Multiple defendants sentenced to a combined 14+ years in federal prison; facility permanently closed; over $6 million in criminal proceeds seized; $15 million fine imposed in connection with $12.7 million Medicaid fraud scheme.

Unnamed Substance Abuse Facility (New Bern, NC) — Medicaid Fraud / Kickback Scheme

Outcome: Owner, compliance officer, and office manager collectively sentenced to over 14 years in federal prison; facility permanently closed; $15 million fine; over $6 million in cash, vehicles, and real estate seized.

A substance abuse treatment facility in New Bern, North Carolina, orchestrated a $12.7 million Medicaid fraud scheme that involved paying more than $1 million in illegal kickbacks directly to drug-addicted patients. The conspiracy involved the facility's owner, compliance officer, and office manager, indicating institutional involvement at the highest levels of leadership.

The kickbacks were designed to induce patients to attend and remain enrolled at the facility, enabling the operators to bill Medicaid for services regardless of whether appropriate treatment was being provided. By paying vulnerable individuals struggling with addiction, the facility generated fraudulent revenue while undermining legitimate treatment.

Federal prosecutors in the Eastern District of North Carolina pursued both criminal and civil actions. The scheme resulted in guilty convictions across all three defendants, with the sentencing court imposing a combined 14-plus years of federal imprisonment. Authorities seized substantial criminal proceeds including cash, vehicles, and real estate, and imposed a $15 million fine. The facility was permanently closed as part of the enforcement action, announced March 5, 2026.

Primary Source: Over $12 Million Medicaid Fraud Scheme Leads to 14 Years of Prison for Substance Abuse Facility, Owner, Compliance Officer, and Office Manager