Free Flights, 'Trap Houses' and $1.6 Billion in Bills: Four Charged in Sober-Home Patient-Brokering Case

Published Oct. 23, 2026. Case statuses are current as of that date.

Federal prosecutors say a father and son in Los Angeles ran dozens of purported addiction-treatment companies and paid recruiters to find people in crisis. The recruiters allegedly offered free flights, cash, apartments, hotel stays, cars and drugs to get them into "treatment" that was billed to private insurers. The Justice Department announced the case on Oct. 22, 2026, and called it "the largest sober home fraud scheme the Department has ever prosecuted." It says more than $1.6 billion was billed [1].

Important: Charges are allegations. Every defendant named below who has not been convicted is presumed innocent unless and until proven guilty in court.

How the scheme allegedly worked

The following is drawn from the Justice Department's summary of the indictment [1].

1. Finding targets. "Body brokers" allegedly sought out people who were unhoused and in poverty, along with people attending substance abuse support groups.
2. Choosing by insurance. The defendants allegedly looked for people whose insurance paid the most generous reimbursements. Prosecutors say they often enrolled people in new insurance policies they were not eligible for.
3. The lure. Prospective patients were allegedly offered free flights, money, apartments, hotel stays, cars, gift cards, marijuana, cigarettes, controlled substances (including illegal drugs) and prescription medications.
4. Two tiers. Prosecutors say "premium" patients with high-paying insurance got hotels, private apartments and dinners. "Non-premium" patients lived in cramped, unsanitary, crowded and often derelict housing described as "trap houses."
5. Keeping people in place. The Youngs allegedly recycled patients through their facilities to keep billing. According to the release, they directed that patients who tried to leave be drugged with medication "to knock the client out," cut patients off from family, kept them from their belongings and physically blocked them from leaving.
6. Coaching and "therapy." Employees were allegedly told to coach patients to make up symptoms so they would qualify for detox, and patients were encouraged to use drugs or alcohol so they would be eligible for "treatment." After detox, prosecutors say, "therapy" meant Zoom sessions with more than 100 attendees, where patients only had to turn on their cameras. In text messages quoted in the release, patients were told they could "stick [the] video back at [the] ceiling" and "Lay out on [the] beach."

The people charged and their status

Nathan Young and David Young

Nathan Young, also known as "Pablo," 39, and David Young, also known as "Sancho Lopez," 71, both of Los Angeles, are described by prosecutors as a son and father who controlled dozens of purported substance abuse treatment companies in the Los Angeles area and around the country [1]. The release says that when Nathan Young was told a premium patient wanted to leave detox, he directed staff to give the patient what he wanted off-site to keep him there.

Along with the charges against all four defendants (below), each of the Youngs faces five more health care fraud counts and four more counts of violating the Eliminating Kickbacks in Recovery Act (EKRA) [1].

Honey Phipps and Cody Phipps

Honey Phipps, 42, and Cody Phipps, 36, both of Greenville, Texas, are described as "body brokers" who allegedly worked at the Youngs' direction. Text messages quoted in the release are attributed to them, including the "Lay out on [the] beach" message [1].

All four are charged with conspiracy to commit health care fraud and wire fraud, conspiracy to violate EKRA, three counts of health care fraud and two counts of violating EKRA. The Justice Department said eight takedown defendants were arrested Oct. 22, and two were expected to make initial appearances in federal court in Texas. The release does not say which defendants were arrested, and we could not confirm pleas or detention status for these four [1].

Nicholas Moore: guilty plea

Nicholas Moore, 33, of North Myrtle Beach, South Carolina, pleaded guilty to a superseding information charging him with conspiracy to commit health care fraud and wire fraud. According to the release, Moore managed some of the Youngs' facilities and was a nominal owner and director of some of them. As an "area manager," including at detox facilities, he admitted helping the Youngs submit $199 million in fraudulent claims to insurers. No sentencing date was given [1].

The FBI, IRS Criminal Investigation and the DEA are investigating. The case is being prosecuted by the Fraud Division's Health Care Fraud Section and the U.S. Attorney's Office for the Central District of California [1].

Red flags

• Free travel, cash or housing to enter treatment. Legitimate programs do not pay you or fly you across the country for free in exchange for your insurance information.
• A recruiter who asks about your insurance first, or who offers to sign you up for a new plan.
• Being told to use drugs or alcohol, or to exaggerate symptoms, so you will "qualify" for detox.
• "Therapy" that is a giant video call where you only need to turn on your camera.
• Being cut off from family, having your phone or belongings held, or being pressured not to leave.
• Explanations of benefits listing services you never got. Check every insurance statement.

What to do if you or someone you love is targeted

1. Find treatment through a neutral source. SAMHSA's free, confidential National Helpline is 1-800-662-4357, and FindTreatment.gov lists licensed providers.
2. Check licenses with your state's health or addiction-services agency before accepting any placement.
3. Report patient brokering or billing for care you didn't receive to your insurer's fraud unit, to the FBI at tips.fbi.gov, and to the FTC at ReportFraud.ftc.gov.
4. If someone is being held or drugged against their will, call 911.

Case status (as of Oct. 23, 2026)

Defendant	Court	Status	Source
Nathan Young ("Pablo"), 39, Los Angeles	Federal (C.D. Cal. prosecutors)	Indicted (conspiracy, health care fraud, EKRA counts); presumed innocent	[1]
David Young ("Sancho Lopez"), 71, Los Angeles	Federal (C.D. Cal. prosecutors)	Indicted (same counts as Nathan Young); presumed innocent	[1]
Honey Phipps, 42, Greenville, Texas	Federal (C.D. Cal. prosecutors)	Indicted; presumed innocent	[1]
Cody Phipps, 36, Greenville, Texas	Federal (C.D. Cal. prosecutors)	Indicted; presumed innocent	[1]
Nicholas Moore, 33, North Myrtle Beach, S.C.	Federal (C.D. Cal. prosecutors)	Pleaded guilty to conspiracy; sentencing date not announced	[1]

Those not convicted are presumed innocent. Statuses can change.

Sources

1. U.S. Department of Justice, Office of Public Affairs, "Los Angeles Health Care Fraud Takedown Results in Charges Against 15 Defendants, Including 6 Medical Professionals, Nearly $2 Billion in Loss," Oct. 22, 2026. https://www.justice.gov/opa/pr/los-angeles-health-care-fraud-takedown-results-charges-against-15-defendants-including-6

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