Mesa facing crisis of unlicensed, underregulated sober living homes

Neighbors said at times they’ve seen people staggering along sidewalks, jaywalking without regard for the traffic and passed out on the street.

Police sirens and mysterious vans have become part of everyday life in one Mesa neighborhood for people who are sounding their own alarms to state and local investigators about troublesome sober living homes.

People in the comfortable neighborhoods around Recker and Baseline roads have an unwanted front row seat to the unfolding crisis of unlicensed and underregulated sober living homes. It’s playing out in a freshly built townhouse complex called Canal on Baseline not far from Superstition Springs.

There, Mesa police respond to reports of disturbances, people in distress and violence every 40 hours, on average.

Some sober living homes, mostly in the southeast Valley, have been a source of defrauding the state’s Medicaid system of hundreds of millions of dollars.

Sober living homes are transitional facilities designed to provide housing and supportive services for people recovering from drug or alcohol addiction. State investigators allege fraudsters use such places to dump and warehouse people seeking treatment. Investigators say some were kidnapped, including some from other states. Indigenous people were the primary targets. Few got any treatment.

While the focus has been on providers who are accused of defrauding the Medicaid program, called the Arizona Health Care Cost Containment System, Mesa residents and officials are dealing with the effects of these places on their neighborhoods.

Neighbors said at times they’ve seen people staggering along sidewalks, jaywalking without regard for the traffic and passed out on the street. Seeing helicopter searches isn’t surprising for residents.

After residents put pressure on Mesa to get the situation under control, the city launched an investigation into residents’ complaints. Multiple sober living homes were found operating out of the 90-unit rental townhome complex and in some cases were unlicensed.

Now, the community is seeing the issues and 911 calls ramping back up.

Recently, the city hosted a community meeting with police officers and representatives from both the Arizona Department of Health Services and AHCCCS. About 60 neighbors from Mesa and Gilbert attended.

The townhomes in the gated Canal on Baseline community are sandwiched between the Roosevelt Water Conservation District Canal and a commercial complex, and abut the Santa Marguerita Citrus Groves neighborhood.

One area resident told The Arizona Republic a large majority of people living at the sober living homes are Native Americans. Neighbors report seeing people living in the homes “walking like zombies” to the nearby Circle K. The neighbors also report seeing people dropping off alcohol at the sober living homes.

To a passer-by, the complex looks quiet, calm and empty. Patios sit unfurnished and the window blinds are closed.

What residents are seeing are not isolated events but rather a growing problem in the state and a part of a larger medical fraud scam.

In many cases, state regulators found that operators of the illegal sober living homes recruited, and in some cases kidnapped, people to homes and never gave them treatment while billing Medicaid and pocketing the money for themselves. The statewide crackdown was publicized in May.

AHCCCS suspended payments to at least 317 providers for “credible allegations of fraud.” At least two of those homes were at Canal on Baseline.

Arizona Attorney General Kris Mayes in May said the fraud had cost the government “hundreds of millions of dollars.”

However, some critics of the ongoing crackdown say the “knee-jerk” reaction is hurting legitimate businesses and sober living homes.

A frequent police presence

Since Canal on Baseline opened in early 2022, residents described constant police responses to the property.

On the same day as the community meeting, U.S. Marshals were seen on the property searching for an individual who had an arrest warrant. Eight times, police located people with arrest warrants at the complex, according to calls for service data provided by Mesa.

That data, from January through October, shows Mesa police officers responded to calls at Canal on Baseline 180 times. That’s once every 40 hours, on average.

Police responded 43 times to people disrupting the peace, the most common call. The most common other calls were: Assisting another agency: 20 calls. Family fights: 19 calls.

Noise disturbances: 17 calls. Checking on the well-being someone in distress: 15 calls.

There were five responses to assaults, including two involving a deadly weapon. In March, police responded to a call of a dead body.

Since the beginning of the year, monthly call volumes to the Canal townhomes have bounced around but generally trended upward, peaking in September at 31.

“Calls for service and responses are going to go up, especially if you’re going to be proactive,” Mesa Lt. JD Schmidt said.

