A man and woman who ran fifteen Los Angeles and Orange County drug and alcohol addiction sober living facilities face 35 years in prison for a $176 million fraud scheme.
The two suspects, identified as Chris Bathum and Kristen Wallace were arrested for multiple felony counts of grand theft and identity theft. The two allegedly conspired to defraud patients and insurers through an elaborate conspiracy officials said. Investigators said that Bathum, the owner and CEO of Community Recovery of Los Angeles (CRLA) and Wallace, the CFO lured vulnerable clients using a variety of marketing schemes.
In addition to the fraud-related charges, Bathum also was charged with three counts of sexual penetration by a foreign object, two counts of forcible oral copulation and one count each of forcible rape and rape of an intoxicated person. He also faces 27 counts of sexual exploitation and 12 counts of furnishing controlled substances. The victims of the sexual assaults were between the ages of 20-30 years old.
The pair used patient information, stealing their identities, and using them to purchase health insurance without their knowledge. When their treatment was complete they continued to bill the insurance companies for treatment services. “Bathum and Wallace’s alleged conspiracy victimized hundreds of people addicted to drugs and alcohol by keeping them in a never-ending cycle of treatment, addiction, and fraud-all the while lining their pockets with millions of dollars from allegedly fraudulent insurance claims,” said Insurance Commissioner Dave Jones.
Both Bathum and Wallace were charged with Identity theft for submitting fraudulent health insurance applications without patients’ knowledge, five counts of billing fraud for submitting claims for services not provided and duplicate billings, five counts of grand theft by false representation for representing CRLA as a residential treatment facility, which it is not licensed to provide, and
five counts of grand theft by false representation to insurers for filing fraudulent health insurance policy applications. “This is likely the first wave of indictments and charges in an ongoing investigation into one of the largest health insurance fraud cases in California,” added Jones.
Both are expected to be held on $2 million bail and are expected to be arraigned on November 14, 2016. The Department of Health Care Services accompanied detectives during the service of a search warrant in order to ensure that patients in CRLA facilities were transferred to other licensed treatment facilities. Both Bathum and Wallace are facing up to 53 years in state prison. Bathum faces up to a life sentence if convicted of the sexual assault.
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If convicted as charged in the healthcare fraud case, Bathum and Wallace each face up to 53 years in state prison. He faces up to life in prison if convicted in the sexual assault case.
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- Kristen Wallace: CDI