Addiction Recovery Care and its owner Tim Robinson rebuilt a block in downtown Louisa into a coffee shop, commercial kitchen, community theater and an event space. The company has been beset by legal troubles and a federal investigation. (Kentucky Lantern photo by Matthew Mueller)
ADDICTION RECOVERY CARE FACES CONTEMPT HEARING IN FEDERAL COURT IN NEW YORK CITY ON THURSDAY; BUT NOW ATTORNEYS REPRESENTING ARC ASK TO WITHDRAW REPRESENTING ARC IN THE CASE
JANUARY 28, 2026 – written by WADE QUEEN
The legal troubles for the embattled Addiction Recovery Care (ARC) company are continuing to escalate, as a hearing will be held this week in federal court to determine whether the company should be held in contempt for violating a preliminary injunction.
At the same time, the attorneys representing ARC have filed a motion asking that they be allowed to withdraw from the case.
ARC, its owners and subsidiaries are being sued by Angelica Capital Trust for defaulting on a loan.
In November 2025, Angelica paid ARC $5.4 million for $8.1 million in anticipated tax receivables, with the understanding the company would turn over the refunds once they arrived. Instead, when ARC received the refunds in December, the company kept and began spending the money.
Angelica Capital Trust claims ARC is trying to scrape together $27.7 million to settle a Department of Justice investigation into Medicaid and Medicare fraud.
On Tuesday, January 13, 2026, in an order setting a hearing for a preliminary injunction, U.S. District Judge George Benjamin Daniels also issued a temporary restraining order prohibiting ARC from transferring any money from its account that would cause it to have less than $10 million. Instead, Angelica Capital Trust claims ARC immediately began transferring money from its account to those of its subsidiaries.
Last week, U.S. District Judge Daniels agreed to issue a preliminary injunction, instructing ARC to move $4.7 million of its remaining money into a separate, frozen bank account, prohibiting the company from transferring any money out of it. That left ARC $1 million for payment of business expenses, which was expected to last the company until Wednesday, February 4.
On Monday, January 26, Judge Daniels also ordered the company to appear in court to show cause for why “an order for civil contempt, sanctions and other remedies should not be issued.” The order also lists other actions the judge could order, including requirements to prohibit ARC from transferring any assets or entities or make any payments, to deposit any funds the company holds into a bank account with the U.S. District Court Clerk’s Office, to produce all bank records from December and January to Angelica Capital Trust, to pay Angelica Capital Trust its legal fees for costs in connection with the contempt motion, and for ARC owners Tim Robinson and Lelia Robinson and general counsel Jessica Burke to appear in New York for depositions.
But that same day, the attorneys representing ARC in the proceeding, Eddy Salcedo and Torrey Kaufman Young, filed a motion asking that they be allowed to withdraw from the case. The motion does not give a reason for the request, but a separate declaration filed by Torrey Young does give some detail.
“Following the hearing that took place on January 21, 2026, my colleague, Mr. Salcedo, and I became aware that our clients were insistent upon taking actions with which we have a fundamental disagreement,” Young wrote in her filing. “In addition, the clients failed to cooperate in the representation and rendered the representation unreasonably difficult of Mr. Salcedo and me to carry out our employment effectively.”
However, the attorneys representing Angelica Capital Trust are objecting to the request to withdraw, saying it would delay Thursday’s contempt hearing.
“Respondents’ repeated contempt of this court’s orders is causing the dissipation of Angelica’s property at a rapid rate, and time [is] of the essence in addressing any further harm that may result from respondents’ ongoing violations of the preliminary injunction (which Ms. Young’s statement, supra, and respondents’ past misconduct strongly suggest are likely to continue),” Angelica Capital Trust attorney Anthony M. Candido wrote in his objection.
Judge Daniels has not yet ruled on the motion by ARC’s attorneys to withdraw.
Copies of the U.S. federal court documents connected to the ARC/Angelica Capital Trust case are attached with the download links below.
arc-show-cause-contemptDownloadarc-motion-withdrawDownloadarc-motion-withdraw-basisDownloadarc-motion-withdraw-objectionDownload
BACKGROUND
Addiction Recovery Care, or ARC, Kentucky’s largest provider of alcohol and drug treatment, is facing mounting legal troubles.
A federal judge has ordered ARC and its owners, Tim and Lelia Robinson, to appear at a hearing Thursday in federal court in New York to show why they should not be held in contempt of court for spending assets the court had ordered ARC to freeze.
The Louisa-based company, which bills the federal Medicaid program for most of its services, also is the subject of an ongoing FBI investigation into possible health care fraud.
