KNOXVILLE, Tenn. – On February 24, 2022, Porsha Tims Bush, 42, formerly of Knoxville, Tennessee, was sentenced to 57 months in prison by the Honorable Katherine A. Crytzer, in the United States District Court for the Eastern District of Tennessee at Knoxville. 

Bush pleaded guilty to engaging in more than $540,000 in fraud related to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, in violation of Title 18 U.S.C. § 1343.  Judge Crytzer ordered her to pay restitution in the amount of $471,621, a fine of $25,000, and to complete a term of supervised release of three years following her release from prison. 

The CARES Act is a federal law enacted in March 2020 to provide emergency financial assistance to the millions of Americans who are suffering from the economic effects caused by the COVID-19 pandemic.  Two primary sources of relief provided by the CARES Act were the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan (“EIDL”) program.  PPP loans consisted of more than $640 billion in forgivable loans to small businesses for payroll, mortgage interest, rent, and utilities.  The EIDL program provided low-interest loans to business owners to pay for items like accounts payable and other bills that could not be paid as a result of COVID-19.        

As set forth in the written plea agreement filed with the court, from March 30, 2020, to around the end of June 2020, Bush fraudulently applied for 10 loans totaling $547,286 through the PPP and EDIL programs.  Bush submitted fraudulent applications under the names of six businesses that did not qualify for the COVID-19 relief funds that Bush sought.  Bush submitted nine fraudulent applications to financial institutions seeking PPP funds and one fraudulent application to the Small Business Administration seeking EIDL funds.  As part of her fraud scheme, Bush submitted false supporting records, including Internal Revenue Service documents, and made false statements about the number of individuals the companies employed, the revenue generated, and the wages paid.  Bush also made false statements about the business entities and the intended use of the loan proceeds.

Bush then used the fraudulently obtained loan proceeds for unauthorized purposes, including to purchase clothes and electronics; to pay off personal debt; to pay for personal travel; and to fund her daily lifestyle.

For example, according to the plea agreement, on March 30, 2020, Bush submitted an online application to the Small Business Administration in the name of Enlightenment Family Care, Inc., seeking $150,000 in EIDL funds.  On the application and in the supporting documents Bush submitted to the SBA—which were all false—Bush claimed that Enlightenment Family Care employed four individuals, generated $335,651 in gross revenue, incurred $34,500 in cost of goods sold, and paid wages of $45,651 in the twelve months preceding the COVID-19 pandemic.  Bush fabricated a Profit and Loss Statement to substantiate her false claims. 

According to court documents, after entering her guilty plea in August 2021, and while she was subject to presentence release conditions, Bush submitted false Internal Revenue Service forms requesting COVID-19 relief funds for three companies, none of which was entitled to the requested funds.  Bush admitted to that conduct before sentencing in this case in a joint stipulation that was filed with the court.

This case is the result of an investigation conducted by the FBI. 

Assistant United States Attorney William A. Roach, Jr., who also serves as the Office’s Coronavirus Fraud Coordinator, prosecuted the case.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud.  The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.  For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

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On April 10, 1962, President John F. Kennedy proclaimed May 15th as "Peace Officers Memorial Day" and the week in which it falls as "Police Week," recognizing the essential role our law enforcement agencies play in safeguarding the rights and freedoms guaranteed to every American citizen by the Constitution.

Each day, the members of our law enforcement agencies fulfill their duty to serve the people by, in the words of President Kennedy, "safeguarding life and property, by protecting them against violence and disorder, and by protecting the innocent against deception and the weak against oppression and intimidation."

Each year, communities across the United States come together during National Police Week to commemorate police officers, past and present, who, by their faithful service and loyal devotion to duty, protect our communities.

We especially pay tribute to and remember those law enforcement officers who have suffered debilitating injuries in the line of duty or who have made the ultimate sacrifice and the family members, friends, and fellow officers they have left behind.

During the week of May 10-16, a number of virtual activities are taking place across the nation. Please visit our twitter page for more information at: https://twitter.com/USAO_EDTN, #PoliceWeek2020, or #PoliceWeek.

The 32nd Annual Candlelight Vigil will be held on May 13th across the nation. This year the names of 307 officers killed in the line of duty and will be added to the National Law Enforcement Officers Memorial in Washington, DC. https://nleomf.org/virtual-candle and #UnitedByLight.

Over 800,000 law enforcement officers serve communities across the United States, including the dedicated members of law enforcement who protect and serve the citizens of east Tennessee.

A top priority of the United States Department of Justice is to support all of our law enforcement partners throughout the country. Attorney General Barr has emphasized to U.S. Attorneys our commitment to support law enforcement in the performance of their duties and affirm the critical role of police officers in our society.

