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Hollywood Businessman Pays for Phony Medical Billing Scheme

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For Immediate Release


A Hollywood businessman paid $95,000 in restitution to the Franchise Tax Board (FTB) after pleading guilty to felony counts of grand theft, false billing, identity theft, money laundering and filing a fraudulent state income tax return, FTB announced.

Hakob C. Arutunyan, aka Jack Arutunian, 26, was sentenced to 7.5 years in state prison, suspended, placed on 5 years felony probation, ordered to complete 180 hours of CalTrans community service and ordered to pay additional restitution of $110,000 to Medicare. Arutunyan’s restitution to FTB represented the unpaid tax, penalties, interest and cost of the investigation.

According to court documents, Arutunyan misappropriated the physician/practitioner identification number of two Los Angeles County physicians. He then opened a medical billing business and fraudulently billed the Centers for Medicaid and Medicaid Services for medical services that were never performed. He also failed to report the more than $470,000 in income from this scheme on his 2006 state income tax return resulting in unpaid tax of more than $41,600.

Underreporting income is part of California’s tax gap, which is defined as the difference between the tax that is owed and the tax that is paid.

Los Angeles County Superior Court Judge David Horowitz handed down the sentence Wednesday, March 2 in Department 50 of the Clara Shortridge Folz Criminal Justice Center. Los Angeles County Deputy District Attorney Amy Suehiro prosecuted the case. This case stemmed from an investigation by the federal Department of Health and Human Services, Office of the Inspector General, This was a joint investigation between the Los Angeles County District Attorney’s Office and FTB.

For more information on other taxes and fees in California, visit:

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