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Published On: Fri, Jul 26th, 2019

Leader of Billion Dollar Health Care Scam, Michael Drobot Guilty of Selling his Luxury Cars

The imprisoned former owner of Pacific Hospital in Long Beach has agreed to plead guilty to federal criminal charges for illegally selling his luxury cars and keeping the proceeds for himself, disobeying a court order that he forfeit the money because of a previous conviction for orchestrating a nearly $1 billion health care fraud scheme.

Michael D. Drobot, 74, formerly of Corona del Mar but who is now imprisoned at Taft Correctional Institution in Kern County, has been charged in a three-count criminal information with wire fraud, engaging in monetary transactions in property derived from unlawful activity, and criminal contempt of court.

Drobot is scheduled to be arraigned on the information in the coming weeks in United States District Court in Santa Ana. He faces a statutory maximum sentence of 50 years in federal prison.

photo Stefan Krause, Germany

Drobot pleaded guilty in 2014 to charges of conspiracy and paying illegal kickbacks, admitting that he orchestrated a wide-ranging fraudulent kickback scheme where paid more than $50 million in bribes to doctors to steer hundreds of millions of dollars in spinal surgeries to his hospital. Drobot ultimately profited millions of dollars from the scheme.

According to his plea agreement filed on Tuesday, in January 2018, Drobot was sentenced to five years in federal prison and was ordered by the court to forfeit $10 million to the United States government and to partially satisfy the forfeiture by selling his 1965 Aston Martin, 1958 Porsche, and 1971 Mercedes-Benz automobiles. Drobot was ordered to perform this obligation by July 5, 2018.

Instead, from June 22, 2018 until September 14, 2018, Drobot intentionally violated the court’s forfeiture order in an effort to keep his criminal proceeds, the plea agreement states.

For example, on June 22, 2018, Drobot conveyed an interest in the Aston Martin car to a classic car auction company in exchange for a $1 million advance on the proceeds of the car’s sale, according to the plea agreement. Drobot admitted that he caused the auction company to wire $1 million to Drobot’s bank account. Drobot also admitted he used that money for personal expenses and not to satisfy the court’s forfeiture order. Drobot further admitted to laundering the money via transfers to third parties.

After Drobot violated the court’s forfeiture order, the government moved successfully in February 2019 to satisfy the outstanding money judgment by forfeiting Drobot’s interest in his Newport Beach residence and Perris, California business property.

As part of the underlying health care fraud scheme for which he was imprisoned, Drobot paid bribes to California State Senator Ronald Calderon in exchange for Calderon performing official acts to keep the spinal pass-through law on the books. Calderon served a 3½-year sentence in federal prison after admitting that he took bribes from Drobot and undercover FBI agents.

Prosecutors have charged 17 individuals and obtained 10 convictions as part of Operation Spinal Cap, which targets a long-running health care fraud scheme that generated nearly $1 billion in fraudulent claims to federal government, California state, and private insurers. Drobot spearheaded the scheme.

This case was investigated by the Federal Bureau of Investigation, IRS-Criminal Investigation, the California Department of Insurance, and the United States Postal Service, Office of the Inspector General.

This matter is being prosecuted by Assistant United States Attorneys Joseph T. McNally of the Violent and Organized Crime Section, Scott D. Tenley of the Santa Ana Branch Office, Ashwin Janakiram of the Major Frauds Section, and Jonathan S. Galatzan of the Asset Forfeiture Section.

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