LOS ANGELES--A provider who used money from a Medicare scheme to purchase a yacht, mansion and luxury cars, and who spent more than $100,000 gambling, was convicted this month of health care fraud and money laundering, federal officials said.

Phu Luong, 51, of Huntington Beach, and three others were convicted on federal charges for billing Medicare more than $24 million for nutrition products and power wheelchairs that were not medically necessary and, in many cases, were never provided, according to the United States Attorney, Central District of California.

After a three-week trial in U.S. District Court in Santa Ana, a federal jury found each defendant guilty of 35 counts of health care fraud. According to a statement from the attorney's office, those convicted include:

• Luong, who operated United Medical Supply, and also was convicted of five counts of money laundering;
• Sareth Tath, 56, of Long Beach, Luong's partner, who recruited physicians to provide fraudulent prescriptions to United;
• Mo Thi Pham, 50, of Westminster, a Tath employee who recruited Medicare beneficiaries to receive DME that was not medically necessary; and
• Peter Kim, 82, of Los Angeles, another Tath employee who recruited and drove Medicare beneficiaries to the doctors.

The money laundering charges against Luong were based on his purchases of luxury items with the proceeds of the scheme, including a $185,575 yacht, a $118,000 Rolls-Royce, a $1.7 million down payment on a mansion in Huntington Beach; a $170,395 Lamborghini, and $120,000 in gambling bills at the Bellagio Hotel & Casino in Las Vegas, the statement said.

The four convicted were among 10 defendants indicted in March 2005. Four have pleaded guilty to health care fraud, and two are medical doctors who operated offices in Fountain Valley: Derrick Hubbard, 46, formerly of Los Angeles and Atlanta, and Matthew Khatibloo, 72, of Fullerton.

After the indictment was issued, Hubbard fled to South Africa and Khatibloo fled to Iran. Hubbard was later captured and is scheduled for trial on July 11. Khatibloo is still a fugitive.

According to the indictment and the evidence presented at trial, Tath recruited physicians--allegedly Hubbard and Khatibloo--to prescribe enteral nutrition and power wheelchairs that were not medically necessary. Pham helped Tath in running the doctors' offices and also acted as a marketer, recruiting Medicare beneficiaries to see Hubbard and Khatibloo by promising the beneficiaries free enteral nutrition and other medical supplies. Kim also recruited beneficiaries and drove them from Los Angeles County to Orange County to see Hubbard and Khatibloo.

Hubbard and Khatibloo allegedly would perform only cursory examinations of the recruited beneficiaries and invariably prescribe enteral nutrition and sometimes power wheelchairs.

United not only billed for supplies that were not medically necessary but also routinely overbilled Medicare for the amount of supplies that were delivered, and would frequently bill for supplies that were never delivered, according to the statement.

Medicare, which received 363 complaints against United, paid about $15 million of $24 million in fraudulent claims submitted, officials said. The case was investigated by the HHS Office of Inspector General, the FBI and IRS-Criminal Investigation Division.

The four defendants are scheduled to be sentenced July 10. The health care fraud and money laundering counts each carry a statutory maximum sentence of 10 years in federal prison.