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In a major operation to combat health care fraud, the U.S. Department of Justice has arrested a Pakistani national implicated in a massive $650 million Medicaid scam. This complex scheme has been uncovered as part of a broader investigation into fraudulent activities that exploited Arizona’s addiction treatment program designed for Native Americans and the homeless. The investigation highlights the DOJ’s commitment to protecting vulnerable populations from exploitation and ensuring accountability in the health care system.
Federal prosecutors allege that Farrukh Ali, the mastermind behind this Pakistani health care fraud operation, conspired with at least 41 addiction clinics across Arizona. According to court documents, these clinics fraudulently billed the state for hundreds of millions of dollars in addiction treatment services that were either never provided, falsely billed, or medically unnecessary.
Many of the so-called patients were vulnerable individuals recruited from homeless encampments or Native American reservations, officials said. Often struggling with alcoholism or opioid and meth addiction, these patients were promised free room, board, and treatment—services that were largely fabricated.
The indictment of Ali is one of nearly 200 cases announced by the Justice Department on Monday as part of its 2025 nationwide healthcare fraud takedown, which revealed intended losses totalling $14.6 billion. This makes it the largest health care fraud sweep in the department’s history, eclipsing previous efforts in scope and financial impact.
“Today marks a decisive moment in our fight to protect American taxpayers from fraudsters, and to defend the integrity of America’s health care system,” said Matthew Galeotti, head of the DOJ’s Criminal Division. “These criminals didn’t just steal someone else’s money. They stole from you.”
While actual losses from the charged schemes total around $2.9 billion, the cases encompass everything from a staggering $10.6 billion urinary catheter fraud by an international group to a $1 billion wound care scheme targeting hospice Medicare patients, underscoring the vast reach of health care fraud.
How the alleged Pakistani health care fraud scheme worked
According to prosecutors, Ali operated a company called ProMD Solutions LLC, registered in Arizona but based in Pakistan. Between April 2021 and July 2023, ProMD provided credentialing, medical coding, and billing services to addiction treatment clinics across the state.
Ali struck agreements with at least 41 facilities, including two identified in court papers as TUSA and CHWC. These were listed as outpatient centers supposedly offering substance abuse therapy. In reality, officials say the clinics either didn’t deliver genuine care or grossly exaggerated their services.
To keep a steady flow of billable patients, clinic owners allegedly paid kickbacks to sober home operators who funneled people into their programs. Patients enrolled in Arizona’s American Indian Health Program (AIHP) were especially sought after, since the Medicaid system offered higher reimbursements for their care.
“In the greater Phoenix area, they were obtaining patients from homeless shelters, encampments, street corners, hospitals, detox centers,” said a Justice Department official. “They were also going to Native American reservations in vans and offering substance abuse treatment and free room and board.”
Ali, through ProMD, credentialed these clinics with Arizona Medicaid despite knowing they weren’t delivering real treatment. His company then handled the billing—submitting false claims and taking a 5% commission on whatever money the state paid out.
Prosecutors say the fraudulent claims included therapy services that were either never provided, not provided by qualified staff, or so substandard they served no treatment purpose. To hide the scheme, Ali and clinic operators allegedly falsified therapy notes to make it appear patients attended sessions they never did.
Court documents reveal Ali and two clinics alone billed Arizona’s Medicaid program for roughly $57 million and received nearly $52 million in payments. In total, Ali submitted $650 million in bogus claims on behalf of all 41 clinics, with the state paying out around $564 million.
Authorities also traced nearly $3 million of the approximately $25 million Ali personally received to a luxury home purchase on a golf estate in Dubai, UAE.
Ali, who faces conspiracy, wire fraud, and money laundering charges, is not currently in U.S. custody and is believed to be in Pakistan. Efforts to reach him for comment were unsuccessful.
