California has become a “fraudster’s paradise,” a top federal prosecutor in Southern California said Saturday, warning that investigators will not hesitate to charge state officials if evidence shows they helped enable the schemes now under scrutiny.
Bill Essayli, the First Assistant U.S. Attorney for the Central District of California, said the line between “massive incompetence or corruption” can be hard to draw, but added that federal prosecutors will act if they find people inside government benefited from or enabled fraud. “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,” he said on Saturday in America.
Essayli pointed to a $45 million Medicare Botox scam as a case study for what he described as systemic abuse in California. In that case, Violetta Mailyan, a doctor in California, was convicted in Los Angeles for submitting claims for Botox injections that were either not given or were unnecessary. Essayli said investigators would probably recover about $20 million of her assets for taxpayers after the conviction.
That case is one piece of a broader federal push that has already reached California’s Medicaid system. In March, President Donald Trump chose Vice President JD Vance to lead the Task Force to Eliminate Fraud, and in May, Vance and CMS Administrator Dr. Mehmet Oz said the administration would defer $1.3 billion in federal Medicaid funding to California because of oversight concerns. The White House has said the task force has identified major fraud rings involving hospice care and childcare facilities.
Essayli said California’s medical-licensing process is part of the problem, arguing that the state hands out licenses without enough vetting and then leaves federal money exposed. He questioned whether the failures reflect incompetence or corruption, and said state politicians do not seem to care because the money at risk is federal. “You really are just handing the keys to the piggy bank over to these fraudsters,” he said.
The sharpest unanswered question is whether investigators have evidence tying any California officials to the schemes beyond poor oversight. Vance has said the anti-fraud task force is looking into whether government officials enabled the alleged scams and warned that anyone who covered up the abuse ought to go to prison. For now, Essayli’s warning stands as a public signal that the inquiry could move beyond fraudsters and into the government offices that licensed or overlooked them.
