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Laguna Beach


Police Files

Local arrested in alleged $3.2 million sober living fraud scheme

Laguna Beach resident Steven Lomonaco was recently charged, along with four other Southern California defendants, with multiple felonies for allegedly preying on vulnerable substance abuse patients to defraud an insurance company out of millions.

A joint effort by the Orange County District Attorney’s Office (OCDA) and the California Department of Insurance shut down the alleged $3.2 million healthcare fraud ring led by Lomonaco, 61, Mahyar “Christian” Mohases, 37, of Santa Ana, Robert Williams, 41, of Murrieta, Nicholas Reeves, 42, of Aliso Viejo, and James Frageau, 29, of Temecula. The defendants have been charged with multiple felony counts including insurance fraud and money laundering in connection with the scheme.

Police Files Steven Lomonaco

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Courtesy of OCDA

Steven Lomonaco

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 Beach. Now permanently closed, the sober living facility was located at 31365 Monterey St.

 In order to obtain payment from the insurance company for these patients, Mohases, Frageau, Williams, and Reeves allegedly 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 allegedly 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 [allegedly] 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 [alleged] criminals and their predatory operations in order to protect substance abuse patients from unknowingly being trafficked, as well as protect their loved ones, and insurance companies from these unscrupulous operators,” Spitzer said.

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, it is alleged, 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 allegedly used to pay the insurance premiums on the fraudulent policies.

Police Files exterior

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Courtesy of Google

Laguna Beach-based sober living facility is now closed

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.

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.

“The heartless nature of these [alleged] crimes [is] appalling,” said Insurance Commissioner Ricardo Lara. “These suspects [allegedly] 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 has pled not guilty and is out on $250,000 bail. He is scheduled for a pre-trial on February 5. Reeves has pled not guilty also. He is out on $100,000 bail and is scheduled for a pre-trial on January 22 and a preliminary hearing on February 13. Frageau is out on $250,000 bail and is scheduled for a continued arraignment on February 7. Williams turned himself into Huntington Beach Police Department on January 15. No arraignment date has been scheduled for him yet.

Futher details about whether Williams and Lomonaco are in custody were not available as of press time.

According to the Manta website, Casa Bella Recovery was established in 1990 and had 10-19 employees. 

According to a November 23, 2019 story in dailydemocrat.com, parents of a 20-year-old former resident of Casa Bella who died two days into his stay filed a wrongful death lawsuit against Casa Bella and its staff. According to court documents obtained, a notice of judgment was entered in favor of Casa Bella and its staff on November 25, 2019.

The article states, “The wrongful death lawsuit filed by his parents lays the tragedy at the feet of the rehabs and their workers. It also apportions blame for the nurse who, they feel, rendered services that weren’t medically necessary, and with the oversight of a doctor who never saw him. At Casa Bella, Harrison was prescribed a lethal stew of drugs that depressed his breathing and killed him according to the suit.”

The psychologytoday.com website shows there are six sober living facilities in Laguna Beach and dozens in Orange County, especially along the coast. Together with LA County, the posh area has been dubbed “Rehab Riviera.” 

Editor’s Note: An arrest contains allegations that a suspect has committed a crime. Every suspect is presumed to be innocent until and unless proven guilty in court. 

  -By Suzie Harrison

 

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