FBI discovered an alleged fraud scheme involving federal Medicaid and state Medi-Cal health insurance programs. The situation was brought into light four years ago when the agents received a tip from a rescue mission employee.

Scott Johnson, worker at the Union Rescue Mission in Los Angeles’s Skid Row area, said he had seen vans and cars crammed with homeless people. “Sometimes they were so full of people that they put people in the trunks of cars,” said Johnson Thursday. “I wondered what was going on, so I called the state authorities,” he added.

Investigators found out a business practice that was used to defraud taxpayer-funded healthcare programs of millions of dollars by means of taking on homeless patients for unnecessary medical services. According to officials, Medi-Cal and Medicare, administered by the United States government, were billed for costly and unjustified medical services for almost 3 years.

FBI agents took into custody Rudra Sabaratnam, the owner and CEO of City of Angels Medical Center, and Estill Mitts, the operator of a homeless "assessment center" in Skid Row, an area home to one of the largest stable populations of homeless people in the U.S.

A 21-count grand jury indictment, unsealed Wednesday, jointly accuses the couple of conspiring to exchange kickbacks for patient referrals and of committing health-care fraud.

According to FBI spokeswoman Laura Eimiller, Mitts made his first court appearance on Wednesday and posted $25,000 bail. Sabaratnam was being detained in the Metropolitan Detention Center pending a hearing Thursday. If convicted on all counts, Mitts could face a maximum sentence of 140 years in prison and Sabaratnam could face 50 years in federal prison, the authorities said.