LA Prosecutors Uncover $1.6 Billion Drug Rehab Scheme Exploiting Homeless Addicts

Federal authorities have charged David Young, 71, and his son Nathan Young, 39, in connection with an alleged $1.6 billion drug rehabilitation scheme that exploited homeless addicts by using "body brokers" to recruit victims from across the country.

According to prosecutors, the scheme involved luring at least 6,000 individuals struggling with addiction to California clinics with promises of free flights, groceries, and housing. These brokers allegedly targeted vulnerable individuals, often from out of state, to enter rehabilitation centers under false pretenses.

Los Angeles-based homeless advocate Lang Martinez described the practice as distressingly common on Skid Row, describing how body brokers offer addicts money and incentives to secure identification and insurance, which is then used to admit them into rehab centers funded by insurance companies. Martinez claims that some brokers have insiders at insurance companies who backdate policies to facilitate these admissions.

"Los Angeles is definitely a hot spot for this sort of thing," Martinez stated. "First, they’ll find someone caught up in addiction. Then, they’ll give you a little bit of money."

Once admitted, victims allegedly experienced fraudulent treatment, including virtual meetings with hundreds of participants and excursions disguised as group therapy. Prosecutors also allege that some individuals were coerced into relapsing by body brokers, only to be re-admitted to other facilities for further insurance fraud.

"A lot of these people die," Martinez commented on the victims of these schemes. "They relapse you again, and then I put you in another program. That’s how the brokering works."

Assistant Attorney General Colin M. McDonald called the operation "the largest sober home fraud scheme the Department has ever prosecuted." Court documents indicate that victims were flown in from cities like Las Vegas, Cleveland, and Birmingham, Alabama, with brokers offering kickbacks such as money, drugs, and luxury accommodations.

Prosecutors also detailed instances where patients were allegedly drugged, isolated from family, denied access to their belongings, and physically prevented from leaving the facilities. "These body brokers brought vulnerable people here with false promises of treatment, worsening California’s drug-addicted homelessness crisis," said First Assistant U.S. Attorney Bill Essayli. "We will hold accountable those who turn addiction and human suffering into a business."

The investigation, which involved the DEA and LAPD, led to the arrest of the Youngs and accused body brokers Cody and Honey Phipps. The charges highlight the severe exploitation that can occur within the addiction treatment industry, particularly targeting the unhoused and most vulnerable populations.