Over the course of several days in June 2011, a state agent tasked with regulating drug and alcohol rehabilitation centers made a series of phone calls to the Outcast Bar and Resort in the Gold Country town of Copperopolis. She planned to either rule out or verify troubling allegations that Richard Franko—head of Life Choices, one of Silicon Valley’s largest detox facilities—sent addicts undergoing court-ordered treatment to work at the hard-partying music venue in the Sierra foothills.

One witness, whose name was withheld, reported to California’s Department of Health Care Services (DHCS) that Franko made parolees “assist in human like slave duties as a condition of not sending these clients back to prison.” What DHCS investigator Janina Guarino heard from people she interviewed led her to conclude that Franko had indeed used clients for personal benefit and, in doing so, compromised their sobriety.

“Mr. [Franko] did not keep the [clients] in an alcohol-safe environment,” one of the bartenders, somewhat incredulously, told Guarino. “We encourage people to drink. That’s what we do here. People are here to drink.”

“Yes, it is an open bar,” another worker said when asked if Life Choices clients had access to liquor. “A person getting out of rehab shouldn’t be at the bar.”

Guarino asked how many rehab clients Franko would bring to the watering hole, which he reportedly co-owned with his friend, $30 million lottery winner Dennis Sanfilippo. “Sometimes a truck full,” a staffer responded, “sometimes a limousine full.”

Reports show DHCS was told that Franko would get hopped up on pills and cocktails while his clients worked the bar and the door. A female witness told regulators that the rehab director also sexually harassed her at the resort, telling her “that dress looks good on you, you should bend over in it.” He would go on to invite her to his room for drinks.

Other times, Franko would recruit clients to load music studio equipment for his other side hustle, a country music label also co-owned by Sanfilippo called Big 7 Records. According to state records and conversations with former clients, Franko also relied on the captive pool of clientele to take care of his racing pigeons, requiring them to drive the birds several hours away and release them so they could fly back to roost. Aaron Dukes, a former Life Choices client who says he once had to ferry Franko’s pigeons out to Tracy, described the rehab as a nonstop drug-fueled party.

“Meth, cocaine, pot,” he tells San Jose Inside. “All kinds of drugs were all over the place. You had to be clean to live there, yeah, but some people had boxes of drug tests that they took for someone else.”

For addicts whose freedom depended on their sobriety, Life Choices, a 31-bed residential rehab in the heart of San Jose, apparently became a pipeline back to jail. Franko allegedly let clients leave the facility before their legally mandated 30-day “spin dry” was up, setting up vulnerable addicts and alcoholics to go back to the streets, fail their drug test or risk arrest. According to a former staffer contacted by DHCS, the relapse rate among addicts who worked alongside Franko was about 80 percent.

“Every one of the clients that were close to Richard relapsed,” a rehab client told authorities. “It was out of control.”

But Life Choices personnel told Guarino that if they suspected substance use among the clients who worked off-site, Franko prevented them from being drug tested.

“Richard [Franko] is driving everyone crazy,” another exasperated witness said. “He is taking clients out that are detoxing.”

When regulators shut down Life Choices the morning of March 5, 2014, Franko chalked it up to a “personality conflict” that began years before with the Santa Clara County District Attorney’s Office and worked its way up to Sacramento.

But a newly unearthed trove of records obtained exclusively by San Jose Inside sheds light on the problems that led to the dramatic shutdown, which forced Franko to bus clients elsewhere for treatment. Hundreds of pages of DHCS filings paint a picture of shocking dysfunction at the facility, where authorities investigated accusations of exploitation, sexual harassment, stolen medication and rampant drug use.

According to public records and redacted witness statements, Franko’s relapses, a slew of DUIs and a felony weapons charge contributed to the chaos that inspired many of the calls to authorities about the rehab director allegedly borrowing money from clients, crashing company vehicles, urinating in the kitchen sink and, in an instance reportedly caught on video, running naked around the facility. Court records depict a man hitting every stone on the way to rock bottom, from stealing $12.99 bottles of Triple Sec from a liquor store—twice in a day—to kidnapping a woman’s dog from her Willow Glen home.

