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Ex-CEO of mental health provider arrested for insurance fraud
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The founder and former CEO of an addiction treatment provider made an initial court appearance Friday after being arrested on several federal charges, including insurance fraud.
The federal investigation into Sovereign Health Group, which ran multiple addiction treatment centers in Southern California has been underway since June 2017 when the FBI raided Sovereign’s treatment facilities, its San Clemente headquarters and Tonmoy Sharma’s home in San Juan Capistrano. The business eventually shut down in 2018.
But even after the closure, NBCLA investigations found that Tonmoy Sharma, the former CEO, operated a licensed residential treatment facility in San Juan Capistrano under the name Dana Shores Recovery.
Sharma, who was arrested at LAX Thursday afternoon, is accused of submitting more than $149 million in fraudulent claims to private insurance companies as well as accepting $21 million in illegal kickbacks for patient referrals.
Sharma was charged with four counts of wire fraud, one count of conspiracy, and three counts of illegal remunerations for referrals to clinical treatment facilities.
“From 2014 to 2020, Sovereign billed private insurance companies for drug addicted and mentally ill patients often at high, out-of-network rates,” the Department of Justice said in a statement. “At Sharma’s direction, Sovereign employees aggressively pursued patients through various forms of marketing, directing the patients to contact the company at its toll-free phone number.”
Federal officials also allege that when potential patients called to inquire about Sovereign Health’s services, employees misrepresented their services and costs, telling the would-be patients that their treatment would be paid for by donations through a sham foundation.
The organization, which federal investigators call a “ruse” for Sovereign employees, would use patient’s private information, including social security numbers, to order unnecessary tests and treatments without physician’s authorization, the Department of Justice said.
“Sovereign also submitted numerous claims to the insurance companies, including urinalysis tests, after physicians were no longer working at Sovereign,” the federal agency alleged.
Another investigation by NBCLA also found that Sovereign Health reached at $11 million settlement with the family of Brandon Nelson after he committed suidide at Sovereign’s San Clemente treatment facility.
Nelson’s parents said in 2024 only after Brandon’s death did they realize the scope of Sovereign’s false promises.
“It was marketed as, ‘He will have 24/7 oversight of psychologists, a house manager, psychiatrists would come in. They’d have group therapy.’ Noting was provided. It was marketed like that. It was all lies,” said Rose Nelson, Brandon’s mother.
Paul Jin Sen Khor, 45, of Irvine, who managed Sovereign’s finances, was also arrested this week on the charges of conspiracy and illegal remunerations for referrals to clinical treatment facilities. Khor posted $200,000 bail after pleading not guilty.
If convicted, Sharma would face a statutory maximum sentence of 20 years in federal prison for each wire fraud count.
Sharma and Khor would face up to five years in federal prison for the conspiracy count, and up to 10 years in federal prison for each illegal remunerations count.
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