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LEE COUNTY, IOWA -- The owners of a Keokuk care facility are in trouble with the law for possible Medicaid Fraud.

Iowa Attorney General Tom Miller filed a civil lawsuit in Lee County District Court against Dave's Place (now Lexington Place), a Keokuk specialized nursing facility and Alan Israel of Phoenix, Arizona, who owns Lexington Square care facility in Keokuk, the facility's real estate holding company.

The first of its kind civil lawsuit under the Iowa False Claims Act and a state money laundering statute alleges money laundering and false or fraudulent Medicaid claims.

In a news release, Miller stated that the defendants engaged in a money laundering scheme. The state can seek damages worth three times the value of the property or $17.4 million.  The state also seeks additional unspecified triple damages and civil penalties for alleged false statements and claims.

Israel's son, Jason Israel of Phoenix, also is named in the lawsuit as a minority owner of Lexington Square and Dave's Place.

"We allege that the defendants defrauded our state's Medicaid system in a significant way," Miller said.  "We intend to hold these people fully accountable for the Medicaid fraud and money laundering that we allege in this civil law enforcement action."

The lawsuit contends the defendants made false statements and claims. The petition further alleges that improper expenses submitted to the Iowa Medicaid program included airline and train travel, hotel rooms, payments for an employee's camper, and various fraudulent financial transactions and unallowable expenses.

According to the petition, Iowa's Medicaid program reimbursed the defendants substantially more than they were entitled as a result of these false and fraudulent claims submitted since July 2010.

"This action represents a landmark for the State of Iowa,"  Iowa Department of Inspections and Appeals Director Rod Roberts said.  "This is the first case brought against defendants under the provisions of Iowa's False Claims Act."

Roberts noted that those who suspect Medicaid fraud should contact the Medicaid Fraud Control Unit at 1-800-831-1394.