BREAKING NEWS: FEDERAL JUDGE ORDERS ADDICTION RECOVERY CARE TO PAY NEARLY $18.5 MILLION TO CREDITORS IN RULING LAWSUIT FINALE AGAINST ARC

A Southern District New York Court federal judge has ordered Addiction Recovery Care (ARC), once Kentucky’s largest treatment provider, to pay $18.4 million to two creditors that could be the financial ending the troubled Kentucky drug treatment company that was formerly based in Louisa.

U.S. District Judge George Benjamin Daniels in the Southern District of New York entered four rulings on Wednesday, September 23, against Addiction Recovery Care, or ARC.

Angelica Capital Trust and Clear Cove Opportunities Fund both sued ARC for defaulting on promised payments on loans it made last year.

The ruling follows ARC’s agreement to pay a settlement of $16.2 million related to allegations of Medicaid billing fraud.

Angelica Capital Trust, which is based in the Bahamas, was granted a $9.8 million judgment, plus interest and other costs, against ARC and related entities, while the Chicago-based Clear Cove Opportunities Fund I received a judgment awarding it $3.9 million in damages, according to federal court documents.

Angelica and Clear Cove had been engaged in a legal battle over $4.7 million held by ARC that the judge had previously ordered “restrained.”

U.S. District Judge George Daniels entered orders on Wednesday stating that the two creditors had agreed to settle their dispute. Angelica will receive $3.6 million from the ARC account, while Clear Cove will receive the remaining $1.1 million, under the court’s orders.

On Wednesday, September 18, in a letter to the judge, an attorney writing on behalf of both creditors asked for the distributions “as partial enforcement of the judgments requested by Angelica and Clear Cove.”

Ashland-based ARC, which was at one time Kentucky’s largest addiction recovery group, has been under investigation by the FBI for over two years.

In July, the Department of Justice confirmed that ARC had agreed to pay more than $16.2 million to settle claims of Medicaid fraud.

Angelica and Clear Cove sued ARC earlier this year, alleging that ARC was illegally keeping money the companies were owed in order to “stave off imminent bankruptcy.” They alleged ARC was refusing to repay the money in part so it could pay the Department of Justice.

Tim Robinson, the company’s former CEO, was indicted on wire fraud and money laundering charges in relation to those loans in June 2026.

Tim Robinson has formally since resigned, and ARC is now led by Randy Hunter, who is also CEO of another Eastern Kentucky company, Frontier Behavioral Health.

According to its website, ARC has locations in Ashland, Inez, Springfield and Louisa.

THE DOWNFALL OF TIM ROBINSON AND HIS ADDICTION RECOVERY CARE COMPANY

Founder and ex-CEO of Kentucky’s Addiction Recovery Care owes more than $32 million to creditors, according to more than a half-dozen lawsuits alleging he repeatedly sold his company’s tax credits and failed to repay them.

The outstanding debts stacked up in the months before Tim Robinson, 50, who resides in his mansion in Louisa, KY.,was indicted June 4 on charges of fraud and money laundering. He has since resigned as CEO from what was once Kentucky’s largest addiction treatment company.

Federal prosecutors allege Robinson was selling millions of dollars of the same IRS tax credits to two lending companies in exchange for cash, and then spending the proceeds of the fraudulent sale to keep his business afloat.

Lawsuits filed in April and May in New York and Connecticut show Tim Robinson borrowed more than $31.9 million from another six creditor companies between 2025 and 2026, at a time when his company was laying off thousands of employees and shuttering dozens of its facilities.

As part of selling receivable tax credits, a loan company can agree to purchase credits and provide cash up front with the guarantee that the borrower will receive the IRS tax refund once it becomes available. The recipient, in this case ARC, must repay that lump sum plus interest. ARC sold tax credits to at least eight companies and, according to court filings, none were fully repaid.

Some of ARC’s accounts were frozen by a judge in January after Angelica Capital Trust, a Bahamian Company, sued ARC for defaulting on a repayment plan. Angelica alleges ARC owes it more than $8 million; an amount Angelica had given to ARC in exchange for future tax credits, plus interest. But once those credits were given to ARC, ARC never repaid Angelica, according to the lawsuit.

