NYC rehab chain Narco Freedom pleads guilty to corruption

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A trustee for a Bronx-based chain of drug and alcohol rehabilitation clinics pleaded guilty on its behalf to stealing millions of dollars from Medicaid, New York Attorney General Eric Schneiderman said on Wednesday.

The plea came 2-1/2 years after the attorney general accused Narco Freedom and some of its officials of trying to plunder the nonprofit and defraud Medicaid of at least $27 million.

Narco Freedom trustee Alan Nisselson entered the guilty plea to charges of enterprise corruption, grand larceny and filing false paperwork, Schneiderman said.

Criminal charges against four officials, including Narco Freedom founder Alan Brand and Gerald Bethea, who both served as chief executive, remain pending, Schneiderman said.

The attorney general has said Narco Freedom, which operated in New York City, cheated Medicaid by submitting claims for excessive services, operating unregulated treatment programs and coercing patients who lived in its Freedom Houses to remain in treatment.

He also said some Narco Freedom officials siphoned money to fund lavish lifestyles.

Justice Steven Barrett of the state supreme court sentenced Narco Freedom to a conditional discharge, the attorney general said.

Narco Freedom filed for bankruptcy protection in January 2016.

On May 15, a federal bankruptcy judge approved a $118.4 million settlement with the U.S. government and New York state to resolve their claims in the Chapter 7 case.

That money has not been divided up. The governments had asserted combined claims of $588.7 million, court papers show.

Narco Freedom once claimed to provide substance abuse, medical, mental health and social services to more than 36,500 people, including patients and family members.

(Reporting by Jonathan Stempel in New York; Editing by Bill Trott)