SAN FRANCISCO, CALIFORNIA - OCTOBER 28: San Francisco police officers and F.B.I. agents gather in front of the home of U.S. Speaker of the House Nancy Pelosi (D-CA) on October 28, 2022 in San Francisco, California. Paul Pelosi, the husband of U.S. Speaker of the house Nancy Pelosi, was violently attacked in their home by an intruder. One arrest has been made. Speaker Pelosi was not at home at the time of the attack. (Photo by Justin Sullivan/Getty Images)
Los Angeles, California – The founder of a now-defunct Southern California addiction treatment empire was arrested Tuesday on charges he masterminded a sprawling health insurance fraud scheme that netted over $149 million in bogus claims. Tonmoy Sharma, 61, of Tustin, was taken into custody at Los Angeles International Airport and faces multiple federal charges in connection with his role leading Sovereign Health Group.
According to a newly unsealed federal indictment, Sharma orchestrated a years-long conspiracy to exploit vulnerable patients, falsify insurance applications, and bill private insurers for services that were unnecessary, unauthorized, or outright fabricated. His alleged conduct included submitting more than $29 million in fraudulent claims for urinalysis testing and paying more than $21 million in illegal kickbacks to patient brokers under the guise of “marketing” contracts.
Also arrested was Paul Jin Sen Khor, 45, of Irvine, a former cash management supervisor at Sovereign. He faces conspiracy and illegal remuneration charges and pleaded not guilty during an initial appearance in Santa Ana federal court. A trial is scheduled for July 29.
Once one of the largest addiction treatment providers in the region, Sovereign Health operated out of San Clemente with facilities across Southern California and other states. From 2014 to 2020, the company aggressively pursued patients suffering from addiction and mental illness, promising care that a charitable foundation would allegedly cover. In reality, prosecutors allege, the foundation was a front used to covertly obtain personal information and enroll patients in private health insurance without their knowledge or consent.
Prosecutors say Sovereign employees, under Sharma’s direction, used false life events and manipulated income information to enroll patients in plans with higher reimbursement rates. Allegedly, Sovereign routinely billed patients for expensive drug testing — including comprehensive panel tests costing far more than standard cup tests — multiple times per week. According to the complaint, Sovereign employees allegedly submitted these claims under the names of doctors who had not authorized the tests or who were no longer employed by Sovereign.
The indictment also accuses Sharma and Khor of paying millions in kickbacks to so-called “patient brokers” who funneled individuals into Sovereign’s programs. These payments were disguised as consulting fees or marketing services in a scheme that violated federal anti-kickback laws.
Authorities have charged Sharma with four counts of wire fraud, one count of conspiracy, and three counts of illegal remunerations for patient referrals. If convicted, he faces decades in federal prison. Both men remain under investigation by the FBI, the Department of Health and Human Services, and the California Department of Health Care Services.