All federal, state, and local law enforcement partners play a vital role in ensuring that there is justice for victims. State and local officers comprise eighty-five percent of all law enforcement. They are the backbone of our law enforcement efforts. In the Eastern District of Tennessee, we value and respect the job they do.

Since the first recorded death in 1791, more than 21,000 law enforcement officers in the United States have made the ultimate sacrifice in the line of duty. Statistics from the National Law Enforcement Memorial Fund from January 1 through May 6, 2020, indicate 84 officers have been killed in the line of duty across the nation this year already, 18 of which were firearms-related.

In November 2019, the Department of Justice announced a new initiative, Project Guardian, designed to reduce gun violence and enforce federal firearm laws across the country. This new initiative involves a combined-agency approach on gun crimes, emphasizing improved information-sharing and coordination in the prosecution of federal and state firearms laws and reviewing cases involving gun crimes to determine whether federal or state prosecution would be more appropriate. Currently, 251 cases have been brought forward to U.S. Attorneys’ Offices nationwide for prosecution.

As U.S. Attorney, I am committed to this program, and our office backs our law enforcement partners every step of the way. None of us can combat violent crime on his own. Working together, however, we can have a meaningful impact.

During this week dedicated to remembering those who have made the ultimate sacrifice, I would like to say THANK YOU to all members of local, state, and federal law enforcement for their dedication and the sacrifices they make each day to make our community, state, and nation safe.

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Saipan – Shawn Anderson, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announces that on March 15, 2024, Kun Gao, age 43, a citizen of the People’s Republic of China (PRC) was sentenced in the District of the Northern Mariana Islands for Conspiring to Transport Illegal Aliens, in violation of 8 U.S.C, §§ 1324 (a)(1)(A)(ii) and (v)(I).  The Court ordered 30 days in prison, one year of supervised release, and a $100 mandatory assessment fee.  Gao was also ordered to promptly return to the PRC after serving his sentence.  

In July 2023, Gao and nine other PRC nationals conspired with four Saipan residents to transport them from Saipan to Guam using a small, motorized boat.  Most of the PRC nationals had no lawful status to be in the CNMI, and none of them were authorized to go to Guam.  Their boat ran out of fuel near the island of Rota, which required a dangerous sea rescue by the U.S. Coast Guard Sector Guam.

At the sentencing hearing, Chief Judge Ramona V. Manglona agreed with the government’s argument that this type of crime needs additional deterrence.  The term of imprisonment imposed was therefore longer than those for past cases.

“Unlawful travel by foreign nationals from the CNMI to Guam is a recurring problem,” said U.S. Attorney Anderson.  “It is an abuse of CNMI parole provisions within our federal immigration system.  It also endangers the lives of those involved, in addition to government personnel who must frequently conduct rescues in adverse weather.  Our sentencing recommendations will continue to emphasize deterrence and public safety.”                

"We are committed to upholding the rule of law and ensuring the integrity of our borders. Today's sentencing sends a clear message that individuals who conspire to circumvent immigration laws will be held accountable for their actions,” said Special Agent in Charge John F. Tobon.

This case was investigated by Homeland Security Investigations, with assistance from United States Coast Guard Sector Guam. 

Assistant United States Attorney Eric S. O’Malley from the District of the Northern Mariana Islands prosecuted the case.

WASHINGTON – On Dec. 2, a federal jury in Greeneville, Tennessee, convicted Peter Bolos, 44, of Tampa, Florida, of 22 counts of mail fraud, conspiracy to commit health care fraud and introduction of a misbranded drug into interstate commerce, following a month-long trial.

According to court documents and evidence presented at trial, Bolos and his co-conspirators, Andrew Assad, Michael Palso, Maikel Bolos, Larry Smith, Scott Roix, HealthRight LLC, Mihir Taneja, Arun Kapoor, and Sterling Knight Pharmaceuticals, as well as various other companies owned by them, deceived pharmacy benefit managers (PBMs), such as Express Scripts and CVS Caremark, regarding tens of thousands of prescriptions. The PBMs processed and approved claims for prescription drugs on behalf of insurance companies. Bolos and his co-conspirators defrauded the PBMs into authorizing claims worth more than $174 million that private insurers such as, Blue Cross Blue Shield of Tennessee, and public insurers such as, Medicaid and TRICARE, paid to pharmacies controlled by the co-conspirators.

