'Devastated our lives': Former employees unaware they worked for businessman who plead guilty to AHCCCS fraud
Three people who used to work for an unlicensed health care facility in the Phoenix area are voicing their frustrations over what had happened.
The owner of the facility, James Demasi, pleaded guilty in March 2024 to fraudulent schemes and illegal control of an enterprise on behalf of two treatment centers.
"This man has effectively ruined some of our lives," one of the former workers said.
PHOENIX - In a follow-up to a story we brought you in April, we are taking a deeper look into a Phoenix area businessman who ran an unlicensed health care facility out of a Phoenix motel that was used for clients trying to get sober.
The clinics that they were transported to daily, however, defrauded Arizona's Medicaid agency for millions of dollars.
The backstory
James Demasi owned two clinics under the name 'New Life Wellness Center,' a behavioral health provider for people in need of substance abuse treatment.
Records we obtained show that the Arizona Health Care Cost Containment System (AHCCCS), which is the state's Medicaid agency, paid New Life $80 million from 2015 through 2024.
Amid a massive crackdown, however, red flags led to a criminal investigation and a costly plea deal.
What we know
While in court, Demasi pleaded guilty in March 2024 to fraudulent schemes and illegal control of an enterprise on behalf of his two treatment centers. Demasi also agreed to pay $25 million back to the state, nearly a year after AHCCCS suspended payments to New Life Wellness due to credible allegations of billing fraud.
With Medicaid funding gone, nearly 150 clients living at the Thomas Suites Campus of Care would be impacted.
We spoke with people who used to work at Thomas Suites.
Local perspective
"It's embarrassing. It's so embarrassing," said Morgan Valentine. "All I wanted to do was help the clients. I was driving my personal car with clients in it to and from these hotels to their doctor's appointments. He didn't care. He offered no support to his staff."
Valentine was the Director of Housing for Thomas Suites, working under Demasi from November 2023 through January 2025. She said many of the clients were parolees out of prison, and unemployed.
"Did you feel like it was a sinking ship?" we asked Valentine.
"100% at a certain point," Valentine answered. "Like, you kind of saw the writing on the wall, and it was going under and it's going under fast, and that's why I chose to step away."
"When I got hired at New Life Wellness, I was told it was like Disneyland," said a former worker, identified only as "Bob" as he wishes to remain anonymous.
"Bob" worked for Demasi from December 2023 until October 2024.
"Did you know that New Life Wellness had been convicted of fraud?" we asked Bob.
"No," Bob replied. "Not until your report."
Both Bob and Valentine said Demasi did not pay them consistently, but reassured them that money was on the way.
"Everything after that was one big lie," said Bob.
Dig deeper
On multiple occasions in 2024, the City of Phoenix turned the water off due to non-payment.
"Our clients were having to take buckets of water and fill their toilets up to go to the restroom," said Valentine.
The direct impact was felt by clients, staff, and caterers like Victor Hernandez.
"It just eventually had to stop, because it was too much accumulating," said Hernandez.
Hernandez said he prepared meals daily for the residents at Thomas Suites from December 2023 to April 2024, investing his own money while never getting paid.
"I put my whole effort into this business and both businesses that I run to make it successful, and when somebody takes good earnings off your life savings, it's pretty upsetting," said Hernandez.
Hernandez has filed a civil suit against Demasi for breach of contract.
"How much money do they owe you?" we asked Hernandez, to which he replied "$435,000."
In a response filing, Demasi denies the allegations. His attorney has not replied to our request for further comment on the lawsuit.
We also asked both Bob and Valentine on the amount of money they are owed.
"Close to $20,000," Bob said.
"I'd venture to say it's in the ballpark of like $30,000," said Valentine.
Valentine said she believed in what she was doing at Thomas Suites, helping people get their lives on track – but now calls her experience a "broken dream."
"We were lucky to get $1,000 a month from this man. Like, he just devastated our lives, having to beg for money, like around Christmas time," said Valentine. "We all have families, and having to be your employer to pay you for the hours that you worked is…this man has effectively ruined some of our lives."
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