BLAINE, Minn. — KARE 11’s investigation into tax records filed by Refocus Recovery raised critical questions about ties between the Minneapolis nonprofit and its for-profit partner company, Kyros.
Both entities were founded by Daniel Larson and both are currently under multiple investigations for alleged Medicaid billing irregularities for addiction recovery services.
Responding to KARE 11’s March 20 report, Blaine Mayor and former Refocus Recovery Executive Director Tim Sanders issued a press release, stating he’s, “disappointed by KARE 11’s irresponsible and inaccurate reporting which has shown a complete disregard for the truth.” He said he refuses “to be smeared by defamatory reporting of baseless allegations.”
Sanders also wrote in his press release, “Contrary to the defamatory and inaccurate claims reported by KARE 11 today, I am not under investigation for my past work with Refocus Recovery.”
KARE 11 did not report Mayor Sanders is personally under investigation, however, the nonprofit he ran clearly is.
ACTIVE INVESTIGATION
Last month, Minnesota Department of Human Services Inspector General Kulani Moti told a legislative hearing, “DHS can confirm an ongoing investigation regarding Kyros and Refocus Recovery.”
Sources have also confirmed to KARE 11 that the Minnesota Attorney General’s Office has opened both civil and criminal investigations.
The investigations follow a series of reports by KARE 11 that uncovered evidence suggesting that Kyros, through Refocus Recovery, billed taxpayers for addiction recovery services that were never provided. The records, and interviews with former clients and staff, also exposed questionable practices such as group billing, billing for watching movies, and billing for unauthorized phone calls — possible violations of state and federal laws.
Under the law, for-profit companies like Kyros cannot bill Medicaid directly for what are known as peer recovery services – where people in recovery are paid to help mentor others battling addiction.
The nonprofit Refocus Recovery can bill the taxpayer-funded program. So, records show the nonprofit founded by Larson has hired his for-profit company to provide the peer services.
Until late January, Refocus Recovery was led by Sanders.
TAX RECORDS
Public tax records Refocus Recovery filed for calendar year 2022 – signed by Sanders – show nearly all the nonprofit’s revenue that year ending up in the for-profit company’s coffers.
After reviewing the tax records for KARE 11, former federal prosecutor Doug Kelley said they raise “red flags” about how tax money is being used. “If it turns out that the nonprofit is a mere shell corporation to get the money into a for-profit, that’s a huge red flag,” Kelley said.
In his press release, Sanders also took issue with KARE 11 reporting that Minnesota Secretary of State filings list him as the organization’s president. “I never served as the president of Refocus Recovery,” he wrote.
Refocus’ s Managing and Interim Executive Director Matt McLane emailed KARE 11 that, “Unfortunately, the Office of the Minnesota Secretary of State's Annual Renewal form for Minnesota Nonprofit Corporations automatically applies the title of 'president' to the person listed on the form as the authorized person, with no option to change the title to the organization's title.”
Sanders has for months deflected questions about the questionable Medicaid billing practices and did not respond to questions when approached by KARE 11 at a recent Blaine City Council meeting.
An attorney representing Refocus Recovery wrote in an earlier email that “… if any claims for reimbursement are found to have been made in error, any such funds received will be refunded to the payors.”
In the wake of KARE 11’s reporting about questionable billing in the taxpayer-funded addiction recovery programs, multiple pieces of reform legislation have been introduced by state lawmakers.
WATCH MORE ON KARE 11+
Download the free KARE 11+ app for Roku, Fire TV, Apple TV and other smart TV platforms to watch more from KARE 11 anytime! The KARE 11+ app includes live streams of all of KARE 11's newscasts. You'll also find on-demand replays of newscasts; the latest from KARE 11 Investigates, Breaking the News and the Land of 10,000 Stories; exclusive programs like Verify and HeartThreads; and Minnesota sports talk from our partners at Locked On Minnesota.
- Add KARE 11+ on Roku here or by searching for KARE 11 in the Roku Channel Store.
- Add KARE 11+ on Fire TV here or by searching for KARE 11 in the Amazon App Store.
- Learn more about the KARE 11+ app for Apple TV in the Apple App Store.
- Learn more about KARE 11+ here.
Watch more KARE 11 Investigates:
Watch all of the latest stories from our award-winning investigative team in our special YouTube playlist: