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Indian American pharma tycoon arrested for healthcare fraud
Tonmoy Sharma was accused of submitting fraudulent claims for addiction treatment services and laboratory testing.
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Malvika Choudhary - Wed, 04, Jun 2025
- 16:09 EDT
- 42
Tonmoy Sharma / LinkedIn
An Indian-American psychiatrist was arrested on May 29 for orchestrating a massive healthcare fraud scheme that defrauded insurers out of over $149 million.
Tonmoy Sharma, 61, the former CEO of Sovereign Health Group, was accused of orchestrating the years-long scheme that included submitting fraudulent claims for addiction treatment services and laboratory testing, while also paying more than $21 million in illegal kickbacks for patient referrals, according to the U.S. Attorney’s Office for the Central District of California.
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Sharma, a resident of Tustin, was taken into custody at Los Angeles International Airport. He faces eight federal charges, including four counts of wire fraud, one count of conspiracy, and three counts of illegal remunerations for patient referrals.
Also arrested was co-defendant Paul Jin Sen Khor, 45, of Irvine, who managed cash operations at Sovereign. Khor pleaded not guilty at his arraignment on May 29 in Santa Ana and was released on a $20,000 bond. His trial is scheduled for July 29.
Prosecutors allege that between 2014 and 2020, Sovereign Health — once a major addiction treatment provider based in San Clemente — used aggressive and deceptive tactics to recruit patients. Employees allegedly told patients that their treatment would be covered by a charitable foundation, which in reality was a front to collect personal information and enroll them in private insurance plans without their knowledge.
The indictment claims Sovereign fraudulently obtained insurance by falsifying qualifying life events and misrepresenting income to secure government-subsidized plans under the Affordable Care Act. Patients were often unaware that policies had been issued in their names.
In one part of the scheme, the company allegedly billed insurers over $29 million for unauthorized urinalysis testing. Prosecutors say patients were subjected to frequent, unnecessary drug screenings — some ordered after the supervising physicians had already left the facility.
In addition, Sharma and Khor are accused of paying kickbacks to patient brokers under sham “marketing hours” contracts, disguising payments to maintain a steady referral pipeline.
“The scope of this alleged fraud — involving manipulated insurance applications, deceptive marketing, unauthorized lab testing, and illicit kickbacks — represents a grave abuse of our healthcare system,” authorities said.
The FBI, the U.S. Department of Health and Human Services Office of Inspector General, and other federal and state agencies are investigating the case.
If convicted, Sharma could face up to 20 years in federal prison for each wire fraud charge, 10 years for each illegal kickback count, and 5 years for conspiracy.
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