Former residents say an Arizona sober living program promised them free housing. Now 200 are on the streets

PHOENIX - The fallout of the sober living crackdown continues. The state has suspended payments to nearly a hundred more providers since August, accusing them of Medicaid fraud.

FOX 10 Investigates looks into a situation at a Tucson hotel where roughly 200 tenants are on the streets because of a sober living program that stopped paying rent.

Our newsroom received several tips about the hundreds of tenants being evicted from a hotel that was used for a sober living facility.

We’ve learned residents did not get any services from the program and the provider that allegedly recruited them is connected to Valley. He was recently suspended by the state’s Medicaid agency for allegations of fraud.

‘I had a feeling’

On a rainy Wednesday morning in Tucson, outreach workers from several organizations were set up in the parking lot of Ocotillo Apartments & Hotel.

It’s a day residents have been expecting after receiving a notice from property management.

"I had a feeling it was happening to me. It was just too good to be true, but I said, ‘I’m not going to pass it by that’s for sure.’ I was hurting at the time. I needed it extremely," resident Howard Spence said.

He believes he was tricked by the people who recruited him to live here.

Some understood the sober living program to be called "Happy Times," offering free housing and food.

"We went for it. Stay off the streets. When you have an addiction, but they never gave us any help for addiction," a man said.

He didn’t want to be identified, nor did this woman.

"I was trying to change myself and better myself and try to get out of this situation that I’m going through right now with depression, and they never did help me," she said.

"This was booked out as a sober living facility or some of the rooms were booked out as a sober living facility and therefore there are people willing to work their way through that process and that’s what we know," said Andy Squire, city of Tucson spokesperson.

But, the residents we spoke to all share a similar story and the key to joining the community.

The key: Be a member of Arizona’s Health Care Cost Containment System. It’s better known as AHCCCS, the state’s Medicaid agency.

"Just go to AHCCCS insurance, change insurance from one plan to another," Spence said.

"But they made us change our AHCCCS, our insurance to native insurance," the anonymous man said.

"I was brought here by a cousin of mine, and they told me I had to change my health plan, my AHCCCS plan," the unnamed woman explained.

The American Indian Health Plan is under the umbrella of AHCCCS – specifically for Native American clients.

A plan the Arizona Attorney General’s Office is familiar with – used by fraudsters in a multi-million dollar scheme to bill the state for services rarely provided by shady sober living homes after acquiring the personal information of clients.

In this case, the city of Tucson says Ocotillo management stopped receiving rent money from "Happy Times" – asking residents to pay up or leave.

‘Luckily, we were there to intervene’

Advocates for tenants came to stop unlawful evictions on Sept. 20.

"We walked right into an eviction that was going on. Their stuff, their cat was outside. All of their stuff was outside. As these women were still packing up their stuff, they were being boarded inside. Physically boarded, you could hear the screwdrivers going into the wall to board them in and luckily, we were there to intervene," said Zaira Livier, the executive director at People’s Defense Initiative.

Residents say they remember the provider that brought them has gone by the name "New Direction" in the past.

"They had told me at the front office that New Direction had changed their name to Happy Times. Same people but different names," the anonymous woman said.

New Direction Behavioral Health and Services is licensed with the state, but you can’t find Happy Times in the Care Check database.

Tracking down the alleged leader

FOX 10 obtained the notice of suspension accusing New Direction of fraud allegations including a "pattern of member steering," changing member health plans to the American Indian Health Plan "after previously billed services were denied."

The Office of Inspector General is also accusing New Direction of failing to disclose ownership of "other AHCCCS suspended entities" and billing for services on days when the facility was closed.

The address on the suspension letter took us to an office in Phoenix near Southern and 19th avenues where a behavioral health provider by another name is located.

The owner of this clinic said off camera that New Direction moved out of the suite months ago, and he’s no longer associated with the suspended provider.

When the anonymous woman was asked if she thought she’d ever be caught up in this, she replies, "No, no because I’d seen them so sincere and all friendly and everything but no, you can’t trust nobody nowadays."

The new norm?

FOX 10 learned that Ali Kulumba is a principal member of New Direction’s LLC, Happy Times Home Care LLC and the director of a foreign for-profit business called Mercy Hands Human Services, according to the Arizona Corporation Commission.

Investigators Justin Lum spoke to Kulumba on the phone, but he didn’t want to elaborate on the situation at the Ocotillo apartments, asking to call him back another day.

Some people at the property told FOX 10 about intake being done in Phoenix before being brought into Tucson.

The city of Tucson says a majority of the residents are tribal members.

Investigator Justin Lum asks Squire if there’s concern that with the AHCCCS scandal – the crisis going on throughout the state and the crackdown that’s happening – that this situation may become more normal. How can they prepare for this?

He replies, "I don’t have knowledge of that. I don’t know if that would be the case. I would tell you that if that was, I would hope that with the relationship that we have with our state partners and our local partners that we would find out about that and that we would be ready for that if that were to happen."

FOX 10 did get an update on what’s unfolded in just the past few days at the Ocotillo Hotel.

The city of Tucson says someone vandalized the power supply, fire suppression systems, smoke alarms and fire extinguishers.

Code enforcement determined the property was unfit for occupants and provided resources for those who accepted services.

We’ve reached out to Kulumba again, several times, and have not heard back.