A California man who operated addiction treatment facilities in Orange County was convicted this week of paying nearly $3 million in illegal kickbacks to refer patients to his facilities, according to federal prosecutors.
From at least October 2018 until December 2020, the man, Casey Mahoney, 48, of Los Angeles, paid about $2.87 million to “so-called ‘body brokers’” who gave thousands of dollars to patients to coax them into Healing Path Detox L.L.C. in Huntington Beach and Get Real Recovery Inc. in San Juan Capistrano, two treatment centers Mr. Mahoney operated, the U.S. Attorney’s Office for the Central District of California said in a statement on Friday.
Some of the money that the body brokers gave to patients was used by the patients to buy drugs, the department’s statement said.
After a nine-day trial, a federal jury in Los Angeles on Wednesday found Mr. Mahoney guilty of one count of conspiracy related to offering illegal remunerations for patient referrals; seven counts of illegal remunerations for patient referrals; and three counts of money laundering, prosecutors said. He was acquitted on one count of aiding and assisting the preparation of a false tax document.
The money laundering charges, the most serious on which Mr. Mahoney was convicted, each carry a maximum sentence of 20 years in prison. Sentencing is set for Jan. 17, 2025.
Treatment facility operators may pay a group like a marketer or advertiser to promote their services to patients. But the Eliminating Kickbacks in Recovery Act of 2018 prevents the operators from paying body brokers kickbacks based on how much revenue the patients they referred brought in, as Mr. Mahoney did, according to the indictment.
Testimony from an accountant during the trial suggested that Mr. Mahoney made about $25 million from 2018 to 2020 from his facilities, Ciaran McEvoy, a public information officer for the U.S. attorney’s office, said in an email on Friday. Mr. McEvoy also said that a “vast majority” of the patients at the facilities “were brokered.”
Mr. Mahoney concealed that he was paying body brokers based on the length of the patients’ stay and insurance revenue earned from the patients by entering into “sham contracts” with the body brokers, prosecutors said. In one case, he hid payments by hiring a body broker’s mother for consulting work that she never did, prosecutors said in charging documents.
When Mr. Mahoney was indicted in October 2021, a man accused of being a body broker, Joseph Parkinson, was also named and faced several charges, prosecutors said at the time. Their cases were severed, and Mr. Parkinson, formerly of Costa Mesa, Calif., is to stand trial in February, according to court records.
Lawyers representing Mr. Mahoney and Mr. Parkinson did not immediately respond to emails seeking comment on Friday.
The charges against Mr. Mahoney came as part of an effort by the Justice Department called the Sober Homes Initiative, which investigates substance abuse treatment facilities that may be providing kickback payments for the referral of patients, according to Benjamin Barron, who helped prosecute the case when he worked for the U.S. attorney’s office and now works at Keller/Anderle L.L.P.
“These schemes take advantage of vulnerable members of our society — addiction patients seeking help,” Kenneth A. Polite Jr., who was then the assistant attorney general for the Justice Department’s criminal division, said in the 2021 statement.
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