Mott Haven substance treatment program defrauded Medicaid, clients
A trustee for the disgraced Mott Haven nonprofit Narco Freedom Inc., pled guilty yesterday in New York State Supreme Court in the Bronx on behalf of the organization, to charges that its executives stole at least $27 million from Medicaid and the State of New York by taking advantage of drug addicts through an elaborate scam that spanned years.
The investigation charged them with syphoning funds meant for Narco Freedom’s patients, and setting themselves up with lavish lifestyles replete with top-of-the-line cars and suburban mansions. The indictment and civil action alleged that Narco Freedom operated unregulated residential treatment programs and transitional housing for its patients, and required them to come to its clinics regularly for unneeded counseling sessions. Narco Freedom’s on-the-take medical staff would “treat” those patients, then the organization submitted reimbursement claims to Medicaid totaling tens of millions of dollars for services not rendered.
At the time of its indictment in 2015, Narco Freedom received $40 million annually in taxpayer-funded reimbursement, to provide counseling and treatment for its clients.
The Attorney General’s office announced the guilty plea and a multi-million dollar civil settlement to charges including enterprise corruption, grand larceny, filing false paperwork, insurance fraud, conspiracy and money laundering, with Narco Freedom’s former CEO Alan Brand, his son Jason Brand, the organization’s former chief executive, Gerald Bethea, and its controller Richard Gross.
“Narco Freedom operated a years-long criminal enterprise that ripped off taxpayers and took advantage of New Yorkers in need of substance abuse treatment,” Attorney General Schneiderman neatly summed up.
Medicaid was not the only taxpayer institution Narco Freedom bled dry, however. The group also filed false statements with the New York State Department of Health and the Office and the Attorney General’s office’s Charities Bureau. Alan Brand and his controller, Gross, signed those fraudulent filings.
Soon after the 2015 indictment, a federal district court judge appointed a temporary receiver to take control of its finances and run the organization. In September of that year, the group was forced to stop treating patients. Those patients were transferred to another substance abuse treatment provider, Queens-based Samaritan Village, which continues to operate those facilities in the heart of Mott Haven.
Narco Freedom filed for bankruptcy in January 2016. A bankruptcy trustee will now take steps to dissolve the organization following a bankruptcy court’s approval earlier in May of a $118 million settlement to settle its outstanding government claims.
The story was updated to clarify that a trustee for Narco Freedom Inc. entered the guilty plea for the organization, not the executives charged with wrongdoing.