A woman from Coffs Harbour is facing more than 35 years in a United States jail after being accused of being involved in one of the biggest insurance frauds in Californian history.
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Kirsten Wallace was due to face a Los Angeles court early on Tuesday after being charged on Thursday with multiple counts relating to the alleged fraud of $US176 million ($233 million) involving drug rehabilitation centres.
The California Department of Insurance alleges Ms Wallace, who was the chief financial officer of the Community Recovery company which ran about 20 rehab centres, and company owner Chris Bathum were involved in "an elaborate conspiracy" to defraud patients and insurers.
Prosecutors will allege Ms Wallace and Mr Bathum, who is also being investigated for sexually assaulting patients, stole patient identities, bought health insurance policies for patients without their knowledge and continued to bill insurance companies for treatment after the services were completed.
"Bathum and Wallace's alleged conspiracy victimised hundreds of people addicted to drugs and alcohol by keeping them in a never-ending cycle of treatment, addiction and fraud – all the while lining their pockets with millions of dollars from allegedly fraudulent insurance claims," California Insurance Commissioner Dave Jones said.
The charges include: identity theft for submitting fraudulent health insurance applications without patients' knowledge; five counts of billing fraud for submitting claims for services not provided and duplicate billings; five counts of grand theft by false representation for representing [their company] as a residential treatment facility, which it is not licensed to provide; and five counts of grand theft by false representation to insurers for filing fraudulent health insurance policy applications.
Additional charges include enhancements for losses greater than $US500,000 and greater than $US3.2 million.
"This is likely the first wave of indictments and charges in an ongoing investigation into one of the largest health insurance fraud cases in California," Mr Jones said.
Ms Wallace, originally from Coffs Harbour, moved back from the US to Newcastle in late 1999 to be near her mother.
She lived in Carrington and Mayfield for about seven years before her and her young daughter moved to the US about 10 years ago.
Ms Wallace was arrested in California on Thursday, with the Los Angeles Times reporting at least 16 locations were raided.
The newspaper said the company ran six centres in Colorado and 13 drug and alcohol rehabilitation facilities in Los Angeles.
The department said if convicted, the pair face "more than 35 years in prison". Bail was requested at $US2 million and both were likely to be arraigned overnight on Monday (ADST).
