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Pacific Palisades Couple Held Over for State Tax Evasion Stemming From Medicare Fraud and Illegal Marijuana Sales

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For Immediate Release


Sacramento – Alla Chernov, 50, and Boris Sokol, 52, owners of Fairfax Medical Inc., Medi-Falcon, Inc., other medical business entities, and Los Angeles Natural Remedies, Inc, were held to answer to 22 counts of state tax fraud and numerous other felony charges, according to the Franchise Tax Board (FTB).

Chernov and Sokol were allegedly involved in a scheme that billed Medicare and Medi-Cal for more than $12 million from 2002 through 2006 for medical treatments and diagnostic services that were never rendered. An investigation into the billing practices of the medical corporations owned and managed by Chernov and Sokol uncovered widespread fraudulent Medicare billing activities.

Sales receipts from their new business, Los Angeles Natural Remedies, Inc., a medical marijuana dispensary, revealed that Chernov and Sokol underreported their gross sales for 2007 through 2009 by more than $10 million. Evidence presented at the preliminary hearing shows that Chernov and Sokol were allegedly destroying the sales receipts for their business in attempt to hide their true income. An investigator retrieved several bags of trash, one containing several bundles of sales receipts in white paper bags that matched the type of sales receipts found during the March 2010 search warrant. Also found and seized were $186,000 in cash, approximately $200,000 in Russian religious icon artwork, and 140 pounds of marijuana.

FTB alleges that Sokol and Chernov failed to report this income on their personal and corporate tax returns. Under California tax law, no deductions are allowed from gross income that is derived from illegal activities. If proven guilty, Chernov and Sokol owe more than $3.2 million for 2003 through 2009 in state tax alone. Interest and penalties will be added later.

The next court date for the couple is August 17, 2011. The case is being prosecuted by Los Angeles Deputy District Attorney Amy Suehiro. This was a joint investigation by the Los Angeles District Attorney's Office, the California Department of Justice–Bureau of MediCal Fraud and Elder Abuse, the Federal Bureau of Investigation, the Board of Equalization, and the FTB.

FTB's criminal investigation program identifies and investigates cases of tax evasion and tax fraud to encourage compliance with California income tax laws and maintain the public trust.

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

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