Franko tells San Jose Inside he has sobered up and insists that the allegations stem from jilted ex-staffers or disgruntled clients spreading lies. He admits to some slip-ups, just not the way they’re characterized, calling the state’s probe a “witch hunt.” The parolees in question were paid $100 a day for their time, he says, and the work involved remodeling the bar before it opened to customers. In an ironic twist, he adds, the resort-bar has since been converted to a lakeside rehab.

And now, back in the South Bay, Franko’s back in business. In October last year, he obtained a license for a new treatment facility called Red Road Recovery, which takes its name from the Native American term for righteous path. Under the state’s whack-a-mole enforcement, problematic operators can evidently form a new entity and start over again.

With its license expired in 2014, Life Choices has since reverted from a residential rehab to an unregulated sober living facility—considered a group home for the disabled, governed only by local zoning and federal fair-housing laws.

But among many shocking details San Jose Inside has learned about the purportedly reckless rehab center, one of the more surprising is that San Jose city officials have been asleep at the wheel, leaving taxpayers to subsidize the beleaguered program.

The Money Man

Tucked between the remnants of a once-vast orchard and an elevated roadway separating it from a recycling center on the other side of Taylor Street, Life Choices lies almost beyond view from passing drivers. But neighbors and authorities have kept a wary eye on the facility from the day it opened as a residential drug rehab in late summer of 2001.

Founded by Franko and bankrolled by John and Betty Licking, an elderly Sunnyvale dentist and his wife, Life Choices took in some of the first clients under Prop. 36—a state law allowing nonviolent convicts to serve their sentence in rehab instead of jail. When California enacted sweeping prison reform a decade later, it accepted former inmates released under community supervision in lieu of incarceration.

Franko—who’s 63 with a long brown mullet, stocky build and a face weathered by hard living—says the venture came from a very personal place. A self-professed alcoholic who fought for his own sobriety to avoid jail, he says he tried to remain immersed in recovery by turning it into his livelihood.

“I wanted to learn the language of recovery,” Franko says. “I wanted to be able to walk other people through their detox as well as their family members and loved ones.”

John Licking, who met Franko decades ago at the Church of Christ in Sunnyvale, traces his interest in working with recovering addicts to a realization early in his career during a tour of Los Angeles County General Hospital. A doctor told him that just about half of all patients at the notoriously under-resourced infirmary were there because of drugs and alcohol—be it liver disease, a car crash or a bar fight. The sheer magnitude of the crisis weighed on Licking for years, he says. So when Franko approached him about expanding Life Choices, the dentist jumped at the opportunity.

“When you get the chance to do something about a problem, you take it,” Licking says, standing outside Life Choices on a recent afternoon. “This was that chance.”

“I told him the church can save your soul, but the program will save your butt,” Franko quips during an earlier conversation.

In Licking’s telling, Life Choices’ battle with authorities began when administrators refused to comply with a local prosecutor’s request to identify a rehab center resident, which would violate patient privacy laws. From then on, he says, the district attorney’s office had Franko and the facility under the microscope, which created a cloud of suspicion that filtered up to the DHCS.

“It was an uphill battle from the beginning,” Licking says. “The city didn’t want us here, the neighbors didn’t want us here and the DA wanted to tell us how to run the place.”

Licking, who’s on the nonprofit’s board of directors with his wife, admits that he has a dim view of regulators, characterizing their citations as busywork—a way to rack up fees to fund a bloated bureaucracy. Franko echoed the sentiment.

“In this business, I have been turned off at the politics involved,” Franko says. “That is why I don’t believe in the DA or the state. The DA wanted me out because I would not bow down to what they wanted me to do.”

When asked what he thought of the violations that led up to the facility losing its license, however, John Licking says he wasn’t involved in day-to-day operations and doesn’t know what they entailed. When asked if he’d like to review the records obtained by San Jose Inside that recount the allegations of drug-and-booze-fueled parties and forced labor, he shakes his head side to side.

“All the drug recovery programs end up occasionally with some drugs in the program,” he says. “Somebody brings some drugs in. That’s not allowed or permitted. When that happens here, then that person is gone from the program, and anybody else associated with it. … Because you can’t tolerate that.”

And what about the allegations that staff encouraged the use of drugs and alcohol?

