SAN JUAN CAPISTRANO, Calif. — Tonmoy Sharma, the founder and former CEO of Sovereign Health Group, appeared in court Friday following his arrest on multiple federal charges related to a massive insurance fraud scheme and illegal kickbacks tied to addiction treatment services.
Sharma was taken into custody at LAX on Thursday, years after his now-defunct company, Sovereign Health, was raided by the FBI in 2017. The company once operated multiple addiction treatment centers across Southern California before shutting down in 2018.
Despite the closure, NBC Los Angeles reports that Sharma continued to operate a licensed residential treatment facility under the name Dana Shores Recovery in San Juan Capistrano.
Federal prosecutors allege Sharma and his associates submitted over $149 million in fraudulent insurance claims and accepted $21 million in illegal kickbacks for patient referrals. He now faces:
4 counts of wire fraud
1 count of conspiracy
3 counts of illegal remunerations for patient referrals
“From 2014 to 2020, Sovereign billed private insurers for treating drug-addicted and mentally ill patients, often at out-of-network rates,” said the Department of Justice. Sharma allegedly directed aggressive marketing efforts that misled patients about services and falsely claimed costs would be covered by donations from a sham foundation.
Federal officials also accuse Sovereign Health of ordering unnecessary tests and procedures without physician authorization, even continuing to bill insurance providers for urinalysis tests after licensed physicians had left the facilities.
In a particularly tragic case, Sovereign Health reached an $11 million settlement with the family of Brandon Nelson, who died by suicide while in care at Sovereign’s San Clemente location. Nelson’s mother, Rose Nelson, later called the facility’s marketing “all lies,” citing false promises of 24/7 care and psychiatric oversight.
Also arrested in connection with the fraud is Paul Jin Sen Khor, 45, of Irvine, who managed Sovereign’s finances. Khor was charged with conspiracy and illegal remunerations. He pleaded not guilty and was released on $200,000 bail.
If convicted, Sharma faces:
Up to 20 years in prison per wire fraud count
Up to 5 years for conspiracy
Up to 10 years for each illegal remuneration charge
Sharma’s attorney, Peter Swarth, declined to comment on the indictment.
