Blood Lab Owner Sentenced to Over Four Years for Massive Medicare Fraud Fueling Gambling Habits
Introduction to the Fraud Case
A Southern California man known as A.M. was sentenced to 51 months in federal prison for orchestrating a complex Medicare fraud scheme that resulted in $11.2 million in unpaid taxes. The Los Angeles federal court ruling also requires him to repay $15.16 million in restitution alongside his prison sentence.
Details of the Fraud and Legal Proceedings
A.M. pled guilty in 2025 to charges including tax evasion, wire fraud, and healthcare fraud after being arrested in April 2024 at Los Angeles International Airport while attempting to board a flight to Armenia. His charges were mitigated due to his cooperation with authorities.
The fraudulent activities spanned from 2015 to 2023, during which the money generated was used to fund A.M.’s personal lifestyle, notably including gambling excursions and related expenses.
Scheme Mechanics: Fronting Through a Straw Owner
Since Medicare reimbursements were inaccessible to A.M., he used a frontman, L.S., as the legal owner of Genex Laboratories, a blood testing facility in Burbank. This setup allowed Medicare payments to flow into Genex under L.S.’s name.
Funds were deposited into a bank account registered to L.S., who was paid about $2,000 monthly to maintain the appearance of legitimate ownership. A.M. then withdrew these funds for personal use but consistently reported a low annual income of roughly $40,000 to the IRS.
Financial Impact and Tax Evasion
Prosecutors revealed that A.M. failed to report approximately $23.9 million in taxable income, leading to a federal tax loss of about $11.2 million plus an additional $3.9 million in interest. L.S., although involved, was not acting independently but participated under A.M.’s direction.
A.M. supplied L.S. with falsified financial statements portraying Genex Laboratories as barely profitable or operating at a loss. L.S. submitted these misleading documents to his tax preparer, who filed the returns based on the falsified data.
