Federal Agents Seize Ferraris, Luxury Homes and Memorabilia in $270M Medicaid Fraud Case

A secret federal law enforcement warehouse in Southern California holds dozens of Ferraris and Lamborghinis along with stacks of sports memorabilia including Mickey Mantle rookie cards and game-worn Kobe Bryant sneakers. Law enforcement officials told CBS News the items represent taxpayer money diverted through fraud.

Government estimates place annual losses to fraud schemes at $500 billion, while sources who consult with the government on tracking illicit funds put the figure above $1 trillion.

The Trump administration has launched a crackdown on fraud in federal programs including Medicare, food assistance and hospice care. Bill Essayli, the top federal prosecutor in Los Angeles, said seizing physical assets has been a first step in recovery efforts.

Essayli made the comments while climbing the driveway of an eight-bedroom, 10-bathroom compound on an isolated Orange County hilltop that was the former home of Paul Randall.

"He was living like a king off us," Essayli said. Randall pleaded guilty in April to wire fraud and was convicted of diverting more than $270 million in taxpayer funds in one of the largest California Medicaid fraud schemes in state history. He faces up to 30 years in prison when sentenced this summer.

Essayli said Randall was out on bond awaiting sentencing on another federal fraud charge, one of six prior fraud convictions, when he began the latest scheme. "Obviously there's a breakdown in the criminal justice system if this guy was able to have six convictions and never did any real prison time," Essayli said. Randall declined to be interviewed.

Haywood Talcove, CEO of LexisNexis Risk Solutions, Government, consults with the government on tracking illicit funds. He projects that $1 trillion is lost to fraud each year and believes about 70 percent of that amount ends up with transnational criminal gangs. "It goes to Russia, it goes to China, it goes to Nigeria, it goes to Romania," Talcove said.

He added that taxpayers are funding transnational criminals who use the money for child trafficking, drugs and threats to democracy. Essayli said federal law enforcement is working on ways to better find and recover stolen funds. He noted that money is easily converted to digital currency and sent overseas, which puts agents at a disadvantage.

"That is why it is so important that the money never goes out in the first place; that's why it's important that we have systems in place to detect and prevent fraud," Essayli said.