The judge’s order stems from a civil lawsuit filed earlier this month by Angelica Capital Trust against ARC, the Robinsons and affiliated companies, claiming it advanced ARC $8 million which ARC failed to repay as promised.
U.S. District Judge George B. Daniels also ordered the Robinsons and ARC’s in-house lawyer, Jessica Burke, to appear for a deposition, or questioning under oath, by Angelica’s lawyers.
The court ordered ARC twice to preserve funds in a separate bank account that Angelica alleges it is owed but ARC has twice violated the court’s orders, Angelica said in a court filing.
Angelica, seeking to recover its money, said ARC is “on the brink of insolvency” in a court filing. It also said ARC is alleged to have committed “massive fraud” in Medicaid and Medicare billing and is scrambling to raise nearly $28 million for a civil settlement with the federal government.
“ARC is wrongfully withholding this money because it is in desperate straits,” said Angelica’s lawsuit filed Jan. 12 in U.S. District Court for the Southern District of New York.
ARC, in a response to the initial lawsuit, did not reference the fraud allegations or the proposed settlement with the U.S. Justice Department but asked the court not to freeze its assets, saying that would “disrupt the crucial health care services ARC provides to hundreds of patients.”
A spokeswoman for ARC did not immediately respond to a request for comment.
ARC was founded in his native Eastern Kentucky by Tim Robinson, a lawyer and recovering alcoholic, to provide treatment for people with drug and alcohol addiction. The for-profit company grew rapidly in recent years, fueled by an expansion in Medicaid payments for such treatment and Robinson and his company emerged as prolific political donors.
But ARC has foundered in recent months amid fraud allegations and cuts in reimbursement from insurers who pay Medicaid claims, and has been forced to close facilities and lay off staff.
In court filings this week, Angelica alleged ARC has twice violated court orders not to transfer further assets and has placed only $3.6 million in a separate account rather than the $4.7 million ordered by the judge.
“Given (ARC’s) willingness to mislead the court and violate its orders . . . Angelica is gravely concerned that (ARC) will continue to dissipate Angelica’s property in violation of the court’s injunction,” said a Jan. 25 letter to the judge from Angelica’s lawyer.
Angelica, a trust firm based in the Bahamas, agreed to buy from ARC about $8 million worth of tax credits ARC expected to receive from the IRS, according to its lawsuit.
The purpose was for ARC “to get cash quickly” to make it look better to the potential buyer. In turn, ARC would repay Angelica when it received the funds from the IRS, according to the lawsuit.
ARC received $8 million from the IRS on Dec. 2, but ongoing efforts by Angelica to collect the money failed, and by mid-December, ARC told Angelica its deal to sell the company had fallen through and it was attempting to negotiate a sale with a new buyer, the lawsuit said.
Angelica said that despite repeated attempts, it has not been able to confirm ARC’s claim that a new, “supposed” buyer has agreed to advance enough money to restore funds in the court-ordered account to preserve money owed the trust company.
In addition to asking the judge to find ARC and its owners in contempt of court, it asked the judge to order ARC’s remaining funds to be placed in an account controlled by the court or into a third-party escrow account, with funds to be released only with the judge’s approval.
“At this point, (ARC) cannot be trusted to comply with the injunction and the only practical means of ensuring compliance appears to be to remove the funds from their control,” said the letter to the judge from Clifford Chance, a lawyer with the New York firm representing Angelica.
Meanwhile, the New York lawyers representing ARC have asked the court’s permission to withdraw from the case, citing a “fundamental disagreement” with their clients. Also, ARC “failed to cooperate in the representation and rendered the representation unreasonably difficult,” lawyers with Seyfarth Shaw said in a motion filed Jan. 26.
The case is scheduled for a hearing Thursday at 10 a.m. in federal court in New York.
Once again give TACO a donation and your troubles are over TACO has shown over and over, he is for sale. His wealth has increased by $4 billion in just 1 year not counting the $400 million jet that was given to him.
https://www.npr.org/2026/01/14/nx-s1-5677024/trump-profits-merch-hotels-crypto
Well sounds like the Odyssey is coming to an end. The arc has cracks and now the water is coming in and now she is a sinking. A boat can only take on so much water before she sinks. It’s ashame what this guy has done to his town, his state , and the Country. Robbing the Medicare, medicaid and other healthcare systems. Not to mention his family! I feel especially bad for the folks who needed drug treatment. Those people have been used as pawns by him. But whatever happens to him will be his own fault, not anyone else, he did this all to himself.
Tax money hard at work…. Anyone see the place over by the farmers market they built about 6-8 years ago…
They will be out of business very soon. Wonder if the county will buy all their buildings? The county and city has bent over backwards for them but now gonna bend over forward!!!