A disbarred Manhattan Beach solo practitioner has pleaded guilty to felony theft after prosecutors say he spent hundreds of thousands of dollars belonging to his own clients at the gambling tables — capping a case that State Bar disciplinary officials had already called an “unrelenting” pattern of deceit. The Los Angeles County District Attorney’s Office announced that Sergio Valdovinos Ramirez, 36, pleaded guilty July 20, 2026 to three felony counts of grand theft by embezzlement and one felony count of writing checks against insufficient funds, along with a special allegation that his crimes caused losses of $100,000 or more.

Under his plea agreement, Valdovinos Ramirez must pay $50,000 before his September 21 sentencing in Department 123 of the Foltz Criminal Justice Center and owes at least $310,000 in total restitution; prosecutors say he is expected to receive a two-year state prison sentence. “The defendant duped and deceived his clients of funds that were earmarked for them only to blow hundreds of thousands of dollars of these funds gambling,” District Attorney Nathan Hochman said, adding that the case was “a house of cards” that collapsed once law enforcement and the State Bar caught on. The case, prosecuted by Deputy District Attorneys Daniel Akemon and Holly Harpham of the office’s Justice System Integrity Division, was investigated jointly by the California State Bar, the Manhattan Beach Police Department, and the DA’s own Bureau of Investigation.

The criminal case traces conduct between 2019 and 2023, years before Valdovinos Ramirez, admitted to the California bar in 2017, was disbarred. According to contemporaneous reporting, one client, Lisa Mendez, said she paid him roughly $4,350 in fees in 2019 before he fabricated a settlement in her case and handed her checks worth more than $150,000 drawn on accounts with near-zero balances. Other former clients reported similar patterns: thousands of dollars paid up front, work never performed to their satisfaction, and refunds attempted only through checks that bounced because the underlying accounts held little or no money. Investigators found that Valdovinos Ramirez routinely deposited client funds into personal or non-trust accounts before spending portions of the money on personal expenses, including gambling.

The criminal case followed directly from a State Bar Court disciplinary proceeding that, if anything, paints an even starker picture. In a June 2024 opinion, the State Bar Court’s Review Department upheld a hearing judge’s finding that Valdovinos Ramirez was culpable on all 19 counts of misconduct charged across five separate client matters, including moral turpitude for misappropriation and misrepresentation, writing checks against insufficient funds, failing to deposit client funds into a trust account as required by rule 1.15(a) of the Rules of Professional Conduct, and failing to keep a client reasonably informed of significant case developments. The Review Department found his misappropriation of client funds “unrelenting,” noting that he would often deplete his bank accounts of entrusted funds almost as soon as he received them.

Individual allegations detailed in State Bar filings, as reported by the Metropolitan News-Enterprise, describe a pattern extending well beyond simple neglect. One client paid Valdovinos Ramirez $73,965 in advance fees to handle a conservatorship matter; the State Bar Court found he misappropriated the entire amount. Another client hired him to pursue an employment discrimination case, but Valdovinos Ramirez never actually filed suit, instead giving his client a fabricated case number and later falsely claiming the case had settled for $58,000 — a claim he backed up with checks written against accounts that could not cover them. Perhaps most strikingly, Valdovinos Ramirez attempted to excuse his delays, both with clients and in his own disciplinary proceedings, by claiming he was undergoing treatment for terminal cancer under a Dr. Stephen Chang at City of Hope. An investigation by the State Bar’s Office of Chief Trial Counsel found no such treatment had occurred and that no doctor by that name worked at the cancer center at all. Then-Chief Trial Counsel George Cardona said disbarment was “entirely appropriate,” noting that Valdovinos Ramirez “showed no remorse and lied about a life-threatening illness” rather than take responsibility.

The California Supreme Court formally ordered Valdovinos Ramirez disbarred effective October 2024, adopting the State Bar’s recommendation along with an order that he pay restitution to five former clients, plus 10% annual interest, and $5,000 in monetary sanctions to the State Bar itself.

