The top federal prosecutor in Southern California is putting state officials on notice: if they enabled the fraud, they could be next in line for criminal charges.
Bill Essayli, First Assistant U.S. Attorney for the Central District of California, told Fox News that the Golden State has become a magnet for those looking to loot federal health care programs, and that the Justice Department is no longer content to chase only the schemers themselves.
The warning lands at a moment when the Trump administration has already moved to withhold $1.3 billion in federal Medicaid funding from California over oversight concerns, and after federal investigators say they have uncovered fraud rings stretching across hospice care and childcare centers statewide. Essayli’s message to Sacramento is blunt: the money trail does not stop at the fraudster’s front door.
Essayli pointed to a case the FBI in Los Angeles called the “largest Botox fraud scheme in the United States.” California doctor Violetta Mailyan was convicted in a $45 million scheme to defraud Medicare by submitting claims for Botox injections that were either never administered or medically unnecessary.
Federal prosecutors are now pursuing Mailyan’s assets. Essayli said the government expects to recover roughly $20 million for taxpayers.
As Fox News reported, Essayli discussed multiple arrests of suspects who allegedly stole hundreds of millions of dollars, and he framed those busts as part of a broader pattern that California’s own government has failed to stop.
“California is truly the fraudster’s paradise.”
That was Essayli’s assessment. And he did not spare the state’s leadership from his critique.
Essayli directed sharp criticism at California’s medical licensing process, arguing that the state hands out credentials without adequate vetting, creating an open door for criminal enterprises to bill Medicare and Medicaid at will.
“A lot of this is just like reckless, [massive incompetence and negligence] to hand out this many licenses without vetting or checking that these are legitimate medical providers. You really are just handing the keys to the piggy bank over to these fraudsters.”
He accused state leaders of allowing millions of dollars in fraud to continue and argued that California politicians “really don’t care” because the money being stolen belongs to federal taxpayers, not the state treasury. That distinction matters. When the bill goes to Washington, Sacramento has little incentive to tighten the spigot.
Essayli went further, raising the question of whether the problem is negligence or something worse.
“It’s very hard to tell sometimes if it truly is just massive incompetence or corruption, and that’s a very fine line sometimes.”
He then issued what amounted to a direct threat of prosecution against any government insiders found to have profited from or facilitated the schemes.
“If we ever develop evidence that there are people inside the government who are benefiting from the fraud or who are enabling the fraud, we will not hesitate to charge them.”
Essayli’s comments arrive against the backdrop of an aggressive federal push to root out fraud nationwide, with California squarely in the crosshairs. In March, President Donald Trump tapped Vice President JD Vance to lead the Task Force to Eliminate Fraud. The White House says the task force has since identified several major fraud rings involving hospice care and childcare centers.
Then, in May, Vance and Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz announced the administration would withhold $1.3 billion in federal Medicaid funding from California, citing oversight concerns. The move represented an unprecedented step, using the federal purse to force accountability from a state government that, in the administration’s view, has been asleep at the switch.
Vance told Fox News host Kayleigh McEnany that the anti-fraud task force was examining whether government officials had enabled the alleged scams. He did not hold back about what should happen to those found responsible.
“[They] ought to go to prison.”
Essayli echoed that posture. He said new leadership at the Justice Department is “laser-focused” on going after those committing fraud and saving the American people money.
Essayli closed his Fox News appearance with a message aimed squarely at anyone still running schemes in his district. He told potential fraudsters to “be on alert.”
“You could be next. And you probably will be next because we’re not putting up with it here anymore.”
The scope of what federal investigators say they have found is striking. Hundreds of millions of dollars allegedly stolen. A $45 million Botox billing scam. Fraud rings embedded in hospice facilities and childcare centers, programs meant to serve the most vulnerable. And behind all of it, a state licensing and oversight apparatus that, by the federal government’s account, either could not or would not stop the bleeding.
The question Essayli raised, incompetence or corruption, is one California’s leaders will eventually have to answer. The federal government is no longer asking politely. It has withheld $1.3 billion, convicted a doctor in the nation’s largest Botox fraud case, and put state officials on notice that enabling fraud could carry criminal consequences.
For taxpayers who fund Medicare and Medicaid, the pattern is familiar: billions flow out of Washington into a state bureaucracy that issues licenses without scrutiny, collects federal dollars without accountability, and shrugs when the money disappears. The only thing new is that someone in a position of authority is finally willing to say so, and to act on it.
Whether Essayli’s warning produces indictments of government insiders remains to be seen. No specific California officials have been named as targets. The line between gross negligence and criminal complicity is, as Essayli himself acknowledged, a fine one. But the posture is unmistakable: the Justice Department is looking upstream, past the fraudsters, toward the system that made the fraud possible.
That should worry anyone in Sacramento who signed off on a licensing regime that, by the federal government’s telling, functioned as an open invitation to loot the treasury.
When the people charged with guarding the vault leave the door unlocked long enough, the question stops being whether they noticed. It becomes whether they cared.
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