By day, Israel Claustro was an Orange County prosecutor who brought down violent gang members, sex offenders and corrupt officials.
In 2022, Claustro ran for office, winning an open judicial position.
For many years, he worked with a medical billing company and health management on the side. Now, he faces allegations that his moonshine was fraudulent and part of a long-running conspiracy with a Pasadena doctor, according to court records.
The doctor, Kevin Tien Do, agreed to plead guilty this month to conspiracy to defraud and sign a false tax return, according to court records.
Do admitted to creating medical reports that were sent to and billed to the state's workers' compensation fund, concealing his involvement by working with a nurse to write the names of other doctors in the records.
Federal prosecutors have not named Claustro in court papers or charged him with a crime.
But Do's plea deal and the charges filed against him detail how he ran the scheme with “conspirator #1,” described as an OC prosecutor who became a judge in 2022, and who ran a health care company with his wife. Documents filed in state court and public records, some of which were reported by the Orange County Register, suggest that Claustro was an alleged “collaborator.”
Paul S. Meyer, Claustro's attorney, did not respond to written questions and told the Times: “It is premature to comment.”
The allegations cast a shadow over a prominent member of the Orange County legal community who was steeped in her tough upbringing and commitment to ethics as she built her career.
“My earliest childhood memory is lying in the living room of our two-bedroom apartment in Pomona shared by six siblings, parents and uncles,” Claustro said in his 2022 judicial campaign before winning 73% of the vote in the June primary.
Claustro noted that he was the first of his siblings born in the US to Mexican parents with a third-grade education. “My unique ability to connect with people, especially the less affluent members of our community, helps inspire confidence in the American justice system,” he said.
How Claustro crossed paths with Do is unclear.
Born in Saigon, Vietnam, Do immigrated to the US as a child and graduated from USC's Keck School of Medicine, according to state board records. He worked with psychiatric patients and had a rehabilitation practice in Hawthorne and Beverly Hills before his career changed.
In 2003, Do pleaded guilty to aiding and abetting health care fraud through a scheme to submit fraudulent Medi-Cal claims. He served a year in state prison. In that scheme, Do allowed a medical billing company to use his ID to pay for services he didn't provide, then split the revenue with the company, putting in 20%.
In his plea agreement this month, Do admitted that in recent years, he worked with a Rancho Cucamonga outfit called Liberty Medical Group, authorizing reports on disabled patients sent to the state to receive workers' compensation benefits.
Because of Do's prior conviction, he was barred from participating in the state workers' compensation program, although he retained his medical license. Liberty Medical Group therefore removed Do's name from the reports, listing other doctors instead.
There was another problem: Do admitted that “associate #1” did not have a medical license or related medical credentials, so he could not own the medical organization.
And so the alleged conspiracy of the couple began, without the public fingerprints of the real users.
Prosecutors did not allege that Do paid for services he did not perform.
In his plea agreement, Do said Liberty Medical Group had a uniquely powerful “de facto” owner — an alleged conspirator, who “totally controlled” Liberty, including signing Liberty's checks and hiring other doctors and staff.
Claustro's role at Liberty Medical Group was revealed in state court filings. In October, psychiatrist Nhung Phan sued Liberty Medical, claiming he was owed $100,000 for tests done years ago. In the case, Phan recounts the exchange with “Israel” for his unpaid debts. The lawsuit also includes emails exchanged between Claustro and his wife in which Phan wrote that he was trying to collect “payments for patients we have not yet paid.”
Claustro responded in November 2023 that all charges had been paid, adding, “Payment records have been kept. Someone will get the records.” Liberty did not file a response to Phan's lawsuit.
In his plea agreement, Do asserted that it was a co-conspirator who devised a scheme for Do to produce reports containing the names of other doctors or providers.
Prosecutors cited a check Do received from Liberty on Aug. 4, 2020, that included the line of a memo from a patient MP. But a report submitted by Liberty to the state workers' compensation program in June 2020 named a different doctor as the author of the report, prosecutors said.
The state paid Liberty more than $3 million in such loans from Doe, including $1.3 million in 2019, $1.2 million in 2020, and $499,000 in 2021, according to court records. In 2022, the credits drop to $141,000.
While Do was paid more than $300,000 for his work, more than $1.5 million “flowed” into a company controlled by “co-conspirator #1” and his wife, according to the plea agreement.
That company was not listed in the plea agreement, but public records show it is Valley Health Care Management. In his 2022 salary disclosure as a judicial candidate, Claustro listed Valley Health but said his partner owns the company. In 2017, Claustro listed himself as CEO of Valley Health Care, according to public company filings. In his lawsuit, Phan also included a copy of the contract describing Valley Health as Liberty's “business manager.”
As part of his case, Do is scheduled to enter legal custody on Jan. 3, he also admitted that he failed to report his earnings from Liberty Medical to the Internal Revenue Service.
Claustro remains a judge in the family law division of the OC Superior Court. His term is scheduled to end in 2029. A spokesperson for the court said he could not answer questions on the matter.
“The Supreme Court of OC is bound by rules of conduct that do not allow to discuss such matters that may or may not be before another court, before a bench or in the hands of any legal body,” said the spokesman, Kostas Kalaitzidis.
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