A Los Angeles outreach worker has described the disturbing lengths alleged fraudsters go to when recruiting homeless people struggling with addiction for California detox programs. His account follows federal charges against a father and son accused of running a $1.6 billion drug rehabilitation fraud scheme.
Federal prosecutors have charged David Young, 71, and his son, Nathan Young, 39. The pair allegedly relied on “body brokers” to recruit at least 6,000 people with substance-use disorders—many brought in from other states—and place them in California rehabilitation facilities as part of an insurance scam.
Lang Martinez, a Los Angeles homeless advocate and outreach worker, said the alleged scheme mirrors tactics he has repeatedly seen on Skid Row. He also described the methods brokers allegedly use to increase their payouts.
“Los Angeles is definitely a hot spot for this sort of thing,” said Martinez, who once lived homeless on Skid Row before becoming sober in 2018 and rebuilding his life. “First, they’ll find someone caught up in addiction. Then, they’ll give you a little bit of money.”
Martinez said brokers may then take a victim’s identification, arrange insurance coverage and wait roughly a week before placing that person in a treatment center—leaving the insurer to cover the cost.
“They have insiders with the insurance companies, your top insurance companies,” Martinez said. “They’ll grease their palms, and then what they’ll do is they’ll backdate homeboy’s insurance.”
The next step, he said, is often a sales pitch designed to make the recruit feel as though a treatment opportunity has suddenly appeared: “‘Got you a spot, man. I’m gonna put you on a plane, and I’m gonna fly you out to this place.’”
“It happens all over the country,” Martinez added. “Get you in the car. Put you on a plane.”
Once they arrive, however, some people may discover they are not receiving meaningful treatment. At facilities allegedly tied to the Youngs, court documents describe activities such as massive Zoom meetings with little or no care and trips to movie theaters presented as group therapy.
Martinez said the alleged exploitation can become even more dangerous when brokers target people who have managed to get sober. In some cases, he said, brokers may remove them from treatment, provide money and drugs to trigger a relapse, then place them in another facility and collect a new referral fee.
“A lot of these people die,” Martinez said of people caught in such cycles.
“They relapse you again, and then I put you in another program,” he said. “That’s how the brokering works.”
Martinez said hundreds of homeless people struggling with addiction on Skid Row may have ended up there after being drawn into similar arrangements.
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“When you turn human suffering into a business, you’ve lost your humanity,” he said. “What is happening to our unhoused and our most vulnerable individuals through body brokering is not recovery—it’s exploitation.”
The allegations came to public attention this week in the case against the Youngs. Prosecutors say the pair worked with body brokers, including Honey and Cody Phipps of Greenville, Texas, to target homeless people with addictions and repeatedly cycle them through the defendants’ treatment facilities.
Justice Department prosecutors allege the defendants collected more than $210 million over six years. Assistant Attorney General Colin M. McDonald described the case as “the largest sober home fraud scheme the Department has ever prosecuted.”
The two Youngs and the two Phipps were arrested as part of a sweeping federal healthcare fraud investigation announced Thursday in Los Angeles.
According to court documents, the Youngs directed the Phipps and other brokers to travel across the country, locate homeless people with addictions, arrange insurance coverage and enroll them in the Youngs’ rehabilitation centers in Los Angeles, San Diego, the Bay Area and other locations.
Court records indicate that victims were flown to California from Las Vegas, Cleveland and Birmingham, Alabama.
Prosecutors say the brokers offered incentives to persuade people to enter the Youngs’ facilities, including cash, drugs, free flights and free or heavily discounted lodging in desirable locations, including luxury apartments and houses in Los Angeles.
Sometimes, 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,†and would be eligible for rehab, court papers state.
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, prosecutors charge.
To keep their victims as long as possible, the Youngs had such addicts “drugged with medication, cut off from communication with family members, prevented from accessing their belongings, and physically blocked from leaving,†according to court papers.
First Assistant US Attorney Bill Essayli said the scheme was particularly distressing in light of California’s homelessness problem.
“These body brokers brought vulnerable people here with false promises of treatment, worsening California’s drug-addicted homelessness crisis,†he said. “We will hold accountable those who turn addiction and human suffering into a business.â€
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