“I never saw that,” he says.

Would he be interested in seeing the records detailing the allegations?

“It doesn’t matter to me now,” he says.

In a phone call days earlier, Betty Licking claimed ignorance, too.

“The violations that happened were mostly administrative, and actually not—I don’t want to say that they weren’t important—but they were things like the files were not in the order that the state regulators requested,” she says. “Minor administrative things.”

For a couple that’s invested what appears to be millions of dollars in Life Choices and, more recently, Red Road Recovery, the Lickings seem to care surprisingly little about whether the organizations have lived up to their missions. While it’s true that state inspectors noted some seemingly trivial things in their facility reports at Life Choices—a moldy apple under a desk, a pie in a bathroom dresser—civil lawsuits and regulatory filings make it clear that the DHCS had more to worry about than what the Lickings dismiss as merely broken light fixtures or cracked floors. But the proprietors of Life Choices weren’t the only ones turning a blind eye.

Absentee Landlord

Though Santa Clara County and other service providers welcomed the addition of a sizable treatment center, neighbors of Life Choices were none too keen on having the addiction center in their vicinity. The animosity, coupled with plans to someday build a freeway over the site to link with the future Berryessa BART station, led San Jose officials to dig in their heels when the fledgling Life Choices sought to grow from 31 to 120 beds.

Five years after petitioning City Hall to approve the expansion, John Licking sued the city, claiming the city’s denial constituted discrimination against the disabled. To settle the lawsuit, San Jose shelled out $2 million in 2009 to buy the property—leaving the Lickings with a tidy profit and Life Choices with an extraordinarily cheap lease.

Then-Councilman Sam Liccardo, who has since become mayor, called it a win-win at the time, noting that the sale allowed the city to eschew the ordeal of claiming the plot through eminent domain.

Aside from the police calls one might expect from a rehab center—psychiatric holds, drug possession, unattended deaths, the occasional scrap—the lease signing was the last known action the city took on the property. More than two years since the $1-a-month contract expired, officials have yet to renegotiate the deal. Licking says he’ll keep sending that $12 check every year, hoping the city doesn’t ask for more.

“One of these days,” he says, “the city will say, ‘this is your six months’ notice,’ and this will be bulldozed. I don’t know when that will happen.”

Officials from the mayor’s, city manager’s and economic development offices offered no insight on the matter, except to say that the lease had, indeed, expired on Sept. 30, 2015.

Rehab Reform

Rehab operators like Franko and Licking find themselves at a difficult juncture. Growing awareness about chemical dependency as a disease has inspired a nationwide push to reform the $35 billion-a-year industry, with incidents of insurance fraud and overdose deaths at clinics bringing greater scrutiny to the role of residential treatment in an addict’s recovery—and to the potential for abuse.

Recent revelations of labor trafficking, sexual misconduct and alarming relapse rates in California rehab centers have pressured regulators to crack down on unscrupulous clinics, while political advocacy groups debate how to raise professional standards in the field. California requires criminal background checks for acupuncturists, optometrists, veterinarians and dental hygienists, but it has no such mandate for substance abuse counselors or rehab clinic directors.

Twenty-nine states have enacted landmark rehab reforms, including licensure on sober living homes and stricter standards for treatment, but legislation in California has stalled.

“We’re going to regroup and continue that fight in 2018,” says Frank Jones, who founded Recovery Reform Now, which advocates for stronger consumer protections in the drug treatment industry. “There has to be a higher standard for treating a disease that requires intensive, long-term care.”

Until then, virtually anyone can run a rehab business in California. There’s no educational requirement—medical or otherwise—and no need to obtain even a counseling certification through one of several industry associations. Under existing rules, aspiring counselors can work with patients for up to five years without a background check and without certification.

Franko was on track to obtain a certification through the Breining Institute, records show, but he blew the five-year deadline and never submitted any documentation about his academic history.

“They won’t let me get certified,” he says during a recent interview, without elaborating on why that’s the case. “But they’ll let me run the place.”

On paper, however, there’s someone else in charge. The DHCS lists a Wiley David Thorne as the former executive in charge of Life Choices and the clinical director of Red Road Recovery. Franko and his lead counselor, Joaquin Aguirre, downplay Thorne’s involvement, calling him at times a consultant or adviser—but not the head honcho.

