5 arrested in $3.2 million Southern California sober living home fraud scheme – Redlands Daily Facts

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5 folks have been arrested in reference to an alleged $3.2 million sober residing house fraud scheme that preyed on weak substance abuse sufferers to swindle tens of millions of {dollars} from an insurance coverage firm, authorities introduced Friday.

Taken into custody this week had been Steven Lomonaco, 61, of Laguna Seashore; Mahyar “Christian” Mohases, 37, of Santa Ana; Robert Williams, 41, of Murrieta; Nicholas Reeves, 42, of Aliso Viejo; and James Frageau, 29, of Temecula. They’ve been charged with a number of felony counts, together with insurance coverage fraud and cash laundering, in reference to joint investigative efforts by the Orange County District Lawyer’s Workplace and California Division of Insurance coverage.

As well as, Mohases, Williams, Reeves and Frageau have every been charged with two counts of committing medical insurance coverage fraud, one rely of fraudulent written declare to an insurance coverage firm, two counts of cash laundering in extra of $150,000, 4 counts of cash laundering, and one enhancement for aggravated white collar crime over $200,000, in accordance with authorities. They every face a most sentence of 14 years in jail if convicted on all prices.

Lomonaco additionally has been charged with two counts of committing medical insurance coverage fraud, one rely of fraudulent written declare to an insurance coverage firm, one rely of medical insurance coverage fraud, and one enhancement for aggravated white collar crime over $200,000. He faces a most sentence of eight years, 4 months if convicted on all prices.

“Sober residing properties are helpful sources designed to facilitate restoration and therapeutic for sufferers battling probably life-threatening habit points,” Orange County District Lawyer Todd Spitzer stated in a press release.

‘Exploited their addictions’

“As a substitute of serving to these sufferers, these people preyed on extraordinarily vulnerable folks and exploited their addictions for revenue. Working intently with the California Division of Insurance coverage, we’re cracking down on these criminals and their predatory operations as a way to defend substance abuse sufferers from unknowingly being trafficked, in addition to defend their family members and insurance coverage firms from these unscrupulous operators.”

Mohases, Frageau, Williams and Reeves allegedly discovered sufferers from all through the US looking for assist for substance use restoration after which flew them to California to enter therapy at Casa Bella Worldwide Inc., which was owned and operated by Lomonaco, authorities stated.

Then, to acquire funds from an insurance coverage firm that was not recognized, Mohases, Frageau, Williams and Reeves allegedly directed workers to fill out insurance policies for these sufferers utilizing false data.

The defendants are also accused of orchestrating a large money-laundering scheme by filtering funds by a nonprofit, StopB4UStart, by offering so-called donations from Mohases, Frageau, Williams and Reeves from their company, Nationwide Restoration.

“These ‘donations’ can be cashed out, and the proprietor of StopB4UStart would obtain cashier’s checks in specified quantities primarily based on the knowledge he acquired from one of many different co-conspirators,” authorities stated in a press release. Greater than 800 checks in complete had been used to pay the insurance coverage premiums on the fraudulent insurance policies.”

Actions ‘appalling’

California Insurance coverage Commissioner Ricardo Lara, who carried a bill prohibiting body-brokering when he was a state legislator, described the alleged offenses dedicated by the defendants as “appalling.”

“These suspects trafficked weak substance abuse sufferers to California simply to make a fast buck from the insurance coverage firm, with no regard for his or her lives, well being or restoration. Due to the efforts of Division of Insurance coverage investigators, and our shut work with District Lawyer Todd Spitzer’s workplace, there’s one much less fraud ring preying on unsuspecting sufferers.”

Mohases, Reeves and Frageau have been launched on bail from the Orange County jail. Particulars about whether or not Williams and Lomonaco are in custody weren’t instantly obtainable Friday.

Casa Bella Restoration has been battling HealthNet in courtroom for almost three years, with Mohases and Lomonaco named as cross-defendants. Amongst different issues, the litigation raises the query of whether or not referral charges — the widespread business observe of paying somebody to search out purchasers, usually on retainer — is an easy enterprise observe or a matter of fraud.

“We’re not fairly positive but what the information they’re alleging are,” stated Jack Earley, Lomonaco’s lawyer. “At this level, he maintains his innocence.”

Lomonaco was wanting ahead to clearing up the problems within the HealthNet proceedings, and now’s wanting ahead to doing that right here as nicely, Earley stated.

Attorneys for the others didn’t instantly return requests for remark Friday.

Rehab Riviera

Orange County and the Higher Los Angeles space are so dense with habit therapy and sober residing amenities that it’s generally known as the Rehab Riviera.

Over the previous a number of years, the Southern California Information Group has chronicled disturbing reviews of deaths, sexual assault, drug abuse and paying for patients inside California’s loosely regulated habit therapy business. These reviews have prompted federal probes, the Orange County task force that made these arrests, a sober living registry and new state laws designed to protect vulnerable people combating habit.

Lawmakers are engaged on a serious overhaul of the business they hope to introduce this 12 months.

Regulation enforcement seems to be taking the problems extra severely as nicely. In October, federal brokers raided 4 habit therapy facilities in Los Angeles and Orange counties, looking for proof in a prison probe.

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