Fraudster who made millions from Arizona’s sober living scheme, sentenced to probation
PHOENIX - The sober living scheme ravaged the Arizona Health Care Cost Containment System (AHCCCS) for an estimated $2.5 billion in fraud, costing taxpayers.
The scandal took off at the start of the COVID-19 pandemic as suspects fraudulently billed for services rarely provided to vulnerable people needing addiction treatment.
One man whose company made nearly $21 million was sentenced for his role in the scam. That man is 30-year-old Johnwick Nathan.
Since 2020, there have been 73 indictments in connection to Medicaid fraud, a majority by way of Arizona Attorney General Kris Mayes. But this specific case stemmed from former AG Mark Brnovich’s time in office in 2022, accusing a self-proclaimed entrepreneur of fraud, theft and money laundering.
The state asked the judge for a four-year prison sentence, but that didn't happen.
"I’m going to impose on count three, four years of probation and deferred jail time to start December 15," said Judge Tracey Westerhausen of the Maricopa County Superior Court.
Nathan was sentenced to four years of probation for each of the two counts he plead guilty to earlier this year: illegal control of an enterprise and solicitation to commit money laundering.
The sentences will run concurrently.
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The judge says under the plea agreement, she could only choose between prison or probation.
Before the decision, Nathan apologized to the state and taxpayers.
"At this moment, I’ve learned, and I take full responsibility, because that’s a part of having character as well as taking responsibility for your action."
He did not apologize to the Native American AHCCCS members he took advantage of.
Nathan is a self-proclaimed entrepreneur. He authored a self-improvement book to build success, but was caught pushing a behavioral health scam during the pandemic.
The provider he owned, Harbor Health Integrated, billed AHCCCS for 23 to 24 hours worth of services to his patients daily under the American Indian Health Program (AIHP).
According to the state, services were never rendered to at least 10 AHCCCS members, and at the time, AIHP was under far less scrutiny.
Court records say Nathan listed only two diagnoses he billed for: "Alcohol dependence" nearly 90 times and "major depressive disorder" more than 7,000 times.
Nathan rarely billed the state’s Medicaid agency for less than 12 hours per day, for weeks and months on end.
CLICK HERE TO READ MORE COVERAGE ON THE SOBER LIVING SCHEME IN ARIZONA
All of his patients were Native American and the former CEO of Harbor Health told special agents that Nathan’s motivation was "the money."
"In AHCCCS’ investigation via social media posts that showed an extravagant lifestyle with many luxury automobiles, luxury properties," said Aaron Baumann, an attorney for Arizona Health Care Cost Containment System.
Nathan's Instagram account shows exactly that – Nathan driving multiple Ferraris.
The Arizona AG’s office says Nathan ran the Medicaid fraud scheme from March 2020 to August 2021.
Court records say in one case, he continued to bill AHCCCS for another month on behalf of a discharged patient who went home to the Navajo Nation, making $96,135.41.
FOX 10 obtained records from AHCCCS that show Harbor Health Integrated was paid nearly $20,859,694 in total reimbursements for treatment services.
It's unknown how much of it is determined to be fraud.
AHCCCS finally suspended payments to Harbor Health in October 2021 over credible allegations of fraud.
Nathan's attorney said the defendant should have realized early on the money was too good to be true.
"I’ve learned to not allow materialistic things or the words of others to encourage your behaviors or to cloud judgment or to cloud intention and through all of this I’ve allowed that," said Nathan.
Nathan has agreed to pay $2 million in restitution to the state.
The judge said if Nathan is not efforting restitution and following probation guidelines, he could face jail time by December 15.
Through further records requests, FOX 10 learned that between seven behavioral health providers indicted in connection to Medicaid fraud, AHCCCS paid them a total of nearly $170 million, only scratching the surface of the estimated $2 billion in fraud.
Statement from the Arizona Attorney General's Office
"Attorney General Mayes is proud of the work our team did to secure another conviction in the ongoing AHCCCS fraud investigation."
