SANTA ANA, Calif. — A joint effort by the Orange County District Attorney’s Office and the California Department of Insurance has shut down an alleged $3.2 million healthcare fraud ring which preyed on vulnerable substance abuse patients in order to bilk an insurance company out of millions.
Steven Lomonaco, 61, of Laguna Beach, Mahyar “Christian” Mohases, 37, of Santa Ana, Robert Williams, 41, of Murrieta, Nicholas Reeves, 42, of Aliso Viejo, and James Frageau, 29, of Temecula have been charged with multiple felony counts including insurance fraud and money laundering in connection with the scheme.
Mohases, Williams, Reeves, and Frageau have each been charged with two counts of committing medical insurance fraud, one count of fraudulent written claim to an insurance company, two counts of money laundering in excess of $150,000, four counts of money laundering, and one enhancement for aggravated white collar crime over $200,000. They each face a maximum sentence of 14 years if convicted on all charges.
Lomonaco has been charged with two counts of committing medical insurance fraud, one count of fraudulent written claim to an insurance company, one count of medical insurance fraud, and one enhancement for aggravated white collar crime over $200,000. He faces a maximum sentence of 8 years 4 months if convicted on all charges.
“Th heartless nature of these crimes are appaling,” said Insurance Commissioner Ricardo Lara. “These suspects trafficked vulnerable substance abuse patients to California just to make a quick buck from the insurance company, with no regard for their lives, health or recovery. Thanks to the efforts of Department of Insurance investigators, and our close work with District Attorney Todd Spitzer’s office, there is one less fraud ring preying on unsuspecting patients.”
Mohases, Frageau, Williams and Reeves are accused of finding patients across the country who were seeking help for substance use recovery and flying them to California to enter treatment at Casa Bella International Inc., which was owned and operated by Lomonaco. In order to obtain payment from the insurance company for these patients, Mohases, Frageau, Williams and Reeves directed employees to fill out policies for the patients using false information.
They are accused of lying on the insurance applications, stating that patients lived in California, when in actuality the addresses were for employees or businesses related to the co-conspirators. Lomonaco paid the other co-conspirators upwards of $10,000 per patient who stayed enrolled in treatment for more than 30 days.
“Sober living homes are valuable resources designed to facilitate recovery and healing for patients battling potentially life-threating addiction issues,” said Orange County District Attorney Todd Spitzer. “Instead of helping these patients, these individuals preyed on extremely susceptible people and exploited their addictions for profit. Working closely with the California Department of Insurance, we are cracking down on these criminals and their predatory operations in order to protect substance abuse patients from unknowingly being trafficked, as protect their loved ones and insurance companies from these unscrupulous operators.”
In order to pay the insurance premiums, the defendants are accused of developing a massive money laundering scheme in which they filtered money through non-profit, StopB4UStart, by providing “donations” from Mohases, Frageau, Williams and Reeves under their corporation, Nationwide Recovery. These “donations” would be cashed out, and the owner of StopB4UStart would receive cashier’s checks in specified amounts based on the information he received from one of the other co-conspirators. More than 800 checks in total were used to pay the insurance premiums on the fraudulent policies.
Mohases was arrested on January 13, 2020 and arraigned on January 14, 2020, he has pled not guilty. He is out on $250,000 bail and is scheduled for a pre-trial on February 5, 2020 in Department C-57.
Reeves was arrested on January 14, 2020 and arraigned on January 15, 2020, he has pled not guilty. He is out on $100,000 bail and is scheduled for a pre-trial on January 22, 2020 in Department C-55. A preliminary hearing for this suspect is scheduled for February 13, 2020 in Department C-55.
Frageau appeared in Court on warrant on January 15, 2020, he was arraigned on January 15, 2020. He is out on $250,000 bail and is scheduled for a continued arraignment on February 7, 2020.
Williams turned himself into Huntington Beach Police Department on January 15, 2020. No arraignment date has been scheduled for him yet.
Lomonaco was arrested on January 16, 2020. He is scheduled to be arraigned January 17, 2020.
Deputy District Attorney James Bilek of the Insurance Fraud Unit at The Orange County District Attorney’s Office is prosecuting this case.