The owner of a Utah-based wholesale distribution company admitted last month to fraudulently distributing to pharmacies more than $100 million worth of prescription drugs that he bought on the black market. Nevada resident Roger Crowell pled guilty before U.S. District Judge Edgardo Ramos in Manhattan to one count of conspiracy to commit health care fraud and agreed to forfeit more than $13 million in proceeds from the scheme.
Manhattan U.S. Attorney Preet Bharara’s office says Crowell, the owner and operator of a licensed wholesale distributor of prescription medications based in St. George, Utah, defrauded private insurers as well as Medicaid and other government programs out of hundreds of millions of dollars by purchasing contraband drugs at deeply discounted prices and reselling them to pharmacies across the country as legitimately sourced medications.
Crowell’s company wasn’t named by Bharara’s office but Utah business records list Crowell as the registered agent for Green Valley Medical Distributors LLC of St. George. U.S. Attorney Bharara said in a statement:
Randy Crowell perverted for profit a health care system designed to get safe and effective medications to patients who need them. He exposed people with life-threatening illnesses to medicines they had no idea had been diverted from the normal stream of commerce, all the while defrauding health care companies and government benefit programs like Medicaid.
To maximize profits, prosecutors say Crowell and his co-conspirators focused on some of the most expensive medications, including those used to treat HIV. Medicaid patients and other people who received monthly prescriptions for little or no costs, and who were willing to sell their medications rather than take them as prescribed, were targeted as would-be suppliers. Their medications were sold to so-called “collectors” who worked on street corners and in stores and paid as little as $40 to $50 in cash for each bottle, according to Bharara’s office.
The conspirators used hazardous chemicals, such as lighter fluid, to remove drug labels from medication bottles, prosecutors said, a process that risked the chemicals getting into the bottles and rendering the drugs unfit for human consumption. The collectors then sold the secondhand drugs to intermediaries with direct access to legitimate distribution channels, including corrupt wholesale companies like Crowell’s business, which in turn sold them as new drugs to pharmacies.
To maintain a facade of legitimacy, the company lied about the drugs’ origins by creating false documents that purported to show the legitimate movement of the medication, according to Bharara’s office. Prosecutors said Crowell himself took numerous steps to conceal his activities, including using the alias “Roger,” frequently changing the phones he used to communicate with co-conspirators and paying them through sham companies. The government is represented by Assistant U.S. Attorneys Edward B. Diskant and Matthew Podolsky. The case is United States of America v. Randy Crowell in the U.S. District Court for the Southern District of New York.
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