In October the call volume tapered off a little, but police still went to eight crime-related calls, four “proactive” responses, and the rest were medical and welfare check calls, Schmidt told residents.

Schmitt urged residents to continue report suspicious activity, telling them neighbors might not be able to run license plates, but police officers can.

That way, authorities say, the police department and city can pass along any information to the Arizona Department of Health Services or AHCCCS to inspect and regulate the homes to ensure they are operating in accordance with state standards.

AHCCCS Assistant Director of Public Policy and Strategic Planning Kyle Sawyer also urged residents to report sober living homes they suspected of fraud to kick off an investigation.

From a quiet neighborhood to a hub of recovery homes

The area didn’t used to be a magnet for trouble.

Before Canal on Baseline was built, it was the home to a Western-themed dinner-and-entertainment business called Rockin’ R Ranch. After 35 years, the owners called it quits and sold the land to the developer Pacific Rim Group in 2019. East of the canal are green golf courses.

The development, then under a different name, was pitched to the city as a “modern, gated community” with forsale townhomes.

All the units were sold to Samir Holdings Inc., according to Maricopa County Assessor’s Office documents. The property manager, in turn, made all the units rentals.

The townhomes that were meant to be for sale were all purchased by Samir Holdings Inc., for more than $23 million through 2022, according to documents filed to the Maricopa County Recorder’s Office.

Samir Sawhney, the owner and property manager, did not immediately respond to The Republic’s request for comment about the conditions on his property.

The issues at Canal on Baseline came to a head in May after which the Arizona Department of Health Services and AHCCCS investigated the site. In a few cases, the departments were able to identify “a few homes that were operating illegally” and send cease-and-desist letters, Candace Cannistraro, a Mesa deputy city manager told residents.

She said the business vacated the property quickly.

In a statement to Fox 10 news in June, Sawhney said the state Department of Health Services found two units operating without proper licensing, and as a result management requested the occupants to vacate the premises. The complex owners and managers were solely landlords and had no ownership or operational interest in any sober living homes, he said in the statement to Fox 10.

Nearby residents, during their twohour-long meeting with Mesa and Gilbert Police Department representatives and Mesa city staff, described their frustrations and anger that the area hasn’t seen relief.

In an interview, Gilbert resident Joni Hansen said the issue was worse earlier in the year before the state started to crack down on illegal sober homes. She said she used to see a rundown RV bus people into the gated community. With the added attention to the location, residents have seen smaller white vans drive into the complex, she said.

Hansen said she felt sad to see the people living at the sober homes, but neighbors are left to cope with the effects.

Gilbert resident Tracy Prince has lived in the area since 1996 said the neighborhood has changed. Now she’s more on guard when she goes on her nightly walks and carries Mace. Before her safety wasn’t something she thought much about.

“It’s very disheartening what’s happening,” she said.

Nearby residents report only coming across one regular renter.

How many sober living homes at Canal on Baseline?

State law makes it difficult, even for local authorities, to know the true number of sober living homes operating out of Canal on Baseline.

“The department (Arizona Department of Health Services) may not disclose the address of a certified or licensed sober living home except to a local jurisdiction for zoning purposes, local law enforcement and emergency personnel,” reads the 2018 state law.

At least one recovery home, Makini Mental Health Center LLC, listed its address at Canal on Baseline, according to paperwork filed with the Arizona Corporation Commission.

Makini, based out of Phoenix, serves people in both Arizona and New Mexico, according to its website. Services include substance abuse support and transitional housing.

The center, its doctor, and another person listed as being on the team are not listed as AHCCCS providers connected to Makini’s Mesa address, according to AHCCCS’ website.

Makini is licensed as an outpatient treatment center with the Arizona Department of Health Services with its Phoenix address. On Makini’s website, it states the company accepts federal Medicare and Indian Health Services as forms of insurance, among others – it does not list AHCCCS.

In September, the Health Department did an unannounced on-site visit and “no deficiency was cited,” according to a filing on the department’s website.

Ana Doble, Makini’s owner, told the Republic she registered her business at the Mesa address to help a friend lease a unit for a few months. She said she no longer has anything to do with the location and knows nothing about the issues at the townhome complex.