Former drug rehab mogul Tonmoy Sharma was arrested Thursday, Could 29, and charged with eight counts of insurance coverage fraud linked to his San Clemente-based dependancy empire, Sovereign Well being Group.
The U.S. Division of Justice says Sharma – who within the 2010s was a regional chief within the drug and alcohol restoration trade – made $149 million price of fraudulent insurance coverage claims between 2014 and 2020. Prosecutors additionally say Sharma’s firm ran up $29 million in pointless urinalysis exams that have been carried out by Sovereign-owned labs, and that the corporate paid greater than $21 million in unlawful kickbacks to so-called “body brokers” who steered insured addicts into Sovereign-owned clinics.
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Sharma, 61, of Tustin, was picked up at Los Angeles Worldwide Airport after coming back from a visit, officers stated. He was anticipated to spend Thursday night time in federal custody and is scheduled to be arraigned in federal courtroom in Los Angeles on Friday.
Sharma couldn’t be reached for remark. Officers stated late Thursday that Sharma doesn’t but have a lawyer however he’s anticipated to have one throughout his arraignment.
A one-time Sharma worker, Paul Jin Sen Khor, 45, of Irvine, who labored as Sovereign’s money administration and accounts payable supervisor, additionally was arrested Thursday. He was charged with a single rely of conspiracy and one rely of constructing unlawful funds for referrals to medical therapy amenities.
Khor pleaded not responsible Thursday throughout his arraignment in U.S. District Court docket in Santa Ana. A federal decide scheduled a July 29 trial date, and Khor was launched on $20,000 bond.
If convicted, Sharma faces as much as 20 years in federal jail for every wire fraud rely. Additionally, he and Khor withstand 5 years in federal jail for every rely of conspiracy and as much as 10 years in jail for every rely of kickbacks, which prosecutors describe as “illegal remunerations.”
The felony filings in opposition to Sharma and Khor mark the newest episode in a long-running saga that entails Sovereign, particularly, and, extra broadly, the drug and alcohol restoration trade in Southern California.
In 2017, the Southern California Information Group printed Rehab Riviera, an investigative sequence that checked out widespread fraud, abuse and neglect within the drug and alcohol restoration trade within the area.
Amongst different issues, the sequence discovered that the trade confronted little state or federal oversight and that just about anyone might begin a restoration middle. The sequence additionally discovered that many operators have been wooing addicts to restoration operations in Southern California, typically paying physique brokers to deliver them insured shoppers.
And, critically, the investigation discovered that many rehab operators have been abusing loopholes in Obamacare – which requires insurers to pay for dependancy restoration – and billing insurance coverage corporations tens of hundreds of thousands of {dollars} for prolonged, generally repeated, stints at rehab.
A lot of these allegations have been aired throughout a 2022 civil courtroom case involving Sovereign and insurance coverage big Well being Web.
Although Sovereign initially filed swimsuit in opposition to Well being Web, demanding fee for insurance coverage claims, the well being big ultimately received when a Los Angeles jury ordered Sharma and his firm to pay practically $45 million in damages and curiosity.
After a seven-week trial, the jury took a day to seek out that Sharma and his firm acted with “malice, oppression or fraud,” and that Well being Web had proved Sharma violated the Racketeering Affect and Corrupt Group Act.
Past insurance coverage fraud, the trade, extensively, has been criticized by households of recovering addicts, and well being care advocates, who say poorly run restoration facilities have led to a number of deaths and, extra generally, poor well being outcomes. The SCNG investigations have discovered a number of individuals died, typically by drug overdose, at rehab facilities that didn’t observe medical protocols or just didn’t check out sufferers.
The daddy of 1 former Sovereign affected person stated Thursday that he welcomed the felony fraud costs in opposition to Sharma, however doesn’t really feel it covers the scope of what he views as negligence by Sharma and his firm.
“I’m very pleased that Sharma was arrested for his billing fraud, (but) the indictment does not address how Sharma did not provide promised professional treatment that has sentenced our family and other families to a lifetime of grief,” stated Allen Nelson, whose son, Brandon Nelson, hanged himself in 2018 at a Sharma-owned sober dwelling house that had claimed Nelson could be receiving top-of-the-line psychological well being therapy.
In 2021, Gov. Gavin Newsom signed “Brandon’s Law,” which prohibits restoration operators from misrepresenting or making blatantly false claims concerning the companies they provide or the place they’re situated.
In 2023, the Nelson household received $11 million in a wrongful loss of life declare in opposition to Sharma and his firm.
Amongst different issues, the declare stated a Sharma-owned sober dwelling house didn’t inform potential clients that in 2008 his license to observe psychiatry was revoked in the UK for conduct deemed dishonest, unprofessional and deceptive.
Nelson stated he plans to attend Sharma’s arraignment in Los Angeles.
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