Five charged with multiple felonies for preying on patients
It was announced in a Jan. 17 press release that a joint effort by the Orange County District Attorney’s Office and the California Department of Insurance 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.
“The heartless nature of these crimes is appalling,” 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 Laguna. 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, and 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 nonprofit, 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 Jan. 13 and arraigned on Jan. 14. He has pled not guilty and is out on $250,000 bail. Mohases is scheduled for a pre-trial on Feb. 5.
Reeves was arrested on Jan. 14 and arraigned on Jan. 15. He has pled not guilty and is out on $100,000 bail. Reeves is scheduled for a pre-trial on Jan. 22. A preliminary hearing is scheduled for Feb. 13.
Frageau appeared in court on warrant on Jan. 15 and he was arraigned that same day. Frageau is out on $250,000 bail and is scheduled for a continued arraignment on Feb. 7.
Williams turned himself into Huntington Beach Police Department on Jan. 15. No arraignment date has been scheduled for him yet.
Lomonaco was arrested on Jan. 16 and was arraigned on Jan. 17.