Court documents and evidence at trial established that Bolos, Assad, and Palso owned and operated Synergy Pharmacy in Palm Harbor, Florida. Under their direction, Synergy agreed with Scott Roix, a Florida telemarketer operating under the name HealthRight, to generate prescriptions for Synergy and the other pharmacies involved in the scheme. The prescriptions were typically for drugs such as pain creams, scar creams and vitamins. To obtain the prescriptions, evidence showed Roix used HealthRight’s telemarketing platform as a telemedicine service, calling consumers and deceiving them into agreeing to accept the drugs and to provide their personal insurance information. HealthRight then paid doctors to authorize the prescriptions through its telemedicine platform, even though the doctors never communicated directly with the patients and relied solely on the telemarketers’ screening process as the basis for their authorizations. Because this faulty and fraudulent process made the prescriptions invalid, the drugs were misbranded under the Food, Drug, and Cosmetic Act. Synergy and the other pharmacies nonetheless dispensed the drugs to consumers as part of the scheme, so that Bolos could submit fraudulent reimbursement claims.

Court documents and evidence at trial established that during the conspiracy, which lasted from May 2015 through April 2018, Bolos paid Roix more than $30 million to buy at least 60,000 invalid prescriptions generated by HealthRight. Evidence showed Bolos selected specific medications for the prescriptions that he could submit for highly profitable reimbursements. In addition, Bolos used illegal means to hide his activity from the PBMs so that he could remain undetected. Evidence showed that Bolos was responsible for at least $89 million out of the total $174 million in fraudulently paid billings.

“The defendants deceived consumers in order to facilitate the distribution of drugs without proper medical oversight, and overbilled insurers for illegal prescriptions,” said Deputy Assistant Attorney General Arun G. Rao of the Justice Department’s Civil Division. “The Department will continue to investigate and prosecute individuals who use telemedicine to advance fraudulent schemes that violate the Food, Drug, and Cosmetic Act.”

“The United States Attorney’s Office for the Eastern District of Tennessee applauds the unwavering efforts of the multiple agencies involved in this collaborative investigation to bring this extensive healthcare fraud and misbranding scheme to justice,” said Acting U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee. “The scope and nature of this fraud and misbranding scheme shock the conscience. Patients were given medications that they neither requested nor wanted, and the trial proof demonstrated that the prescriptions were specifically chosen by Bolos to maximize the fraudulent scheme’s profits, rather than for the patients’ healthcare needs. The guilty verdict against Bolos and the guilty pleas obtained from his co-defendants should send a strong message that the Department of Justice will aggressively prosecute fraud against health insurance providers.”

“Healthcare fraud is an egregious crime problem that impacts every American,” said Special Agent in Charge Joseph E. Carrico of the FBI’s Knoxville Field Office. “The guilty verdict was a result of a multi-agency investigation into a complex health care fraud scheme that required substantial investigative resources. Along with its law enforcement partners, the FBI remains committed to investigate these crimes and prosecute all those that are intent in defrauding the American public." 

“Distributing misbranded prescription drugs in the U.S. marketplace places patients’ health at risk,” said Special Agent in Charge Justin C. Fielder of the FDA Office of Criminal Investigations Miami Field Office. “We will continue to pursue and bring to justice those who put profits ahead of public health.”

“Bolos and his co-conspirators used their pharmacies to fraudulently bill insurance companies hundreds of millions of dollars, and that type of health care fraud impacts everyone,” said Special Agent in Charge John Condon of Homeland Security Investigations (HSI) Tampa. “HSI will continue to work with our law enforcement partners at the federal, state and local level to investigate all fraud and bring those responsible to justice.”

“Bolos and his co-conspirators sought to increase their profits by executing a comprehensive health care fraud scheme involving innocent patients,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General. “This conviction should serve as a warning to individuals who wish to deceive the government and steal from taxpayers. Alongside our law enforcement partners, we will continue to pursue medical professionals who engage in fraudulent activity.”

“The verdict in this case sends a clear message that these types of schemes will not be tolerated,” said Special Agent in Charge Matthew Modafferi of the U.S. Postal Service Office of Inspector General in the Northeast Area Field Office. “The Special Agents of the U.S. Postal Service Office of Inspector General will continue to work closely with the U.S. Attorney’s Office and our law enforcement partners to bring to justice those who commit these kinds of offenses.”

Roix, Assad, Palso, Smith, Maikel Bolos, and various associated business entities previously pleaded guilty to their roles in the conspiracy. Taneja, Kapoor, and Sterling Knight pleaded guilty to felony misbranding in a conspiracy with Bolos. U.S. District Judge J. Ronnie Greer set sentencing for Bolos for May 19, 2022, in the United States District Court for the Eastern District of Tennessee at Greeneville. Sentencings for the other defendants will be set for dates in 2022.