“I’m really behind the scenes,” Thorne confirms, noting that he’s trying to get Red Road certified by the Commission on Accreditation of Rehabilitation Facilities.

Thorne, a licensed counselor who worked with Franko for much of the past decade, speaks highly of his colleague and calls the state’s enforcement needlessly adversarial.

“One thing I do have to say about Richard is that you could not begin to calculate the number of people that he has helped over the years,” Thorne says. “He has helped so many people get clean and sober, he has helped so many people get their lives back together. … He has more than paid his dues, both rehabilitation-wise, and for any issues he may have had with the criminal justice system.”

Despite his personal and professional struggles, Franko has managed to cultivate a well-funded support network. Although he hasn’t contracted directly with the county since 2005, he relies on a considerable sum of public money channeled through some of the region’s biggest nonprofits, including Catholic Charities and Community Solutions. Indeed, a stack of letters from various officials in the charitable sector and law enforcement vouched for Franko when he faced a judge for legal troubles that coincided with the state enforcement against Life Choices. More recently, Catholic Charities asked the state to approve his petition to add more beds at Red Road.

Franko acknowledges his relapses but says he always got back on track. He blames his downfall on a collision on Valentine’s Day in 2010, when, according to court records, he struck and killed a homeless man while driving a black 2007 Chevy Silverado on a suspended license. The pedestrian, who turned out to be intoxicated, darted into the off-ramp just south of Bird Avenue on Highway 87, according to the police report. It haunted Franko for years, he says, and led to a diagnosis of post-traumatic stress disorder.

“That really shook me,” he says.

Aguirre—a loyal friend to Franko who was working at Gardner Health Services during the few years before Life Choices lost its license—says people who work in the addiction field often struggle with the disease themselves. It’s part of what qualifies them to supervise treatment centers, he says, and part of what pulled them through those difficult years at Life Choices.

While the bulk of DHCS records centered on Franko’s behavior, regulators also noted a troubling association with a staffer who turned out to be a fraud. Ricky Diffenderfer, who introduced himself as “Dr. D,” worked closely with Life Choices until people wised up to his scam of posing as a counselor while bilking clients in treatment centers across Northern California. In 2016, a few years after he parted ways with Life Choices, Diffenderfer pleaded no contest to charges of grand theft and welfare fraud in exchange for a two-year prison sentence.

Another name that turns up only in passing within the dossier supplied by the DHCS is that of Dr. Cecil Bradley, a psychiatrist who sent referrals to Life Choices and now works with Franko at Red Road Recovery. The Medical Board of California twice has suspended Bradley’s license.

The first time came in the 1990s, when the doctor refused to submit to a psychiatric test in response to accusations that he engaged in sexual harassment and inappropriate sexual behavior with employees and patients. More recently, a probationary period ended in 2012 after Bradley was disciplined for prescribing addictive drugs to patients in the throes of substance abuse, according to the medical board. He also eschewed risk-benefit analyses. In 2003, according to the state medical board, one of his patients was hospitalized for stimulant-induced psychosis after Bradley kept prescribing her ADHD medication despite repeated signs of abuse.

Today, almost the exact same team of doctors, counselors, investors and operators—give or take a few—are behind Red Road Recovery in north San Jose, raising questions about the efficacy of state enforcement. Records indicate that Red Road, which charges up to $7,900 a month per client, has met every state-set benchmark as of this week. Life Choices’ last citation, given for advertising licensed services at an unlicensed facility, came this past spring. That, too, was cleared up.

“I don’t want to go to war with the state right now,” Franko says. “To be honest, I’m having a hard enough time with them as it is.”

Until DHCS signs off on a petition to expand Red Road from six to another 20-or-so beds, Franko says he’s going to focus on building up the number of sober homes and rehabs under his purview, thanks to investment from the Lickings and support from nonprofit heavyweights.

“The bottom line is I’ve put up with all this crap and I’m still here,” Franko says during a recent tour of Red Road, where a stray black-and-white cat he calls Detox lurks in the garden. “That’s why they call me The Battleship. I’ve been hit with so many torpedoes, and I’m still standing.”