Man Pleads Guilty in $51M Medicare Fraud Scheme

SAN DIEGO, California—Chula Vista resident and businessowner Fernando Valenzuela Ayub pleaded guilty in federal court, admitting that he conspired with others to launder millions of dollars of health care fraud proceeds and paid unlawful kickbacks.

According to his plea agreement, Valenzuela and co-conspirators owned and operated multiple durable medical equipment (DME) companies, which sold orthotics—including back, wrist and knee braces—to Medicare beneficiaries. Valenzuela admitted that in operating the DME companies, he and co-conspirators paid unlawful kickback payments to sham marketing companies who provided bogus prescriptions for DME. In total, Valenzuela paid $3.7 million in kickbacks.

Valenzuela admitted that he used his DME companies to submit fraudulent claims to Medicare. Once Valenzuela’s DME companies were suspended from billing Medicare, Valenzuela conspired to put DME companies in the names of nominee owners while he maintained control of the companies and the monies received from Medicare. In total, Valenzuela billed Medicare approximately $51 million and was paid approximately $20 million, and ultimately laundered at least $14 million dollars of Medicare proceeds. As part of his guilty plea, Valenzuela agreed to forfeit $7,101,320.

Valenzuela’s sentencing is scheduled for Aug. 15, 2025.