The trial and plea agreements resulted from a multi-year investigation conducted by the U.S. Department of Health & Human Services Office of Inspector General (Nashville); Food and Drug Administration Office of Criminal Investigations (Nashville); U.S. Postal Service, Office of Inspector General (Buffalo); Federal Bureau of Investigation (Knoxville and Johnson City, Tennessee); Office of Personnel Management Office of Inspector General (Atlanta); and the Department of Homeland Security, Homeland Security Investigations (Tampa). The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.

Assistant U.S. Attorneys TJ Harker and Mac Heavener of the U.S. Attorney’s Office for the Eastern District of Tennessee and Trial Attorney David Gunn of the Department of Justice Civil Division’s Consumer Protection Branch in Washington, and a former Assistant U.S. Attorney in Knoxville, prosecuted and tried the case. They were assisted by Barbra Pemberton, Bryan Brandenburg, and April Denard from the U.S. Attorney’s office.   

          

KNOXVILLE, Tenn. – U.S. Attorney J. Douglas Overbey announced today that Assistant U.S. Attorney Perry H. Piper will lead the efforts of his office in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 3, 2020, general elections.  AUSA Piper has been appointed to serve as the District Election Officer (DEO) for the Eastern District of Tennessee and, in that capacity, is responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.

“Every United States citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud. Aggressive and prompt action will be taken by the Department of Justice to protect the integrity of the election process. While the COVID-19 pandemic may alter the way we vote this November, we nonetheless must ensure that voter integrity is maintained, and the votes counted as cast by the citizens. The United States Attorney’s Office for the Eastern District of Tennessee will act promptly and aggressively to protect the integrity of the election process,” said U.S. Attorney J. Douglas Overbey.

The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur.  The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on Election Day.

Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters, and provides that they can vote free from acts that intimidate or harass them.  For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law.  Further, federal law protects the right of voters to make their own ballot or to be assisted by a person of their choice.

The franchise is the cornerstone of American democracy.  We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice.  In order to respond to complaints of election fraud or voting rights abuses on November 3, 2020, and to ensure that such complaints are directed to the appropriate authorities, U.S. Attorney Overbey stated that AUSA/DEO Piper will be on duty in this district while the polls are open.  AUSA Piper can be reached at (423) 385-1332.

In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day.  The local FBI field office can be reached by the public at (865) 544-0751.

Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington, DC by phone at 1-(855) 856-1247 or (202) 514 -3847, by fax at (202) 307-3961, by email to voting.section@usdoj.gov or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.

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GREENEVILLE, Tenn. A federal judge in Greeneville, Tennessee, sentenced two Florida men for their roles in a multimillion-dollar health care fraud scheme.

Peter Bolos, 44, of Tampa, was convicted by a federal jury in December 2021 of conspiracy to commit health care fraud, 22 counts of mail fraud and introduction of a misbranded drug into interstate commerce.  U.S. District Judge J. Ronnie Greer sentenced Bolos to 14 years in prison and ordered him to pay more than $24.6 million in restitution and $2.5 million in forfeiture.  The court also sentenced Bolos’s co-defendant, Michael Palso, 48, of Tampa, to 33 months in prison and ordered him to pay more than $24.6 million in restitution.  Palso previously pleaded guilty to his role in the conspiracy, as did 14 other defendants in related cases.  The remaining defendants are scheduled to be sentenced later this week.

According to court documents and evidence presented at trial, Bolos, Palso and their co-conspirators, Andrew Assad, Scott Roix, Larry Smith, Mihir Taneja, Arun Kapoor, and Maikel Bolos, as well as various other companies owned or controlled by some of these individuals, deceived pharmacy benefit managers (PBMs), such as Express Scripts and CVS Caremark, regarding tens of thousands of prescriptions.  The PBMs processed and approved claims for prescription drugs on behalf of insurance companies.  Bolos and his co-conspirators defrauded the PBMs into authorizing millions of dollars’ worth of claims that private insurers such as Blue Cross Blue Shield of Tennessee, and public insurers such as Medicaid and TRICARE, paid to pharmacies controlled by the co-conspirators.

“The significant sentences imposed by the court are a reflection of the gravity of the crimes that the defendants in this case committed,” said Deputy Assistant Attorney General Arun G. Rao, head of the Civil Division’s Consumer Protection Branch.  “The department will continue to work with law enforcement partners to prosecute those who take advantage of telemedicine to perpetrate fraud schemes.”