Creditors represented in these suits claim they were misled by ARC, which left a trail of stacked loans Robinson and his wife Leila promised to repay. Some of those lawsuits were filed by companies that allege ARC defaulted on payment plans to repay borrowed money.

ARC has filed at least five lawsuits against creditors, claiming some of them acted in “deceptive” and “abusive” ways. In some complaints, Robinson said what he thought were simple merchant agreements were actually illegal, high-rate and high-interest loans, calling them “criminally usurious.”

When asked about the lawsuits, ARC Vice President of Marketing Vanessa Keeton said in an email the company “does not comment on pending or ongoing litigation.”

ARC, which at one point operated more than 40 drug treatment centers around the state, has been under FBI investigation for Medicaid fraud since August 2024. Former ARC employees and clients who were interviewed by the FBI as a major part of their investigation said they were told by ARC to falsely bill Medicaid, or witnessed others billing for services that were not actually provided.

CALIFORNIA CREDITOR COMPANY: ARC & TIM ROBINSON ‘TOTALLY UNRESPONSIVE’ AFTER GOING INTO DEFAULT

One California-based creditor said it agreed to purchase nearly $3 million worth of tax receivables from Robinson and ARC in February.

Core Funding Source LLC agreed to purchase tax credits under the impression ARC was “on the verge of a capital transaction” that would make ARC able to repay the company “in the near future,” the company said in its lawsuit.

“That representation was false and appears to have been made solely in order to induce Core to enter into the agreement,” attorneys for Core wrote in their complaint.

ARC was on the verge of being purchased by Canadian-based Ethema in December 2025, when that deal fell through. In court documents filed in the Angelica lawsuit, tIM Robinson indicated the company had another prospective buyer in January, but no sale has materialized.

Core Funding Source said as part of its contract with ARC, it was allowed to view ARC’s bank accounts. ARC had agreed to weekly payments of $107,071, according to the New York court filing.

But by FebRUARY 27, Core staff were blocked from viewing the bank account, the lawsuit said. Since March 31, ARC has been “totally unresponsive” to repeated contact attempts, the loan company said.

“Once more, these representations appear to have been false and only made as a delay tactic to forestall Core’s initiation of legal proceedings to recover amounts it rightfully owed (sic),” a lawsuit said ARC countersued Core on May 12, arguing Core Funding Source set intentionally high rates that forced ARC to default.

Another creditor, Itria, is suing to intervene in Core’s request to freeze ARC’s accounts, saying that doing so would keep other creditors from accessing funds owed to them.

“If Core is granted this extraordinary relief, it will impermissibly choke off ARC’s ability to pay it’s day-to-day business expenses and ability to operate in the ordinary course of business, and it will choke off the ability of other creditors to enforce their judgments,” the Itria lawsuit reads.

In a third lawsuit filed by ARC against Smart Business, which agreed to pay ARC a lump sum of $300,000 in exchange for future tax credits, ARC accused Smart Business of “deceptive” and “abusive” practices.

Attorneys for Smart Business pushed back on that characterization. They say ARC in March 2026 agreed to weekly repayments of $11,243, but that the company defaulted almost immediately.

ARC “elected to stop making payments less than three weeks after they signed the agreement,” Smart Business attorneys wrote. “They made three daily payments over the course of a month before ultimately taking matters into their own hands and unilaterally determining they had no obligation to deliver that which they sold.”

Tim Robinson faces criminal charges and civil complaints involving tax credits

All the lawsuits were filed before Tim Robinson was criminally charged June 4 with misuse of the tax credits. The first civil suit came from Angelica, which said ARC sought loans in order to “stave off imminent bankruptcy.”

Angelica alleged ARC was refusing to repay the money, in part, so ARC could repay a draft $28 million settlement with the Department of Justice for Medicaid fraud.

In his indictment, the same government that bartered with Tim Robinson in the Medicaid fraud settlement charged him with “devising a scheme” involving the tax credits.

Tim Robinson “devised a scheme” to sell the initial employee retention credit amount to a second buyer, the indictment says, and in doing so, “falsely represented” that the $2.7 million in initial tax credits were available to purchase. “Robinson concealed the prior transactions” to the new buyer, according to the federal  indictment.