They indulge their wildest whims—a private helicopter, Lamborghini sports cars, thoroughbred horses, even a “Pirates of the Caribbean” water theme park. For the schemers and scammers, Medicare fraud is one crime that does pay—and pay and pay.

The Benitez brothers of Miami—Carlos, Luis and Jose—can vouch for that, federal prosecutors say. The brothers, who operated fake storefront clinics there, were indicted last year on fraud charges after allegedly collecting $84 million from Medicare for phony medical treatments. They spent their Medicare millions on the helicopter, the horses, a rental car agency and tourist hotels—all items the government is now trying to seize and reclaim for taxpayers.

Medicare frauds are often inelegant—but they’re outrageously lucrative and relatively low-risk. So lucrative, and so low-risk, the FBI reports, that a number of cocaine dealers in Florida and California have switched from illicit drugs to Medicare fraud.

Medicare loses billions of dollars to fraud each year. “Those billions of dollars,” said Eric Holder, U.S. attorney general, “represent health care dollars” that could be spent on medicine or care or hospital visits, “but instead are wasted on greed.”

Yet Congress has denied Medicare the money officials say it needs to truly police itself. Four years ago, as fraud began spinning out of control, lawmakers ignored Medicare’s request for $300 million to fight these crimes—even though the agency’s Office of Inspector General says that every dollar spent protecting the program returns $17.

Now, with Congress and the Obama administration hoping to help finance health care reform with $500 billion in savings wrung from Medicare over the next 10 years, cracking down on fraud is a fresh priority. And it shows. Just this year, anti-fraud efforts have seen a marked increase in money and agents.

Miami vice

The nation’s first federal Medicare fraud strike force hit the ground in Miami two years ago—with agents from the FBI and investigators from the Department of Health and Human Services’ Office of Inspector General, as well as federal prosecutors. Altogether, the strike force and the southern Florida U.S. Attorney’s Office indicted 197 suspects in 2007, almost doubling Medicare fraud prosecutions.

In one Miami case alone, the team charged 16 people with orchestrating a $101 million fraud involving phony bills for medical equipment that Medicare patients neither needed nor received. Now, strike forces are operating in Medicare fraud hot spots like Los Angeles, Detroit and Houston, and officials say more cities will be targeted later this year. The scams are many, varied and spreading.

The Houston strike force, for example, shut down clinics billing Medicare for $3,000 “arthritis kits” that were only heating pads and knee and shoulder braces. A $16 million bust last July netted 32 doctors and executives. Some of the clinics, prosecutors charge, also were billing for liquid food supplements for patients who were deceased.

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