(New York, NY) Top executives of a Bronx nonprofit that provides drug and alcohol treatment to tens of thousands of New Yorkers were indicted for an alleged criminal enterprise plundering the charity, defraud Medicaid of more than $27 million and commit insurance fraud, New York Attorney General Eric Schneiderman announced in a statement on Wednesday.
The indictment expands Schneiderman’s criminal case announced last October against Narco Freedom Inc, its founder Alan Brand and his son Jason Brand.
It also adds new criminal charges against the nonprofit’s chief executive, Gerald Bethea, 56, Controller Richard Gross, 61, Alan Brand’s son Jonathan Brand, 33, and employee John Cornachio, 60.
Schneiderman said Narco Freedom cheated Medicaid by submitting claims for excessive services, operating unregulated treatment programs and coercing patients who live in its Freedom Houses to remain in treatment. Schneiderman said the charity receives nearly $40 million annually in Medicaid reimbursements.
“Criminal enterprises that use nonprofits to steals millions in public funds poison New York’s charitable sector, which is one of the greatest in the nation,” said Schneiderman.
The scams included shell companies, no-show jobs, kickbacks and insurance fraud. Alan Brand allegedly demanded and received $13,000 monthly in personal kickbacks for his own use for leasing some Narco Freedom’s facilities in buildings owned by a particular developer.
Narco Freedom founder Alan Brand and his son, Jason, were hauled out of the 42nd Precinct stationhouse in the Bronx Wednesday morning.
Cornachio reportedly shouted, “It’s all horses—!” as he left the 42nd Precinct in handcuffs.
The Brands and Cornachio have also been accused of misusing funds to support lavish spending habits, including vehicles such as a Tesla, a Porsche 911 Carrera, a Range Rover and a vintage Corvette.
“We entrust the leaders of nonprofits to perform their duties with their organization’s mission at heart,” stated Schneiderman.
The defendants face from one to 25 criminal counts each, including enterprise corruption, grand larceny and insurance fraud, Schneiderman said. Narco Freedom faces 18 counts.
Michael Bachner, a lawyer for Alan Brand, said his client “continues to vigorously deny any wrongdoing in connection with these charges, and will be vindicated after trial.”
In addition to $4 million in assets that were previously frozen, the Attorney General was granted court permission to freeze an additional $29 million in assets yesterday.
Founded in 1971, Narco Freedom provides substance abuse, medical, mental health and social services to more than 36,500 people, including patients and family members, according to its website.
Since 2002, the Brands had given tens of thousands of dollars in campaign contributions to Bronx and statewide politicians, including $8500 to Attorney General Schneiderman and $25,000 to Governor Cuomo. Those donations were given to charity after the announcement of the indictments last October.
In October, U.S. Attorney Preet Bharara in Manhattan filed civil charges accusing Narco Freedom of cheating Medicaid through kickbacks.
Federal prosecutors have also charged the duo with an illegal kickback scheme through Medicaid fraud. The company received around $40 million annually in Medicaid reimbursements.
The federal charges revolved around Narco Freedom’s “three-quarter houses,” where addicts receiving treatment also get housing. The company required the addicts to enroll in outpatient programs run by Narco Freedom as a condition of getting a roof over their heads, according to the lawsuit filed in Manhattan Federal Court.
Schneiderman pledged that his office will not stop in its efforts to prosecute those who abuse the public trust and rip off taxpayers.
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