Case #Case #20CF0066, 20CF0067, 20CF0068, 20CF0069, 20CF0070
Five defendants charged with multiple felonies for preying on vulnerable substance abuse patients to bilk insurance company out of millions
SANTA ANA, Calif. – A joint effort by the California Department of Insurance and the Orange County District Attorney’s Office has led to charges against five defendants in connection with a fraud ring allegedly designed to traffic vulnerable substance abuse patients from outside California into treatment facilities in Orange and Riverside counties and to bilk insurance companies out of millions of dollars.
Authorities charged Jeremy Ryan, 42, of Orange, Daniel Reaman, 41, of Mount Rainier, Maryland, Richard Roberts, 61, of Stockton, Reiner Nusbaum, 54, of San Clemente, and Michael Castanon, 56, of San Juan Capistrano, with multiple felony counts including insurance fraud, money laundering, and conspiracy.
The defendants face between 12 years, 8 months and 21 years and four months in prison for their alleged involvement in a scheme that resulted in $60 million in fraudulent billing and $11.7 million in insurance losses.
“With no regard for the substance abuse patients who wanted and needed treatment, this ring trafficked and used them to steal from insurance companies to line their own pockets,” said Insurance Commissioner Ricardo Lara. “Thanks to the hard work and determination of the Department of Insurance, and partnership with the Orange County District Attorney’s Office, we have charged additional defendants in this ring.”
Authorities allege that Ryan, Reaman, and five previously charged defendants used mass media marketing campaigns to identify addicted “clients” from across the country who were seeking treatment. The conspirators and their witting employees then falsified clients’ health care insurance applications to circumvent California residency requirements and closed enrollment periods, employed a money-laundering scheme they devised to conceal their involvement in paying clients’ insurance premiums, and trafficked their clients into Southern California treatment facilities
The conspirators allegedly used their own nonprofit, Healthcare Relief Foundation, and exploited the unwitting non-profit, StopB4UStart, to conceal their involvement in funding their scheme.
“Treatment is one of the most fundamental stages in recovery for those who seek and need help. These schemes target and exploit vulnerable people at a time when they need help the most,” said Orange County District Attorney Todd Spitzer. “The Orange County District Attorney’s office will continue to send a strong message against fraudsters and the deceptive tactics that exploit treatment services by prosecuting these cases to the fullest extent of the law.”
Authorities further allege they conspired with the owners and employees of over 17 substance treatment facilities, including facilities owned by defendants Roberts, Nusbaum and Castanon, to traffic clients into these facilities in order to collect thousands of dollars on their investment in unlawful, per-client, kickbacks.
Roberts, Nusbaum, and previously charged conspirators owned and operated RNR Recovery and Diamond Recovery, both Orange and Riverside County businesses offering inpatient detox treatment and residential sober living and assistance. Castanon owned and operated Luminance Recovery Center, a San Juan Capistrano based treatment facility.
Deputy District Attorney James Bilek of the Insurance Fraud Unit at the Orange County District Attorney’s Office is prosecuting this case.