June 2, 2026
A Southern California blood lab owner was sentenced to 51 months in federal prison and ordered to pay $15.16 million in restitution after admitting to a Medicare and tax fraud scheme that prosecutors said helped fund his gambling and lifestyle spending.
A Southern California blood laboratory owner has been sentenced to more than four years in federal prison after admitting to a long-running Medicare and tax fraud scheme that prosecutors said helped fund his lifestyle and gambling activity.
The defendant, identified in court records by the initials A.M., received a 51-month prison sentence in Los Angeles federal court. U.S. District Judge John A. Kronstadt also ordered him to pay $15.16 million in restitution.
Sentence: 51 months in federal prison
Restitution: $15.16 million
The business: Genex Laboratories, a blood testing lab in Burbank, California
The period: 2015 to 2023
The mechanism: a front owner used to keep collecting Medicare money after being barred
Unreported income: approximately $23.9 million
Tax avoided: around $11.2 million, plus $3.9 million in accrued interest
Fraud Scheme Ran for Years
According to federal prosecutors, the scheme operated from 2015 through 2023 and involved Genex Laboratories, a blood testing laboratory based in Burbank, California.
A.M. had previously been barred from receiving Medicare reimbursements directly. To get around that restriction, he admitted that he used another person as a front owner for the lab, allowing the business to continue receiving Medicare funds while he remained the real person controlling the operation.
The money generated through the scheme was allegedly used to support A.M.’s personal expenses, including gambling trips and other lifestyle spending.
Guilty Plea and Arrest
A.M. pleaded guilty in 2025 to charges including tax evasion, wire fraud and healthcare fraud.
He was originally arrested in April 2024 at Los Angeles International Airport while allegedly attempting to board a flight to Armenia.
Prosecutors said the government agreed to a lighter sentence because A.M. cooperated with authorities during the case.
Frontman Used to Hide Control of Lab
Court documents said A.M. arranged for a friend, identified as L.S., to be listed as the legal owner of Genex Laboratories. Prosecutors said A.M. paid L.S. around $2,000 per month to maintain the arrangement.
Medicare payments were deposited into an account registered under L.S.’s name, but A.M. allegedly withdrew the funds and used them for himself.
Despite controlling millions of dollars in income, A.M. reported only modest earnings to the Internal Revenue Service, claiming around $40,000 per year in income.
Why an Exclusion Is Supposed to End the Business
Being barred from Medicare reimbursement is one of the most serious sanctions a healthcare provider can face, precisely because it does not depend on a criminal conviction to bite. Once a person is excluded, no federal healthcare programme money is supposed to reach a business they own or control — which, for a laboratory whose revenue comes largely from those programmes, is effectively a shutdown order.
Millions in Unreported Income
Federal prosecutors said A.M. failed to report approximately $23.9 million in taxable income.
As a result, the government estimated that he avoided paying around $11.2 million in taxes, with an additional $3.9 million in accrued interest.
The case shows how healthcare fraud and tax evasion can overlap when business income is hidden through false ownership structures and misleading financial records.
The overlap is not a coincidence. Money taken out of a business through a nominee cannot easily be declared without explaining where it came from, so a concealed ownership scheme tends to force a second set of false filings to cover the first. Prosecutors frequently find the tax case easier to prove than the underlying fraud, because the gap between $40,000 in declared income and millions in withdrawals speaks for itself.
The Gambling Angle
The reference to gambling trips in the government’s account is not a separate offence, and nothing in the case suggests the casinos involved did anything improper. What it does is supply a motive and a destination for the money — the reason the withdrawals kept happening, and the place a meaningful share of them ended up.
It is also a familiar pattern in fraud prosecutions. Large, frequent cash movements tied to gaming venues are among the transactions most closely monitored by financial-reporting rules in the United States, which means a spending habit of this kind tends to leave a documented trail rather than hide one.
False Documents Given to Friend
Prosecutors said L.S. was also pulled into the tax scheme, though not as the primary actor.
According to the government, A.M. gave L.S. falsified financial documents that made Genex Laboratories appear to have little profit or even operate at a loss. L.S. then gave those documents to his own tax preparer, who filed returns based on the inaccurate information.
Authorities said the false records helped conceal the real scale of the lab’s income and the money A.M. was taking from the business.
Restitution Ordered Alongside Prison Term
In addition to the 51-month prison sentence, the court ordered A.M. to pay more than $15 million in restitution.
The sentence closes a major federal case involving healthcare fraud, concealed laboratory ownership, unpaid taxes and gambling-funded spending.
Federal prosecutors said the scheme deprived the government of millions of dollars while allowing A.M. to continue benefiting from Medicare reimbursements despite being barred from doing so directly.
Details are as set out by federal prosecutors and the sentencing court at the time of writing. Gambling involves risk and isn't for everyone — please play responsibly, set your limits, and if it stops being fun, take a break.
