David and Nathan Young

Introduction

David Young, 71, a.k.a. “Sancho Lopez,” and his son Nathan Young, 39, a.k.a. “Pablo,” both of Los Angeles, were charged by federal indictment on October 22, 2026 with a years-long scheme to traffic vulnerable patients from around the country to Southern California and elsewhere to receive sham substance abuse treatment billed to private insurance companies to the tune of over $1.6 billion. The Justice Department described the charges as including the largest sober home fraud scheme it has ever prosecuted. The father and son were charged alongside Honey Phipps, 42, and Cody Phipps, 36, both of Greenville, Texas, in a takedown charging 15 defendants with $2 billion in fraudulent claims.

Background Information

As alleged in the indictment, the father and son controlled dozens of purported substance abuse treatment companies in the Los Angeles area and around the country. The Youngs directed “body brokers,” including Honey and Cody Phipps, to target vulnerable populations such as individuals who were homeless and in poverty and individuals attending substance abuse support groups; wire coverage described the targets as the homeless and addicts attending 12-step programs. The defendants allegedly sought out individuals whose insurance policies provided the most generous reimbursements and often fraudulently enrolled individuals in new insurance policies for which they were not eligible, to ensure they obtained the highest reimbursement for their sham treatment.

The Controversy or Incident That Led to Their Cancellation

Charged, not convicted. The Youngs face only the allegations of an indictment, which merely contains accusations; they are presumed innocent until proven guilty beyond a reasonable doubt, and no pleas are reported in the coverage.

Prosecutors allege the Youngs lured prospective patients to Southern California and elsewhere by offering free flights, money, apartments, hotel stays, cars, gift cards, marijuana, cigarettes, controlled substances including illegal drugs, and other prescription medications freely dispensed by doctors employed by the Youngs. Once in California, most patients found that the promises made by the conspirators were illusory. Some so-called “premium” patients with high-reimbursing insurance policies received luxurious accommodation, stays in hotels and private apartments, and dinners, while “non-premium” patients lived in cramped, unsanitary, crowded, and often derelict housing described as “trap houses.”

The Youngs allegedly recycled patients through their facilities to continue billing insurance regardless of whether treatment was medically necessary or provided. To keep patients cycling through their facilities, they directed that patients be drugged with medication — “to knock the client out” — if they tried to leave. They also allegedly offered drugs to patients, cut them off from communication with family members, prevented them from accessing their belongings, and physically blocked them from leaving the facilities to continue billing their insurance policies. Employees were instructed to coach patients to fabricate symptoms so they would be eligible for detoxification services, and in some instances patients were encouraged to use drugs or alcohol to become eligible for “treatment.”

The substance abuse “therapy” the Youngs provided once patients were out of detox allegedly consisted of Zoom sessions with more than one hundred attendees that patients did not have to participate in except to turn on their cameras; patients were told they could “lay out on [the] beach” without having to participate in therapy that was subsequently billed to insurance companies.

Public Reaction and Consequences

Assistant Attorney General Colin M. McDonald said, “These charges include the largest sober home fraud scheme the Department has ever prosecuted, and a scheme involving unnecessary invasive procedures that was detected through data analytics,” adding, “Our message is simple: if you steal health care dollars from the American taxpayer or abuse your position to harm patients, we are coming for you – and the data will lead us to you.” The $1.6 billion billed made the case the largest substance abuse treatment fraud scheme the Department of Justice has ever prosecuted, and wire coverage carried the takedown the same day. A related defendant, Nicholas Moore, who managed and served as a nominal owner and director of certain of the Youngs’ facilities, has pleaded guilty to conspiracy to commit health care fraud and wire fraud, admitting he assisted the Youngs in submitting $199 million in fraudulent claims as an “area manager” for several Young facilities, including their detox facilities.

Current Status

The four defendants are charged with conspiracy to commit health care fraud and wire fraud, conspiracy to violate the Eliminating Kickbacks in Recovery Act (EKRA), three counts of health care fraud, and two counts of violating EKRA; Nathan and David Young are charged with an additional five counts of health care fraud and an additional four counts of violating EKRA. The FBI, IRS Criminal Investigation, and the Drug Enforcement Administration are investigating the matter. The Justice Department notes that indictments, complaints, and informations merely contain allegations and that all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Impact on Their Career/Life

The indictment untangles a family enterprise — aliases “Pablo” and “Sancho Lopez,” dozens of purported treatment companies, and a broker network reaching from Texas to California — alleged to exist to farm insured patients for reimbursement. The Justice Department’s framing of the case as the largest sober home fraud scheme it has ever prosecuted now attaches to everything the Youngs built in the treatment industry, and the conduct described stretches from recruiting pitches of free flights and drugs to patients allegedly drugged to keep them from leaving. Their case anchors the substance abuse portion of the October 22 takedown.

Sources

• U.S. Attorney’s Office, Central District of California, “L.A. Health Care Fraud Takedown Results in 15 Defendants Charged, Including Six Medical Professionals, with $2 Billion in Losses Alleged”, October 22, 2026 — source
• MyNewsLA, “Doctors Charged in LA Health Care Fraud Takedown”, October 22, 2026 — source
• San Bernardino Sun, “Doctors among 15 charged in LA healthcare fraud takedown”, October 22, 2026 — source