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New York Charges “Sober Houses” Operators with Criminal Enterprising

by Dave Maass

New York’s Attorney General charged six people for allegedly operating a crime ring as “sober home” providers.  The homes were widely used by the state’s parole commission even as it suspected legal improprieties were ongoing.

PLN has previously reported on the sober house business [See PLN, May 2014].  Known as the “Brand Criminal Enterprise” in court documents, the accused run a trio of interconnected non- profit substance abuse programs- Narco Freedom, Canarsie, A.W.A.R.E. , and NRI Group.  Charged are: former Narco Freedom CEO Alan Brand, Jason Brand, Jonathan Brand current Narco Freedom CEO Gerald Bethea, it’s controller Richard Gross, and John Cornachio.

They face between one and 25 counts of each of charges that range from enterprise corruption, grand larceny, and insurance fraud.  According to Attorney General Eric Schneiderman, Narco Freedom receives nearly $40 million annually in Medicaid reimbursement.  It is alleged the company stole at least $27 million from Medicaid through a variety of schemes, including companies the defendants created to bill, the non-profits for services, kickbacks, and insurance fraud.

Freedom Houses are mostly multi-story apartment buildings.  The company housed up to 1,500 people in 21 such buildings at one point.

"Narco Freedom’s housing program is just that: a housing program, so to call it an unregulated treatment program is completely false and clearly an attempt to force a narrative that doesn’t exist," said Narco Freedom spokesperson Michael McKeon.

"In a practice started by Alan Brand and continued by Gerald Bethea, Narco Freedom has linked eligibility to reside in its Freedom Houses to participation in its treatment programs, as coercive inducement for needy New Yorkers to attend its program," the Attorney General’s Office said in a statement.

The neediest are parolees, and New York’s parole commission has conceded in testimony that it recommended Narco Freedom even though it was aware the company was potentially violating patient’s rights designed to assure patients are free of “undue influence” in choosing a provider.

 “It becomes an issue of last resort for us,” said Department of Corrections and Community Supervision Deputy Thomas Herzog.  “Sometimes we have to settle on something that’s sub-optimal.”

PLN will update this story as events progress.