Novocastrian Kirsten Wallace faces hearing over $US176 million insurance fraud involving Community Recovery rehabilitation centres.

CHARGED: A mugshot of former Novocastrian Kirsten Wallace.
CHARGED: A mugshot of former Novocastrian Kirsten Wallace.

A FORMER Novocastrian who could serve up to 53 years in a US jail if convicted of one of the biggest insurance frauds in Californian history has faced the first days of a preliminary hearing to determine if she should be committed for trial. 

Kirsten Wallace, 43, who was the chief financial officer of the Community Recovery company which ran about 20 rehab centres, and company owner Chris Bathum were involved in "an elaborate conspiracy" to defraud patients and insurers to the total of $US176 million ($233 million), according to the California Department of Insurance. 

They are each charged with 31 counts of money laundering, eight counts of grand theft, six counts of identity theft and five counts of insurance fraud.

Mr Bathum has also been charged with sexually assaulting nine patients.

A spokesman from the Los Angeles District Attorney’s office confirmed the preliminary hearing was in progress. 

It was unknown how long the hearing would run for.