutors said. They operated their call center under the name Global Marketing, and ran their medical device company as California General DME.
“This group used people’s pain and illnesses to criminally enrich themselves,” Santa Clara County District Attorney Jeff Rosen said in a statement. “They tried to hide behind a maze of dozens of shell corporations and straw owners. We found them anyway — and now they will pay back their victims and be held accountable.”
By the end of the investigation — which included the California State Board of Pharmacy, and district attorney offices in San Mateo, Monterey and Los Angeles counties — seven participants were convicted of felonies and eight were convicted of misdemeanors after negotiating plea agreements.
Some received county jail sentences, which typically last a year at the longest. The group was also ordered to pay $8.3 million in victim restitution.
Santa Clara County residents accounted for $2.3 million of the approximately $40 million in overstuffed charges linked to the scam. The DA’s office called it the largest medical fraud case prosecuted in the county, and added that the $8.3 million figure was the largest insurance-fraud restitution amount secured by South Bay prosecutors.
