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Prosecutors alleged that Michael D. Drobot, the former owner of the Pacific Hospital of Long Beach,orchestrated a massive kickback scheme where he paid $50 million dollars in kickbacks to dozens of physicians in order to steer surgeries to his hospital, Pacific Hospital of Long Beach. The kickback scheme was effective and resulted in over $500 million in kickback induced surgeries being performed at Pacific Hospital.

In 2014, Drobot entered into a pre-indictment cooperation plea agreement with the government where he agreed to plead guilty to conspiracy to commit wire/mail fraud (18 U.S.C. § 371) and a violation of the anti- kickback statute (42 U.S.C. § 1320a-7b(b)(2)(A)).

The plea agreement provided that the government would forgo any additional charges against Drobot that could have been filed based on the kickback scheme. The plea agreement required him to cooperate with authorities as well as to obey all Court orders. His “cooperation” lead to the prosecution and conviction of many of his cohorts, including well known physicians in the California workers’ Compensation industry.

On January 10, 2018, pursuant to the plea agreement the Court sentenced him to 63 months in prison, and ordered him to forfeit $10 million to the United States and to partially satisfy the forfeiture order as follows: (1) by a date agreed to with the government, paying $300,000 to the government; (2) by a date agreed to with the government, selling properties in Oregon and providing the proceeds to the government, and (3) by a date agreed to with the government, selling defendant’s 1965 Aston Martin, 1958 Porsche, and 1971 Mercedes Benz, and paying the proceeds to the government. Drobot and the government agreed the cars – with an estimated value of nearly $2 million – would be sold by July 5, 2018.

In June 2018, Drobot told the government that he was trying to sell the cars but needed an extension through the end of August 2018 so that he could sell them at maximum value at the Pebble Beach car auction. The government granted him an extension and provided Drobot written wiring instructions for the proceeds. The parties also made arrangements for the sale proceeds to be transferred directly from the auction house to the government in order to ensure that the proceeds would go to the government.

The auction house records reveal that Drobot diverted the car sales proceeds on June 22, 2018 by taking a $1 million dollar advance on the sale of the cars And, on September 14, 2018 diverted the remaining $675,795.89 proceeds..

As a result, last October, prosecutors filed a motion asking the Court to find Drobot in breach of his plea agreement.

On January 14, 2019 Federal Judge Josephine Staton found that Drobot “ntentionally violated the Court’s order when he diverted the proceeds from the sale of 1965 Aston Martin and 1971 Mercedes Benz to bank accounts that he controlled and ultimately used the funds for personal purposes. In addition, Defendant has failed to abide by the Court’s order that he sell the 1958 Porsche and provided the proceeds to the Government.”