Rehab.com Sued in Federal Court

By Christopher Dale

In a shocking lawsuit, the treatment facilitation website’s Founder & CEO is being sued for blatant financial malfeasance. The details aren’t pretty.

“We exist to advocate, educate and support people with mental illness and their families,” the site’s homepage states. “The right of every individual to accessible mental health services is our top priority.” Users are prompted to click on a tab marked “We are here to help.”

But when they do, one little additional sign appears – an otherwise forgettable coding error that might just be the most ironic typo ever.

It’s a $. And it’s Patrick Nagle in a nutshell.

Allegedly, anyway.

According to a lawsuit filed November 19 with a US District Court in Maryland, Patrick Nagle is a crook – a swindler who misrepresented his intentions while misappropriating investor funds to the tune of $1.5 million.

The lawsuit centers around another of Nagle’s online projects, one even more relevant to Addiction/Recovery eBulletin readers than MentalHealth.com. In 2016, Nagle founded Rehab.com, the self-proclaimed “leader in the rehabilitation space” for addicts and alcoholics seeking recovery treatment options. Per his LinkedIn profile, Nagle remains the site’s CEO.

Per the lawsuit summary, the Trust invested $1.5 million in Rehab.com between April 2019 and October 2021. The goal was simple: Rehab.com would use the funding to make upgrades that, among other aims, would lead to additional investment. It’s the sort of money a young business needs to reach a point of self-sustaining maturity. In return, the Trust’s investment would, it hoped, mature along with the site.

As recently as early 2022 the arrangement was, publicly anyway, still on track – evidenced by Rehab.com naming Ryan Rice to its Strategic Advisory Team, per a press release praising him as an “impact investor.”

But behind the scenes – and again, all this is prefaced with “allegedly” – Nagle had been making an impact of his own, in the form of luxury goods, lavish hotel rooms and prostitutes. The lawsuit also alleges Nagle used nearly $200,000 of the Tryst’s funding to invest in cryptocurrency, which these days has an even lower payoff than the hookers.

From the detailed roster of Nagle’s expenses the lawsuit alleges, it seems highly likely that the accounting books at Rehab.com were… well, Rehab.cooked. What on Earth happened?

Take the Money and Run

The extensive accusations detailed in the lawsuit paint a damning picture of malfeasance, presenting Rehab.com with a steep uphill battle. While everyone in America is innocent until proven guilty, Nagle in particular clearly has some ‘splainin’ to do.

The initial $1.5 investment was, so far as convoluted financial transactions go anyway, quite straightforward. Rehab.com was to use the cash injection to convert to a C-corporation – business-speak for an entity separate from its owners. Ironically, doing so may have shielded Nagle from a fair amount of the incoming currently aimed squarely at his neck.

Rehab.com also was to use some of the Trust’s cash for something called Series A fundraising – legalese for a startup soliciting outside investors to help it grow. Ideally, the company grows, and the investors make a profit on their investment. Since investing in a young, assumedly cash-strapped company brings elevated risk, Series A investors often also get equity in the company, meaning they become partial owners who can reap dividends as the company scales up and turns profits.

But allegedly, Nagle did exactly none of this. An excerpt of the lawsuit says it best:

Nagle did not use the funds invested by the Trust to further Rehab.com’s or CCR Holdings’ (Rehab.com’s holding company) corporate purposes. A review of Rehab.com’s books and records show that Nagle used the funds invested by the Trust—taken directly out of the Rehab.com account—to pay for his own elaborate lifestyle, spending over $1.7 million on things like personal vehicles, domain names that he registered to himself and profited from personally, a luxury penthouse, elaborate meals, extended stays at five-star hotels and resorts, gambling, and prostitutes.

It gets worse. According to the lawsuit, Nagle then proceeded to act like he needed Rehab.com rather than ran it.

As Nagle continued to use the Rehab.com account to pay for his lifestyle, Nagle’s behavior became more volatile and erratic. He continuously refused to convert Rehab.com to a C-corporation, he refused to engage in Series A fundraising, and he became increasingly abusive and belittling to his subordinates and even investors. As a results of Nagle’s actions, the performance and the financial condition of the companies began to deteriorate

Unsurprisingly, the suit says that all this eventually caught up to Nagle. In order to service the incremental debt payments owed to Rice’s Trust, Rehab.com took on – what else? – additional debt, often with interest rates exceedingly 50%. For God’s sake, there are sharkskin suited loan sharks with better terms than that.

A debt death spiral ensued, with Rehab.com unable to service their debts on several occasions to various creditors, including the Trust.

Notably, the lawsuit acknowledges the sensitivity of suing a site whose mission is to help struggling substance abusers recover. “The Trust now brings this action to protect its investment in Rehab.com and protect Rehab.com itself,” the filing reads, “which has the potential to help millions of people if its funds are properly directed at initiatives that benefit the business rather than supporting Nagle’s lavish personal spending and extravagant lifestyle.”

Allegedly, Nagle’s finagling also included creating an offshore shell corporation, the not-so-conspicuously named Nimble Technologies, to avoid Rehab.com’s pending tax liabilities. And even as he allegedly used the Trust’s funds to pay for a luxury car and other items, he asked for additional investments from the firm. When Rice and the Trust inquired about the delay in converting Rehab.com to a C-corporation, Nagle cited the COVID-19 pandemic and subsequent financial downturns as reasons for his inaction.

It gets even weirder. In May 2021, Nagle relocated to Puerto Rico and, per the lawsuit, begin showing signs of mental distress. He told company employees that his actions were being monitored and manipulated by some combination of the CIA, the Russian mafia, and powerful tech figures like the Winklevoss twins. In other words, he started sounding like a MAGA rally.

Soon, Nagle checked into an in-patient psychiatric facility and, even then, began giving irrational business directives that Rehab.com colleagues were compelled to disregard. He also sent emails to the CEO of Google and other prominent companies that, per the lawsuit, were “unhinged.”

The remainder of the lawsuit alleges a series of false promises, false starts toward rectification and, ultimately, unpaid debts. Where it goes from here is for the courts to decide. But for now, we at Addiction Recovery eBulletin can safely advise readers against patronizing this troubled, perhaps soon-to-be-terminated website.

CLICK HERE TO READ THE LAWSUIT

Click@Dockets.Justia


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