Phoenix pastor among 22 charged in alleged $60M Medicaid fraud, billing for clients who were in jail, hospitalized or dead — but attorney accuses state of deflecting ‘blame’ from its failures

“This [sober-living homes scandal] is something that was allowed to fester for way too long, and far too many people were hurt by it," Mayes shared with Fox 10 Phoenix. Each stolen dollar creates shortfalls in an already strained Medicaid system, adding to existing pressures from rising health care costs and growing demand.

As part of the investigation, Mayes’s office reportedly uncovered what it’s calling one of the largest fraud cases connected to the ongoing sober-living scandal. The total damage? A staggering $60 million in potentially fraudulent billings that sent cash to a behavioral health business, a church catering to African migrants, and even the nation of Rwanda.

At the center of this financial tornado stands Theodore Mucuranyana, a Phoenix pastor whose Hope Of Life International Church is now facing 10 felony counts of money laundering. And as this case makes its way through the courts, it serves as a stark reminder that these frauds directly impact all Americans.

When Medicaid money takes an unexpected journey

A Phoenix-based company, Happy House Behavioral Health, is accused of billing Arizona's Medicaid system for $60 million worth of substance abuse and mental health treatment services that were either partially provided or — in many cases — not provided at all.

Just how brazen was the alleged fraud? Among the felony counts, Happy House is charged with billing the state for clients who were either incarcerated, hospitalized or even worse — dead.

According to the indictment, Happy House's owners — Desire Rusingizwa and Fabrice Mvuyekure — each received checks from the business for $2.9 million. At the same time, the company allegedly paid a whopping $5 million to Hope of Life International Church, which later wired $2 million of that money to an "unnamed entity" in Rwanda, 12News reports.

And that church connection runs even deeper. Happy House also leases a building on church grounds from Hope of Life, creating a cozy financial relationship that prosecutors now claim was part of an elaborate money laundering operation.

While the 22 defendants entered not guilty pleas in Maricopa County Superior Court, one specific detail emerged: according to an attorney for two defendants, most — if not all — of the defendants come from Phoenix's African migrant community.

Attorneys push back against charges

As you might expect, the defendants' attorneys have objected to charges and allegations levied against their clients. The pastor's attorney, John Kolsrud, told 12News that the AG's office was attempting to "deflect blame" for its own regulatory failures.

"Just because he rented his property out, he's now being indicted on four different counts of fraud and abuse when he actually had nothing to do with this case," Kolsrud said of his client.

Attorney Ulises Ferragut, who represents a couple of service providers charged with racketeering, claimed his clients were unaware they were breaking the law.

"It seems to be a community of folks that were involved," he told 12News. "From what I've seen, a lot of them didn't even realize that what they were doing was a crime."

A $2 billion problem

As was laid out above, this case involving Hope Of Life International Church and Happy House Behavioral Health is just the tip of a very expensive iceberg. The ongoing sober-living homes scandal that Mayes’s office is investigating has reportedly bilked Arizona taxpayers out of more than $2 billion to date.