A FORMER Newcastle woman will spend the next decade in a United States jail for her role in one of the largest insurance frauds in Californian history.
Kirsten Wallace was sentenced to 11 years’ jail after admitting she was involved in an “elaborate conspiracy” to defraud patients and insurers in a scheme that relied on false claims amounting to $US175 million ($233 million).
Wallace last week pleaded guilty to 46 counts of money laundering, grand theft, identity theft and insurance fraud.
The former Mayfield woman was the chief financial officer of Community Treatment Los Angeles, a company which ran about 30 rehabilitation centres for drug and alcohol addicted patients in southern California and Colorado.
The 44-year-old was arrested in 2016, along with the company’s co-owner, Christopher Bathum, who faced the same fraud charges but was also accused of sexually assaulting patients.
The California Department of Insurance said at the time the investigation was “one of the largest health insurance fraud cases in California”.
Prosecutors said the duo stole patient identities, bought health insurance policies for patients without their knowledge and continued to bill insurance companies after treatment had ended. About $44 million was paid out by five insurance companies before authorities latched on.
California Insurance Commissioner Dave Jones alleged the duo victimised “hundreds” of patients by “keeping them in a never-ending cycle of treatment, addition and fraud – all the while lining their pockets with millions of dollars from allegedly fraudulent insurance claims”.
Prosecutors said bills were mostly sent for services never actually provided
Wallace, originally from Coffs Harbour, moved back from the US to Newcastle in late-1999 to be near her mother.
She lived in Carrington and Mayfield for about seven years before her and her young daughter moved to the US about 10 years ago.
The charges related to identity theft for submitting fraudulent health insurance applications without patients’ knowledge; insurance fraud for submitting claims for services not provided and duplicate billings; grand theft by false representation to insurers for filing fraudulent health insurance policy applications.
Additional charges included money laundering.
The Los Angeles Times reported the duo were arrested after raids on several properties.
According to the Los Angeles County Sheriff’s Department, Wallace did not receive bail and was detained at Century Regional Detention Facility in the Californian city of Lynwood.
In March, her bond was set at $US1.75 million ($2.2 million).
In the wake of the arrests, the Los Angeles District Attorney issued a statement that said Wallace and Bathum were facing up to 53 years in jail if convicted of the fraud case.
“Between June 2012 and December 2015, Bathum and Wallace are accused of fraudulently billing an estimated $175 million [$A233 million]. In most instances, bills were sent for services allegedly never provided,’’ the statement said.
“About $44 million [$A58 million] was paid out by five insurance companies, prosecutors said.
“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.”
The 56-year-old was found guilty of 31 charges, including rape, sexual penetration by foreign object, forcible oral copulation and sexual exploitation, according to the Times.
Jurors acquitted Bathum of 11 counts of sexual exploitation and one count of offering methamphetamine.
The jury deadlocked on one count of rape by use of drugs and two counts of sexual penetration by a foreign object, the newspaper reported.
The prosecutor said Bathum gave his patients drugs as they were trying to break a cycle of addiction, took drugs alongside them and taught them how to beat drug tests.
He was due in court again on April 17.
- with AP
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