Father, son who ran NY drug treatment centers face fraud charges

Reuters News
Posted: Oct 22, 2014 4:28 PM

By Laila Kearney

NEW YORK (Reuters) - A father and son who ran New York City substance abuse clinics were accused on Wednesday of stealing tax money meant to treat addicts and using it to fund a lavish lifestyle that included luxury cars.

Alan Brand and his son, Jason Brand, were arrested on an indictment charging them with fraud and embezzlement from the Narco Freedom clinics, Attorney General Eric Schneiderman said in a statement.

The drug and alcohol treatment centers served as their personal piggy bank, with the men siphoning public funds from real estate deals and a $3.5 million insurance claim meant to aid the clinics that served tens of thousands of New Yorkers, prosecutors said.

“People motivated solely by personal greed have no business administering to the serious health needs of other New Yorkers,” Schneiderman said in a statement.

The elder Brand, the director and sole shareholder of Narco Freedom, was suspected of receiving at least $13,000 a month for five years in kickbacks from a real estate developer he had personal ties with and who steered the nonprofit to some of its locations, the statement said.

Both Brands are accused of improperly filing a $3.5 million insurance claim to restore a Narco Freedom location. The claim over-estimated damages and the restoration work was secretly given to a company owned by Jason Brand, the statement said.

After a year-long investigation, authorities arrested the men on Wednesday and seized six of their cars, including a 2013 Tesla Model S and a 1969 Chevy Corvette, the statement said.

Narco Freedom receives nearly $40 million annually in taxpayer-funded Medicaid reimbursements and additional funds from the New York State Office of Alcoholism and Substance Abuse Services, the statement said.

The organization provides services including counseling and medication management to about 36,500 residents affected by substance abuse, including addicts and their families, according to its website. It also provides HIV care.

Alan Brand has been charged with bribery, grand larceny and money laundering for the kickback part of the suspected scheme, for which he faces a maximum of 15 years in prison, the statement said. 

If convicted of improperly claiming and spending insurance funds, Jason and Alan Brand each face a maximum of 25 years in prison.

A representative of Narco Freedom, which remains open, declined comment. Attempts to identify lawyers representing the two men were unsuccessful.

(Reporting by Laila Kearney; Editing by Barbara Goldberg and Andrew Hay)