A Los Angeles father and son have been charged in what the US Justice Department calls the largest substance abuse treatment fraud it has ever prosecuted. The alleged rehab fraud scheme involved more than $1.6 billion in claims to private insurers. Prosecutors say David and Nathan Young lured homeless and addicted people to California for sham treatment, with charges announced on 22 October 2026.

Who Is Charged in the Rehab Fraud Case

Key facts: four defendants face charges in United States v. Young. Nathan Young is 39 and David Young 71, both of Los Angeles. Honey Phipps, 42, and Cody Phipps, 36, of Greenville, Texas, are accused of working as recruiters. The Justice Department announced the case on 22 October 2026.

All four face conspiracy charges covering health care fraud, wire fraud and violations of the Eliminating Kickbacks in Recovery Act, plus individual counts. The Youngs face additional counts. The case formed part of a wider Los Angeles healthcare fraud crackdown in which 15 defendants were charged in schemes involving more than $1.8 billion in alleged fraudulent claims.

FBI Director Kash Patel said the arrests came under President Trump's White House Task Force to Eliminate Fraud.

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How Prosecutors Say Vulnerable People Were Recruited

According to the indictment, the Youngs controlled dozens of purported treatment companies and directed so-called body brokers to target people who were homeless, in poverty or attending substance abuse support groups.

Prosecutors allege that some patients were fraudulently enrolled in insurance policies for which they were ineligible.

Recruits were allegedly offered free flights, money, apartments, hotel stays, cars, gift cards and illegal drugs. Once in California, prosecutors say, most found the promises illusory. So-called premium patients allegedly received hotels and private apartments, while others lived in cramped, unsanitary and often derelict housing.

Allegations of Drugging and the Defence Response

Prosecutors allege the Youngs recycled patients through their facilities to keep billing insurers, whether or not treatment was necessary. Prosecutors allege that the Youngs directed staff to drug patients 'to knock the client out' if they tried to leave.

They also allege that patients were cut off from their families, denied access to their belongings and physically prevented from leaving the facilities. Some were allegedly encouraged to use drugs or alcohol to qualify for detox.

Therapy, the indictment says, consisted of Zoom sessions with more than 100 attendees, where patients needed only to switch on their cameras. They were reportedly told they could spend time on the beach instead, which is hardly a demanding clinical regime.

Nathan Young's lawyer, Reuven Cohen, said his client denies the allegations and looks forward to challenging the government's case. The Justice Department release did not set out responses from the other three defendants.

A separate defendant, Nicholas Moore, 33, of North Myrtle Beach, has pleaded guilty to conspiracy to commit health care fraud and wire fraud. He admitted helping the Youngs submit $199 million in fraudulent claims to insurers while working as an area manager at their facilities.

Eight defendants across the wider takedown were arrested on 22 October, with five due in Los Angeles federal court that afternoon. The FBI, IRS Criminal Investigation and the Drug Enforcement Administration investigated the case, which is being prosecuted by the Major Frauds Section and the department's Fraud Division.

The Justice Department stressed that indictments contain allegations only and that all defendants are presumed innocent until proven guilty.

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