The Kentucky Sentate gavel rests on the wooden sound block in the Kentucky Senate chambers before the first day of Concurrence began at the state Capitol in Frankfort, Ky. March 13, 2025.
San Diego, California – Fernando Valenzuela Ayub, a local business owner, pleaded guilty Tuesday in federal court to his role in a large-scale Medicare fraud and money laundering conspiracy involving millions of dollars.
According to court documents and his plea agreement, Valenzuela, 48, along with co-conspirators, operated multiple durable medical equipment (DME) companies that sold orthotic devices such as back, wrist, and knee braces to Medicare beneficiaries. Valenzuela admitted that he paid unlawful kickbacks totaling $3.7 million to sham marketing companies in exchange for bogus prescriptions, which Valenzuela allegedly used to justify fraudulent Medicare claims.
The scheme involved submitting false claims to Medicare for durable medical equipment (DME) products that were either unnecessary or never provided. When authorities suspended Valenzuela’s companies from billing Medicare due to investigations, he conspired to continue the fraud by placing ownership of new DME companies in the names of nominees while maintaining actual control over the companies and their Medicare payments.
Prosecutors say Valenzuela billed Medicare approximately $51 million during the scheme and received about $20 million in payments. He then laundered at least $14 million of those proceeds to conceal their illicit origins.
As part of his guilty plea, Valenzuela agreed to forfeit over $7 million—specifically $7,101,320—related to the fraudulent activity. He faces sentencing in August.
“This case highlights the ongoing commitment of law enforcement to root out fraud that threatens vital healthcare programs like Medicare,” said a spokesperson from the U.S. Attorney’s Office. “The scheme not only defrauded taxpayers but also endangered the integrity of healthcare services for vulnerable beneficiaries.”
Medicare fraud involving durable medical equipment (DME) companies has been a persistent problem, often involving kickbacks and the fabrication of prescriptions to generate excessive and unnecessary claims. The fraud drives up healthcare costs and diverts resources from patients who genuinely need assistance.
Valenzuela’s case marks another significant victory in the fight against healthcare fraud, demonstrating federal authorities’ dedication to pursuing those who exploit government programs for financial gain.
Residents and business owners in Chula Vista and beyond are reminded that Medicare fraud carries severe legal consequences, including potential prison time, hefty fines, and forfeiture of ill-gotten gains.
Valenzuela’s sentencing will take place later this year, where federal prosecutors are expected to seek substantial penalties for his role in this multimillion-dollar fraud and money laundering conspiracy.
