Sober Living Scheme: Arizona Attorney General addresses Medicaid fraud
The Brief
Arizona Attorney General Kris Mayes sat down with FOX 10 Investigator Justin Lum to talk about the state's Sober Living Crisis.
The crisis, along with the scandal involving the Arizona Health Care Cost Containment System (AHCCCS), could ultimately cost the state $2 billion.
"This is going to take years to fix," AG Mayes said.
PHOENIX - As fallout from the Sober Living Crisis and the scandal involving Arizona's Medicaid agency that ultimately cost the state $2 billion continues, Attorney General Kris Mayes sat down with us to talk about the situation.
The backstory
Attorney General Mayes sat down for the interview after nearly 20 people, a behavioral health provider and a church are accused of defrauding the Arizona Health Care Cost Containment System (AHCCCS) for $60 million.
While AG Mayes could not get into specifics of the case, we know that, according to investigators, Happy House Behavioral Health and other defendants allegedly conspired by patient brokering and using sober living homes to take advantage of Medicaid members.
The suspects are also accused of wiring millions of dollars to Hope of Life International Church and an entity in Rwanda, which is a country located in Africa.
The defendants have pleaded not guilty.
What they're saying
Attorney Joshua Kolsrud, who represents Pastor Theodore Macuranyana, released a statement in connection with Macuranyana's indictment.
Kolsrud's statement reads:
"Kolsrud Law Offices condemns the Arizona Attorney General's Office for its unjust indictment of Pastor Theodore Macuranyana, a respected community leader with no criminal history, and his religious organization in a healthcare fraud investigation. This action exemplifies egregious prosecutorial overreach.
The Attorney General's Office seeks to escape accountability for failing to detect an alleged fraud that triggered over $60 million in payouts within a year. Instead of addressing this regulatory failure, the prosecution pursues baseless charges against uninvolved parties to deflect blame.
Criminal charges must be rooted in evidence, not politics. Targeting a church and its leadership without proof sets a dangerous precedent and erodes public trust in the justice system. The AG's Office unfortunately has a history of politically motivated prosecutions. Just yesterday, May 19, 2025, the Maricopa County Superior Court ruled that the AG's Office unfairly presented its so-called "Fake Electors" case to the grand jury and violated the defendants' constitutional rights. The judge ordered the case remanded back to the grand jury.
Kolsrud Law Offices demands a transparent review of the facts, free from political motives."
We've reached out to the attorneys for the rest of the defendants in this latest indictment, but have not heard back.
Dig deeper
As we have reported on since 2023, thousands of victims, mainly Native Americans, were not provided legitimate treatment services for substance abuse and mental health.
Per AG Mayes, more than 120 individuals and entities have been charged in connection to the Sober Living Scheme, but only a small percentage of the estimated $2 billion has been recovered, as she says funds have been spent on assets like cars and homes, or wired offshore.
Cases we are seeing prosecuted stem back to before 2023, when AHCCCS and the state's Attorney General's Office were led by another administration.
"How much does this fall on checks and balances handled by our state agencies?" we asked AG Mayes.
"This is about a government failure. That is something that we're working on right now, that AHCCCS is now working on," AG Mayes replied. "We continue to provide advice and some guidance to them about what we think they need to do to stop this fraud. This is going to take years to fix. It could take up to a decade to fix this. This is something that was allowed to fester for way too long, and far too many people were hurt by it."
AG Mayes also confirmed that there are clear international ties to this scheme, as alleged in the money laundering charge involving Rwanda.
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