For clients of any California attorney who experiences theft or comparable dishonest conduct, the State Bar’s Client Security Fund offers a separate, non-adversarial avenue for partial recovery, independent of any restitution ordered in a criminal or disciplinary case. The fund, financed entirely through mandatory annual assessments on active California attorneys, can reimburse up to $100,000 per claim for losses caused by an attorney’s theft, misappropriation, or comparable dishonest conduct, including a failure to refund fees for work never performed. It does not cover ordinary malpractice or negligence, and applicants generally must file within four years of discovering the loss. Given the number of former clients implicated in the Valdovinos Ramirez matter, the fund may end up bearing a meaningful share of the loss the criminal restitution order does not ultimately recover.

This summary is provided for general informational purposes only. Statements attributed to prosecutors, State Bar officials, and news reporting reflect their own characterizations of the underlying conduct; a criminal defendant’s guilty plea establishes the specific counts admitted but does not itself resolve every disputed factual allegation referenced in related civil or disciplinary proceedings.

Saul Fox and Dexter Paine co-founded investment firm Fox Paine & Company, LLC (FPC). In 2006, after Paine launched a third investment fund, Fox Paine Management III, LLC, without Fox’s full participation, the relationship between the two collapsed. In August 2007, Fox and related entities (the Fox Parties) sued Paine and related entities (the Paine Parties) in Delaware, alleging Paine poached FPC employees and misrepresented that Fox had authorized various actions; the Paine Parties countersued, and years of litigation followed. That dispute triggered claims under a tower of insurance policies covering FPC and affiliated individuals: a $10 million primary policy from Houston Casualty Company (HCC), a $10 million first-layer excess policy from Twin City Fire Insurance Company, a $10 million second-layer excess policy from St. Paul Mercury Insurance Company, a $10 million third-layer excess policy from Twin City, and a $10 million fourth-layer excess policy from Liberty Mutual Insurance Company — a $50 million tower in which each excess policy attaches only once the insurance beneath it is exhausted.

According to the operative complaint, the Paine Parties came to control the insurance claim: HCC paid the Paine Parties its full $10 million primary limit without notifying the Fox Parties, and Twin City and St. Paul later settled with the Paine Parties for a combined $9 million (roughly $6 million allocated to Twin City’s first-layer policy and $3 million to St. Paul’s), again without telling the Fox Parties, who allege they learned of these developments only years later through a third-party docket alert. Plaintiffs Fox, FPC, and related entities sued Twin City, St. Paul, and Liberty Mutual for breach of contract, declaratory relief, breach of the implied covenant of good faith and fair dealing, and aiding and abetting breach of fiduciary duty, alleging they — not the Paine Parties — held the only legitimate claim to the excess coverage and had incurred more than $43 million in covered loss and interest defending the Delaware litigation and its aftermath.

All three excess insurers demurred to the operative complaint, arguing plaintiffs’ claims against the higher-layer policies failed because plaintiffs could not allege the underlying insurance had actually been exhausted. The San Francisco County Superior Court found plaintiffs had adequately alleged exhaustion of the primary HCC policy, allowing claims against Twin City’s first-excess-layer policy to proceed, but concluded exhaustion had not occurred as to St. Paul’s policy, Twin City’s third-layer policy, or Liberty Mutual’s policy, since only $6 million of Twin City’s $10 million first layer had been paid out. On that basis, the court sustained the demurrers of St. Paul and Liberty Mutual (and Twin City’s demurrer as to its third-layer policy) without further leave to amend, resulting in a judgment of dismissal as to those insurers.

The California Supreme Court granted review to examine (Fox Paine & Co., LLC v. Liberty Mutual Ins. Co. (2024) 104 Cal.App.5th 1034), a Court of Appeal published opinion, that agreed with the trial court, and held that the absence of actual exhaustion defeated any “actual controversy” under Code of Civil Procedure section 1060, treating the case as materially identical to Qualcomm, Inc. v. Certain Underwriters at Lloyd’s, London (2008) 161 Cal.App.4th 184.

In the case of Fox Paine & Company, LLC v. Twin City Fire Insurance Company, No. S287404 (Cal. Sup. Ct., July 2026) — the California Supreme Court reversed the judgment of the Court of Appeal and remanded the cause for further proceedings.

