20 people, health care business and church charged in sober living
scheme in Arizona
[May 21, 2025]
PHOENIX (AP) — Twenty people, a mental health business and a
church were charged in an indictment that alleged Arizona’s Medicaid
program was defrauded $60 million in a scheme involving billing for
mental health treatment and addiction rehabilitation, the latest
indictment in a series of crackdowns in the state focusing on sober
living homes.
The indictment announced Tuesday alleged Happy House Behavioral Health
LLC was paid the money for services that were either never provided or
only partially completed and that there was billing for clients who were
deceased and incarcerated.
Authorities say sober living homes referred clients to the behavioral
health business, which received money from the Arizona Health Care Cost
Containment System and then paid the homes for the clients in violation
of state law.
Money laundering charges alleged Happy House Behavioral Health paid $5
million in July 2023 to a Hope of Life International Church, which later
wired $2 million to an entity in Rwanda.
The charges against Happy House Behavioral Health include conspiracy,
fraud, forgery, theft and money laundering.
The Associated Press left an email with a lawyer representing Happy
House Behavioral Health.
In a statement, Hope of Life International Church said it was unjustly
charged with money laundering for accepting a donation from a licensed
sober living facility that was a tenant of the church and was later
accused of defrauding the state’s Medicaid program. The church said it
didn’t have access to the sober living facility’s internal operations,
financial practices or management decisions.
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A billboard is seen in Scottsdale, Ariz., Saturday, June 10, 2023,
near the health care facility of the Salt River Pima-Maricopa Indian
Community, which has been affected by a gigantic Medicaid fraud
scheme involving sober living homes that promised help to Native
Americans seeking to kick alcohol and other additions. (AP
Photo/Anita Snow, File)
 “The church’s only relationship was
that of a landlord and, later, as a recipient of a donation — a
donation accepted in good faith, consistent with its mission and
longstanding practice,” the statement said.
In all, more than 100 people and several companies have been charged
in cases brought by Attorney General Kris Mayes’ office in the
state’s crackdown on Medicaid fraud and unlicensed sober living
homes, many of which targeted tribal community members. The state
had suspended payments to more than 100 providers as part of the
crackdown.
The scam had left an unknown number of Native Americans homeless on
the streets of metro Phoenix as fraudulent sober living homes lost
their funding and turned former residents out onto the streets.
Navajos account for most Native Americans grappling with addictions
who have been affected by the scam. Navajo officials say that in
some cases, people who ended up in the homes were picked up in
unmarked vans and driven to the Phoenix area from faraway places on
the sprawling Navajo Nation that stretches across northern Arizona,
and parts of New Mexico and Utah.
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