reporter: ferdman pled guilty to organized crime and was sentenced to seven years in a texas prison. he served just one year. was let out early for good behavior. and ended up in california. even though felons are barred from running drug medi-cal centers, ferdman soon opened a rehappen clinic called able family support. taxpayer funded drug rehab has been easy money for alexander ferdman. despite his organized crime conviction in texas, his california drug medi-cal contract is now worth about $2 million a year. his salary? $180,000. even after a 2011 review by los angeles county found evidence of what it considers to be fraudulent practices at his business, ferdman was allowed to expand. drew griffin with cnn. how you doing? i d like to ask you some questions about your business if i could. i really don t have time right now. reporter: you can explain how
investigative reporting reviewed thousands of records in california s drug medi-cal program. including program audits. we analyzed patient billings. even watched clinics under cover to see who was getting treatment and who wasn t. the result? we found that in the last two fiscal years, half of the nearly $186 million spent for drug medi-cal, about $94 million, went to clinics that have shown questionable billing practices or signs of fraud. case in point, the man with the cigar. a convicted felon named alexander ferdman. ferdman was the organizer. marble vogt was the lead investigator who investigated him for running a texas based krim syndicate that staged car crashes, ripping off big insurance companies. he lists his occupation as a driver of an ice cream truck.
alexander ferdman. convicted for running an organized crime ring in texas that ripped off insurance companies. it hasn t stopped him from coming to california, setting up a drug rehab clinic, and billing taxpayers. even though felons are barred from running drug medi-cal centers. mr. ferdman, how can a guy with a record like you be operating a drug rehab clinic here in kra rah? you ve been convicted of a major insurance car crash scheme in texas. i was convicted. but it s not what it seems. reporter: in the last two fiscal years, taxpayers spent nearly $186 million. supposedly treating drug and alcohol abuse patients in california. our investigation, with the center for investigative reporting, found half of that money, or about $94 million, has gone to clinics that have shown questionable billing practices or signs of fraud. joy jarfurs, former drug
to provide a response as to why this widespread fraud is allowed to continue? after weeks of calling the secretary of health and human services and getting no for an answer, we decided to ask for a response in person. reporter: secretary, drew griffin with cnn. we ve been trying to reach you to talk about the widespread fraud. but we re told neither you or anyone with the state of california will talk to us about it. secretary, do you know alex ferdman a convicted felony who has run one of these clinics for years despite complaints registered with the department
they just happen to announce this huge review in the wake of your reporting. yeah, i think it s pretty obvious. just before air we found out that now 36 of these clinics have been referred to for the california department of justice for possible prosecution. the clinics are being shut down. alexander ferdman, the man that we showed in the piece, his clinic shut down last week. georgia luna s clinic voluntarily shut down a month ago. they do want it both ways. we re on top of it but we re doing this big overhaul and review of the situation. and working on the budget so we can t bother to talk to you. the problem is, they did know and that s the crux of what you see. if you ve been watching the last several nights, they knew the fraud was going on. they had records of it. their own investigators found it and little to nothing was done until now. and now, at least to you, california officials are saying the fraud is going to end or at least you know, we ll see, right? what the