By day, Israel Claustro was an Orange County prosecutor who took down violent gang members, sex abusers and corrupt bureaucrats.
In 2022, Claustro glided to electoral victory, winning an open judicial post.
For years, he also operated a medical billing and healthcare management firm on the side. Now, he is facing accusations that his moonlighting was rife with fraud and part of a long-running conspiracy with a Pasadena doctor, according to federal court records.
The physician, Kevin Tien Do, agreed to plead guilty this month to one count each of conspiracy to commit mail fraud and signing a false tax return, according to court records.
Do admitted to drafting medical reports that were submitted and billed to a state fund for injured workers, concealing his involvement by working with a co-conspirator to list other doctors’ names on the records.
Federal prosecutors have not named Claustro in court documents or charged him with a crime.
But Do’s plea agreement and the charges filed against him detail how he operated the scheme with “co-conspirator #1,” described as an O.C. prosecutor who in 2022 became a judge, and who operated a healthcare company with his wife. State court filings and public records, some of which were reported by the Orange County Register, suggest that Claustro was the alleged “co-conspirator.”
Paul S. Meyer, Claustro’s attorney, did not respond to written questions and told The Times: “It is premature to comment.”
The allegations cast a shadow over a prominent member of Orange County’s legal community who centered his hardscrabble upbringing and commitment to ethics as he built his career.
“My earliest childhood memory is sleeping on the living room floor of our two-bedroom apartment in Pomona shared with six siblings, parents and uncles,” Claustro said in his 2022 judicial campaign before winning 73% of ballots in the June primary.
Claustro noted that he was the first of his siblings born in the U.S. to Mexican parents with a third-grade education. “My unique ability to connect with people, especially less affluent members of our community, helps foster trust in the American justice system,” he said.
How Claustro crossed paths with Do is unclear.
Born in Saigon, Vietnam, Do immigrated to the U.S. as a teen and graduated from USC’s Keck School of Medicine, according to state Medical Board records. He worked with psychiatric patients and operated a rehabilitation practice in Hawthorne and Beverly Hills before his career took a turn.
In 2003, Do pleaded guilty to aiding and abetting healthcare fraud with a scheme to submit phony claims to Medi-Cal. He served a year in federal prison. In that scheme, Do allowed a medical billing company to use his identity to bill for services he had not provided, then split the revenue with the company, pocketing 20%.
In his plea agreement this month, Do admitted that in recent years, he worked with a Rancho Cucamonga-based outfit called Liberty Medical Group, authoring reports on disabled patients that were submitted to the state to secure workers compensation benefits.
Because of Do’s prior conviction, he was barred from participating in the state workers compensation system, though he kept his medical license. So Liberty Medical Group omitted Do’s name from reports, instead listing other practitioners.
There was another hitch: Do admitted that “co-conspirator #1” lacked a medical license or a related medical credential, and so was unable to own a medical corporation.
Thus the pair’s alleged conspiracy took off, with scant public fingerprints of its true operators.
Prosecutors have not alleged that Do billed for services he did not perform.
In his plea agreement, Do said that Liberty Medical Group had a uniquely powerful “de facto” owner — the alleged co-conspirator, who “completely controlled” Liberty, including signing checks from Liberty and hiring other physicians and employees.
Claustro’s role in Liberty Medical Group was laid out in state court filings. In October, psychologist Nhung Phan sued Liberty Medical, alleging she was owed $100,000 for evaluations conducted years prior. In the lawsuit, Phan recounted exchanging communications with “Israel” for her unpaid bills. The suit also included emails exchanged with Claustro and his wife in which Phan wrote that she was trying to collect “payments for patients we have not been paid for.”
Claustro responded in November 2023 that all cases had been paid out, adding, “The records of payment are in storage. Someone will retrieve the records.” Liberty has not filed a response to Phan’s lawsuit.
In his plea agreement, Do asserted that it was his co-conspirator who devised the plan for Do to generate reports containing the names of other physicians or providers.
Prosecutors cited a check Do received from Liberty on Aug. 4, 2020 that included a memo line for patient M.P. But the report submitted by Liberty to the state worker’s compensation program in June 2020 listed a different doctor’s name as the author of the report, prosecutors said.
The state paid Liberty more than $3 million for such billings from Do, including $1.3 million in 2019, $1.2 million in 2020, and $499,000 in 2021, according to court records. In 2022, the billings fell to $141,000.
While Do was paid more than $300,000 for his work, more than $1.5 million “flowed” to a company controlled by “co-conspirator #1” and his wife, according to the plea agreement.
That company was not listed in the plea agreement, but public records indicate it is Valley Health Care Management. In his 2022 income disclosure as a judicial candidate, Claustro listed Valley Health but said his spouse owned the company. In 2017, Claustro listed himself as the CEO of Valley Health Care, according to state corporate filings. In her lawsuit, Phan also included a copy of a contract that described Valley Health as the “business manager” of Liberty.
As part of his guilty plea, which Do is scheduled to formally enter on Jan. 3, he also admitted failing to report his earnings from Liberty Medical to the Internal Revenue Service.
Claustro remains a judge in the family law section of O.C. Superior Court. His term is scheduled to end in 2029. A court spokesperson said he could not address questions about the matter.
“The O.C. Superior Court is bound by ethical rules that do not allow discussion of such matters that may or may not be before another court, before the bench or in the hands of any law enforcement agency,” the spokesperson, Kostas Kalaitzidis, said.
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