The Supreme Court disagreed with the Court of Appeal, holding that a lack of actual exhaustion does not categorically defeat an actual controversy regarding coverage under an excess policy. Applying the ripeness framework from Pacific Legal Foundation v. California Coastal Commission (1982) 33 Cal.3d 158, the Court explained that insurance coverage disputes routinely involve future contingencies, and that courts should ask whether it is practically or reasonably likely that a contingency will occur rather than treating any unresolved contingency as fatal. Because plaintiffs alleged a loss, identified the specific policy provisions covering it, and alleged they had submitted virtually all their invoices without reimbursement, the Court found the dispute concrete enough to support declaratory relief, and held that requiring insureds to litigate excess policies one layer at a time — suing, winning, executing, and then suing the next insurer up the tower — would impose serious and unnecessary hardship.

The Court did impose a real pleading requirement going forward: a plaintiff seeking a declaration of coverage under an excess policy must adequately allege that its covered losses are sufficient to reach that policy’s attachment point, and courts must not credit complaints that impermissibly commingle covered loss with other amounts, such as prejudgment interest, that do not themselves contribute to exhaustion. Applying that standard, the Court faulted plaintiffs’ own allegation of “$43,000,000 in covered Loss and recoverable interest” for blending two different things, but remanded for the Court of Appeal to determine in the first instance how much of that figure, if any, can reasonably be read as covered loss alone, and whether a reasonable-likelihood standard should apply given the record’s uncertainties. In reaching this holding, the Court disapproved two prior Court of Appeal decisions, Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592 and Lockheed Martin Corp. v. Continental Ins. Co. (2005) 134 Cal.App.4th 187, to the extent they could be read as excusing insureds from pleading any covered loss at all.

Turning to the bad faith claims, the Court also held that an insured suing an excess insurer for tortious breach of the implied covenant of good faith and fair dealing likewise need not allege prior exhaustion of all underlying insurance. The Court of Appeal had relied on Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1 for the proposition that there can be no bad faith claim absent actual coverage. The Supreme Court explained that Waller addressed whether coverage would ever be due, not when coverage attaches, and that an excess insurer’s implied duty not to injure its insured’s right to policy benefits exists from the inception of the policy, not only once exhaustion occurs. It is enough, the Court held, for an insured to allege facts showing that coverage under the excess policy will attach — or would attach but for the insurer’s own bad-faith conduct — and that the insurer’s misconduct impaired the insured’s recovery of benefits owed. The Court declined to address whether plaintiffs’ specific allegations of misconduct were adequate, leaving that question for the Court of Appeal on remand.

Finally, the Court rejected the Court of Appeal’s separate holding that declaratory relief was “not necessary or proper” under Code of Civil Procedure section 1061 even if an actual controversy existed, including that court’s concerns about entangling excess insurers in litigation whose outcome depended on unresolved claims against Twin City and about upsetting excess insurers’ settled expectations. The Court found these rationales gave undue weight to speculative future defenses and were outweighed by the hardship serial litigation would impose on insureds, particularly in disputes involving “follow form” excess policies that adopt the primary policy’s terms, where requiring multiple courts to separately interpret identical language invites inconsistent rulings. Having rejected each ground the Court of Appeal relied on, the Supreme Court reversed and remanded the case for further proceedings consistent with its opinion.

A federal jury in San Francisco has convicted Simon Katz, the Boca Raton, Florida-based CEO of a Hayward, California home health agency, of conspiring to defraud Medicare — the fourth and final conviction in a case the government first brought more than two and a half years ago. The U.S. Attorney’s Office for the Northern District of California announced the July 23, 2026 verdict, which followed a six-day trial before U.S. District Judge James Donato.

Katz, 43, ran HealthNow Home Healthcare and Hospice alongside his wife, Veronica Katz, who served as the agency’s CEO of record. According to trial evidence, HealthNow provided in-home medical care to Bay Area patients and billed both Medicare and private insurers for that care. Beginning October 1, 2018, prosecutors say, the couple began submitting fraudulent documents to California Department of Public Health inspectors to keep HealthNow’s Medicare billing privileges intact, while running a scheme with several distinct components: having unqualified staff provide patient care outside their authorized scope of practice, billing Medicare for services never actually rendered, and directing former employees to lie to federal investigators. By the time the scheme ended in November 2020, HealthNow had collected more than $3 million in Medicare payments tied to the fraudulent claims, and Simon Katz personally received roughly $300,000 of that money, according to the government.

