South Bay Residents Named In Federal Healthcare Fraud Investigation

SOUTH BAY — Eight people, including three South Bay residents, were accused by federal officials Thursday of massive healthcare fraud.

The three have been charged with conspiracy to commit healthcare fraud and wire fraud in connection with a $19 million scheme to defraud a labor union’s health plan via false claims for chiropractic services and physical therapy that weren’t needed or never provided.

Those charged are:

• Tolu Aulava-Moala, 51, of Carson, who was the director of the facilities;
• John Nicola, 77, of El Segundo, a licensed chiropractor;
• Crysta Richter, 40, of Torrance, who owned a medical billing company.

Also charged is a Long Beach man, John Keohuloa, 49.

According to court documents, from January 2010 to September 2023, the four fraudulently submitted at least $19,005,463 in claims to International Longshore and Warehouse Union Pacific Maritime Association and other private health insurers on behalf of several chiropractic and physical therapy service companies: Ohana Wellness Center, Ohana Management Corp., and R3New Wellness – all based in Carson – and the Huntington Beach-based One Life Acupuncture APC.

Aulava-Moala and Keohuloa induced beneficiaries to visit clinics to receive medically unnecessary services, such as massages or endoscopies, in exchange for kickback payments, according to the Department of Justice.

"Nicola knowingly created fake client notes for beneficiaries, and Aulava-Moala, Nicola, and Richter submitted false and fraudulent claims to health insurers for reimbursement for medical services," the DOJ said in a statement.

In August 2022, the former owner of the Ohana companies testified under oath at a civil trial that the companies falsified patient chart notes and billed claims under chiropractors’ names and insurance numbers without their knowledge. A state court later that month found the Ohana companies liable for the fraud scheme.

In addition, from March 2016 to June 2023, Aulava-Moala and Keohuloa conspired to submit about $700,000 in fraudulent receipts for a charity donation program operated by a Los Angeles-based oil refinery for which the company paid at least $500,000, the DOJ said.

The defendants are all expected to make their initial appearances in Los Angeles federal court in the coming weeks.

Healthcare fraud-related charges in these cases carry a statutory maximum sentence of 10 years in federal prison. Wire fraud is punishable by up to 20 years in federal prison. Aggravated identity theft carries a mandatory two-year consecutive prison sentence.

“The defendants charged today allegedly turned hospice care into a cash-producing operation, resulting in more than $50 million in losses to taxpayers,” Inspector General T. March Bell of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), said. “Today’s takedown reflects HHS-OIG’s commitment to deploy every tool at our disposal and collaborate with our law enforcement partners to dismantle hospice operations built on deception.”