The owner and chief executive of City of Angels Medical Center and a patient recruiter of a homeless facility face federal criminal fraud charges for allegedly recruiting homeless individuals for unnecessary health-care treatments and then billing Medicare and Medi-Cal for them, state and federal and local authorities say.

After three medical centers (thought to be involved in the plan) were raided on Wednesday, Rudra Sabaratnam, chief executive of City of Angels hospital, and Estill Mitts, operator of a homeless assessment center in Los Angeles’s downtown “Skid Row,” were arrested by Federal Bureau of Investigation agents. They were accused of conspiring to persuade homeless people (including drug addicts and the mentally ill) to act like patients in the past four years, a civil lawsuit filled by Los Angeles City Atty. Rocky Delgadillo said.

These homeless people were promised money, about $30, and given unnecessary medical services, which were paid from money taken from Medicare and Medi-Cal, money originally intended to go to the elderly and the sick.

“The defendants are accused of preying on the homeless and exploiting their desperate conditions for personal gain,” Salvador Hernandez, assistant director in charge of the FBI’s Los Angeles office said.

The defendants were indicted on 21 counts by a federal grand jury for their alleged roles in the scheme. If convicted, Sabaratnam could face 50 years in federal prison, and Mitts could face 140 years, authorities said. However, additional criminal charges are expected according to US Attorney Thomas O’Brien.

“This is one of several major medical fraud investigations that are ongoing. There’s too much money being illegally stripped from public health care programs and the potential impact to those with a legitimate need is too great to let such fraud escape federal prosecution,” O’Brien said.

The investigation started after watching a videotape by Los Angeles Police Department officers registered on a Sunday afternoon two years ago. The videotape was showing an ambulance dropping off five homeless people in downtown Los Angeles. Later, one of the so-called “patients” revealed details of the scheme.

“This is a shameless exploitation of the homeless population. Skid Row has served as a cloak of chaos. But we’re peeling back the onion and sending the message to these charlatans that the city and our residents do care about those who are in the most vulnerable situation in LA,” City Atty. Deladillo said.

One of the unfortunate people “used” in this malefic plan was a mentally ill woman who was admitted to all three hospitals for conditions she said she never had, such as short of breath and chest pains. With the money received from the hospitals, the woman was buying drugs, but she was never treated for drug addiction on her “visits.”

City of Angels Medical Center, Los Angeles Metropolitan Medical Center and Tustin Hospital and Medical Center were served search warrants, the FBI said. Los Angeles Metropolitan and the Tustin hospital are owned by Pacific Health Corp. and Los Angeles' Intercare Health Systems owns City of Angels. Their representatives did not immediately respond when asked to comment on the charges.

Besides the three hospitals involved in the scheme, a civil suit by the City Attorney’s Office also alleges that APT Ambulance Company participated in the fraud by transporting victims to and from hospitals.

There could be more hospitals involved in the scheme, police said, adding that the investigation is ongoing.