According to an earlier December 2024 sentencing announcement, a federal grand jury indicted Veronica Katz and two co-defendants on October 17, 2023. Under her subsequent plea agreement, she admitted the scheme involved using licensed medical practitioners’ names and credentials on electronic medical records and Medicare billing submissions without those practitioners’ knowledge or consent; directing staff who were not Registered Nurses to prepare mandatory “Start of Care” assessment forms that Medicare rules reserve for RNs; digitally altering patient records afterward to make it appear an RN had completed those assessments; and billing Medicare for physical therapy visits that were never provided at all. Prosecutors say the scheme unraveled in part because of an FBI interview in October 2019, when an employee was questioned about HealthNow’s billing and assessment practices; both Katzes learned of that interview and, according to trial evidence, Simon Katz personally instructed the employee to lie to the FBI and falsely claim she had been trained and supervised by an RN.

Veronica Katz pleaded guilty to one count of health care fraud on April 18, 2024, and was sentenced that December to two years in federal prison, three years of supervised release, $543,634.34 in restitution to Medicare, and a $50,000 fine; she began serving her sentence on January 6, 2025. Two former HealthNow employees, Vennesa Herrera and Pharadja Andrews, pleaded guilty in August 2021 to conspiracy to commit health care fraud (Herrera also pleaded guilty to a substantive health care fraud count); both are scheduled for status hearings on August 3, 2026. Simon Katz, convicted after contesting the charges through trial, is currently in federal custody with no sentencing date yet set; he faces a statutory maximum of 20 years in prison and a $250,000 fine under 18 U.S.C. section 3553’s sentencing framework. Assistant U.S. Attorneys Chris Highsmith and Kevin Yeh prosecuted the trial, with assistance from Kevin Costello and Lynette Dixon; the investigation was conducted by the FBI, HHS-OIG, and the California Department of Public Health.

The new Simon Katz jury verdict lands amid a marked escalation in federal health care fraud enforcement on the West Coast and nationally. The Department of Justice created a new National Fraud Enforcement Division (NFED) on April 7, 2026, consolidating the department’s health care fraud prosecutors into a single coordinating hub tied to the administration’s broader Task Force to Eliminate Fraud, chaired by Vice President J.D. Vance. Three weeks later, on April 30, 2026, NFED and the U.S. Attorney’s Offices for the Northern District of California, Nevada, and Arizona launched a new West Coast Health Care Fraud Strike Force, staffed by at least ten NFED prosecutors and modeled on the long-running national Medicare Fraud Strike Force program, which has collectively prosecuted more than 6,200 defendants since its creation. That regional push has run alongside a larger national effort: DOJ’s 2026 National Health Care Fraud Takedown, announced June 23, 2026, charged 455 defendants — including 90 doctors and other licensed medical professionals — across 56 federal districts and 45 states and territories in connection with more than $6.5 billion in alleged false claims, with 50 state Medicaid Fraud Control Units participating, the most in the takedown’s history.

U.S. Attorney Craig H. Missakian tied the Katz conviction directly to that broader push, framing the case as part of what he called the administration’s “War on Fraud” and pledging continued prosecution of anyone who steals from federal health programs. FBI Special Agent in Charge Scott Schelble and HHS-OIG Special Agent in Charge Robb R. Breeden likewise pointed to the case as an example of sustained interagency work, with Breeden noting the investigation reflected “years of determined investigative work and close coordination among federal and state partners.” For home health agencies and their insurers, the case is a reminder that Medicare’s documentation requirements around who may perform and sign off on patient assessments — particularly Start of Care evaluations reserved for Registered Nurses — remain a frequent and closely scrutinized target of federal fraud enforcement, and that obstruction of an active investigation, not just the underlying billing fraud, can add substantially to a defendant’s eventual exposure.