“These schemes deplete America’s pocketbook”: DOJ says fraudsters exploited Medicare patients and falsified medical records in shocking $522 million genetic testing scam spanning Texas, Georgia, and New Jersey

Texas – Texas has become one of the central battlegrounds in a growing nationwide crackdown on healthcare fraud, as state and federal officials intensify investigations into alleged abuse involving taxpayer-funded medical programs. Attorney General Ken Paxton recently launched sweeping probes into Medicaid providers across Texas, targeting suspected false billing, improper claims, and fraudulent healthcare practices tied to public insurance systems. At the same time, the Trump administration has expanded pressure nationwide, ordering every state to develop stronger audit systems aimed at rooting out fraud inside Medicaid and Medicare programs.

Now, federal prosecutors say one of the largest healthcare fraud schemes uncovered in recent years stretched directly into Texas itself.

The U.S. Department of Justice announced that two men tied to a massive genetic testing fraud operation involving laboratories in Texas, Georgia, and New Jersey have been sentenced to prison after authorities accused them of orchestrating more than $522 million in fraudulent medical claims.

According to prosecutors, Reyad Salahaldeen and Mohamad Mustafa ran an elaborate scheme involving medically unnecessary genetic testing, illegal kickbacks, fake paperwork, and falsified medical records that targeted Medicare, Medicaid, and private insurance systems between 2018 and 2020.

Federal officials say the operation revolved around four laboratories controlled by Salahaldeen, including Express Diagnostics in New Jersey, BioConfirm in Georgia, and two Texas-linked facilities — Tox Management and Tri-State Toxicology.

Fraud scheme stretched across multiple states

Court records describe a highly organized operation that prosecutors say relied heavily on illegal bribes and deceptive marketing tactics.

Authorities say Salahaldeen and his co-conspirators paid kickbacks to marketers who approached individuals covered by Medicare, Medicaid, and private insurers. Those marketers allegedly convinced people to hand over their insurance information and DNA samples for expensive genetic tests supposedly connected to cancer risk and other health conditions.

But investigators say the tests were often medically unnecessary and improperly authorized.

According to the DOJ, the marketers were instructed to obtain fraudulent laboratory requisition forms from medical providers who had never actually treated the patients and did not use the test results in their medical care.

Federal officials further allege that Salahaldeen personally falsified laboratory forms, letters claiming medical necessity, and other patient records to make the testing appear legitimate.

Prosecutors also accused Salahaldeen and Mustafa of disguising illegal payments through fake contracts and fraudulent invoices designed to conceal kickbacks and bribes flowing through the operation.

While the laboratories submitted more than $522 million in fraudulent claims, investigators say Medicare, Medicaid, and private insurers ultimately paid out approximately $84 million before the scheme was uncovered.

The scale of the fraud immediately drew outrage from federal officials overseeing healthcare enforcement efforts.

“Under the guise of health care, these two fraudsters attempted to steal more than half a billion dollars from taxpayers through a web of sham contracts, lies, and bribes. These schemes deplete America’s pocketbook and destroy the trust in medicine that patients deserve and demand,” said Colin M. McDonald, Assistant Attorney for the National Fraud Enforcement Division.

Sentences handed down as fraud crackdowns expand

Federal courts ultimately handed down sharply different prison sentences to the two men involved.

Salahaldeen received a sentence of 151 months behind bars, reflecting what prosecutors described as his leadership role in the operation and his direct involvement in falsifying records and coordinating illegal payments.

Mustafa received a three-year prison sentence.

The case arrives during a period of rapidly expanding healthcare fraud enforcement across the country.

Federal officials have recently increased scrutiny on Medicaid and Medicare providers following reports showing hundreds of millions of dollars flowing to organizations later accused of fraud. States including Texas, New York, Arizona, Ohio, and California have all become major focuses of ongoing investigations.

The Trump administration has also intensified pressure through new nationwide audit requirements targeting providers considered high-risk. Officials say sectors like home healthcare, hospice care, therapy services, and laboratory testing have become especially vulnerable to abuse because of the enormous amount of public money flowing through the systems.

For Texas, the case represents another major example of how healthcare fraud investigations are increasingly intersecting with broader political debates around government spending, oversight, and public trust.

What makes the allegations especially striking is not only the amount of money involved, but the way prosecutors say the scheme exploited vulnerable patients and manipulated trust in medical systems.

Authorities argue that fraudulent healthcare schemes do more than drain taxpayer funds — they also damage confidence in doctors, testing, and medical treatment itself.

And as state and federal agencies continue ramping up investigations across the country, officials are warning that similar cases may still be unfolding quietly inside healthcare systems that millions of Americans rely on every day.