and then there's alexander ferdman. ame to california, setting up a drug rehab clinic, and billing taxpayers even though felons are barred from running drug medi-cal centers. mr. ferdman, how can a guy with a record like you being operating a drug rehab clinic here in california. you have been convicted of a major insurance car crash scheme in texas. >> i was convicted, but it's not what it seems. >> in the last two fiscal years, taxpayers spent nearly $186 million supposedly treating alcohol and drug abuse patients in california. our investigation with the center for investigative reporting found half of that money or about $94 million has gone to clinics that have shown questionable billing practices or signs of fraud. joy jarfers, former drug medi-cal supervisor, says she complained to the state about all the obvious fraud. >> we found billing records for people in jail, one person dead, people who said they didn't need this kind of treatment. >> uh-huh. >> clinics closed on a certain day billing for that certain day.

alexander ferdman.ad investigator who investigated him for running a texas based krim syndicate that staged car crashes, ripping off big insurance companies. >> he lists his occupation as a -- >> driver of an ice cream truck. >> reporter: ferdman pled guilty to organized crime and was sentenced to seven years in a texas prison. he served just one year. was let out early for good behavior. and ended up in california. even though felons are barred from running drug medi-cal centers, ferdman soon opened a rehappen clinic called able family support. taxpayer funded drug rehab has been easy money for alexander ferdman. despite his organized crime conviction in texas, his california drug medi-cal contract is now worth about $2 million a year. his salary? $180,000. even after a 2011 review by los angeles county found evidence of what it considers to be fraudulent practices at his business, ferdman was allowed to expand. drew griffin with cnn. how you doing? i'd like to ask you some questions about your busines

alexander ferdman, the man that we showed in the piece, his clinic shut down last week. georgia luna's clinic voluntarily shut down a month ago. they do want it both ways. we're on top of it but we're doing this big overhaul and review of the situation. >> and working on the budget so we can't bother to talk to you. >> the problem is, they did know and that's the crux of what you see. if you've been watching the last several nights, they knew the fraud was going on. they had records of it. their own investigators found it and little to nothing was done until now. >> and now, at least to you, california officials are saying the fraud is going to end or at least -- >> you know, we'll see, right? what they are saying is they will review all clinics, recertify all clinics and that should at least get away the felons running the clinics. >> the felons running the clinics -- >> who will oversee to see the clinics, oh, they're closed on wednesdays but billing on wednesdays. the clinics treating people that don't exist or are dead. we don't know the specifics of what their overh

and then there is this man, alexander, ferdman organizing a crime ring in texas.t hasn't stopped him from coming to california, setting up a drug rehab clinic and billing taxpayers. even though, felons are barred from running drug med cal centers. >> how can a guy like you run a drug rehab in california. this is a major insurance car crash scheme in texas. >> i was convicted, but it's not what it seems. >> reporter: in the last two fiscal years, taxpayers spent nearly $186 million supposedly treating drug and alcohol abuse patients in california. our investigation with the center for investigative reporting found half of that money, or about $94 million has gone to clinics that have shown questionable billing practices or signs of fraud. joy jaffers former drug medical supper visor says she complained to the state for years about all the obvious fraud. >> we found billing records for people in jail. one person dead. people who said they didn't need this kind of treatment. >> uh-huh. >> clinics closed on a certain day, billing for that certain day. >> uh-huh. >> no

alexander ferdman, the man we showed in the piece his clinic shut down last week. george aluno's clinic voluntarily shut down a month ago. they want it both ways. we are on top of it and doing this overhaul and review of the situation. >> and we are working on our budget so we can't bother to talk to you. >> the problem is they did know and that's the crux of what you have been seeing if you have been watching the last several nights. they had records and their own investigators found it and little to nothing was done until now. >> now, at least to you california officials are saying the fraud will end. >> we'll see. right? what they are saying is they will review all of the clinics, recertify all of the clinics. that should get away the felons running the clinics. >> they have felons running the clinics. >> but who's going to oversee the clinics are closed on wednesday but billing on wednesdays and they are treating people that don't exist or are dead. we don't know the specifics of what their overhaul will look like, the state auditor, the state senator calling f