Disgraced ex-CEO of addiction treatment provider facing charges for $149M fraud now has detox center running out of his California home — neighbors say it’s ‘despicable’ it’s been allowed

Addictions treatment scandal

This May, Sharma was arrested in connection with an ongoing federal investigation into the now-defunct Sovereign Health Group.

He faces charges of wire fraud, conspiracy and $21 million in illegal kickbacks for patient referrals in connection with the now-defunct Sovereign Health Group. If found guilty on all counts, he faces up to 35 years in prison.

Sharma’s former business is alleged to have submitted $149 million in false claims to private insurers.

These allegations have yet to be proven in court. But in 2022, Health Net Insurance won a $45-million fraud judgment in a suit against Sharma and Sovereign Health, as the Orange County Register reports.

Meanwhile, Rose and Allen Nelson — who lost their son Brandon to suicide at Sovereign’s San Clemente facility in 2017 — settled with Sharma’s insurer for $11 million in 2024. They say they were lied to about the services the facility would provide.

"It was marketed as, 'He will have 24/7 oversight of psychologists, a house manager, psychiatrists would come in. They’d have group therapy,’” Rose Nelson told NBC4. “Nothing was provided…it was all lies.”

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Lack of licensing standards

That Dana Shores Recovery could open in Sharma's home despite his history shows a lack of licensing standards around mental health and addictions treatment, Girand argues.

"There are virtually no standards,” she said. “No fingerprinting, there’s no review of criminal history. There’s nothing that will protect vulnerable individuals from being preyed upon.”

She’s joining state legislators in calling for better oversight. California State Assemblymember Laurie Davies has introduced a number of bills designed to protect vulnerable families from predatory treatment facilities.

If passed, these bills would set standards for licensed and certified treatment programs and increase transparency of state investigations into complaints around those programs.

“These are common-sense measures that go straight to addressing the health, recovery, and safety of vulnerable patients,” said Davies.

It’s a start — but critics say the system remains dangerously open to abuse.

How to choose a legitimate treatment center

With limited state oversight, families often bear the burden of vetting mental health and addiction recovery centers themselves. Here are a few steps that can help protect you or your loved one:

• Check licenses and certifications. Verify the facility is licensed and has a clean track record.
• Research the staff. Be wary if the facility doesn’t list the names or qualifications of its counselors and medical professionals. Legitimate providers are transparent about who’s on staff.
• Watch for red flags. Vague answers, pushy intake staff, or promises of “miracle cures” all indicate shady operations. If it sounds too good to be true, take the time to dig deeper.
• Get payment details in writing. Make sure any claims about cost coverage are spelled out clearly in writing and verified with your insurer.
• Look up reviews and complaints. A web search, like this, can reveal lawsuits, disciplinary actions, or concerning patterns. Read both positive and negative reviews to get a balanced picture.

For many families, the stakes couldn’t be higher. People entering treatment are often at their most vulnerable, and they deserve care from trustworthy professionals, not profiteers.