“The scale of the prescription-drug fraud scheme orchestrated by these defendants and their conspirators was astonishing, and the Court’s prison sentences reflect the seriousness of their crimes,” said U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee.  “The financial harm caused by health care fraud hurts all Americans, and the United States Attorney’s Office for the Eastern District of Tennessee will continue to support the cooperation among its federal law enforcement partners that is necessary to bring criminal swindlers like these defendants to justice.”

“This sentencing is the result of a multi-agency investigation into a complex telemedicine pharmacy fraud scheme, requiring substantial investigative resources,” said Special Agent in Charge Joseph E. Carrico of the FBI’s Knoxville Field Office.  “The FBI, with its law enforcement partners, will remain vigilant to assure that unscrupulous individuals who exploit our health care system are brought to justice.”

“Distributing misbranded prescription drugs in the U.S. marketplace places patients’ health at risk,” said Special Agent in Charge Justin C. Fielder of the FDA Office of Criminal Investigations (OCI) Miami Field Office.  “We will continue to pursue and bring to justice those who put profits ahead of public health.”

“Bolos and his co-conspirators abandoned their responsibilities in the health care industry through an elaborate fraud scheme and manipulated the system without regard for patient need or medical necessity to line their pockets,” said Special Agent in Charge John Condon of Homeland Security Investigations (HSI) Tampa.  “This significant sentence should serve as a warning to anyone who attempts to deceive the government and steal from taxpayers.”

“Providers who solicit beneficiaries’ personal information and use it to defraud federal health care programs not only undermine the integrity of those programs; they also divert valuable taxpayer dollars for self-serving purposes,” said Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services, Office of Inspector General (HHS-OIG).  “HHS-OIG is proud to work alongside our law enforcement partners to investigate and hold accountable perpetrators of federal health care fraud.”

“The U.S. Postal Service, Office of Inspector General, will continue to vigorously investigate those who commit frauds against federal benefit programs and the U.S. Postal Service,” said Special Agent in Charge Matthew Modafferi of the U.S. Postal Service, Office of Inspector General Northeast Area Field Office.  “The sentencing in this case sends a clear message to pharmaceutical companies that tactics like these will not be tolerated.  The U.S. Postal Service, Office of Inspector General would like to thank our law enforcement partners and the Department of Justice for their dedication and efforts in this investigation.”

Court documents and evidence at trial established that Bolos, Assad and Palso owned and operated Synergy Pharmacy in Palm Harbor, Florida.  Under their direction, Synergy employed Scott Roix, a Florida telemarketer operating under the name HealthRight, to generate prescriptions for Synergy and the other pharmacies involved in the scheme. The Prescriptions were typically for drugs such as pain creams, scar creams and vitamins.  To obtain the prescriptions, Roix used HeathRight’s telemarketing platform as a telemedicine service, cold-calling consumers and deceiving them into agreeing to accept the drugs and to provide their personal insurance information.  HeathRight then paid doctors to authorize the prescriptions through its telemedicine platform, even though the doctors never communicated directly with the patients and relied solely on the telemarketers’ screening process as the basis for their authorizations.  Because this faulty and fraudulent process made the prescriptions invalid, the drugs were misbranded under the Food, Drug and Cosmetic Act.  Synergy and the other pharmacies nonetheless dispensed the drugs to consumers as part of the scheme, so that Bolos could submit fraudulent reimbursement claims.

Court documents and evidence at trial established that during the conspiracy, which lasted from May 2015 through April 2018, Bolos and Palso, along with co-defendant Andrew Assad, paid Roix millions of dollars to buy at least 60,000 invalid prescriptions generated by HealthRight.  Bolos selected specific medications for the prescriptions that he could submit for profitable reimbursements at inflated prices.  In addition, Bolos, Palso, and Assad used illegal means to hide his activity from the PBMs so that they could remain undetected.

The sentencing for the remaining defendants – all of whom pleaded guilty prior to trial – are scheduled to occur later this week.  Larry Smith, Alpha-Omega Pharmacy, Germaine Pharmacy, Zoetic Pharmacy, Tanith Enterprises LLC, ULD Wholesale Group, and Taneja will be sentenced on May 17.  Kapoor, Sterling Knight Pharmaceuticals and Maikel Bolos will be sentenced on May 18.  Assad, Roix and HeathRight LLC will be sentenced on May 19.  All of the sentencings will occur before Judge Greer in the U.S. District Court for the Eastern District of Tennessee at Greeneville.   

The trial verdict and plea agreements resulted from a multi-year investigation conducted by the HHS-OIG (Nashville); FDA-OCI (Nashville); U.S. Postal Service, Office of Inspector General (Buffalo); FBI (Knoxville and Johnson City, Tennessee); OPM-OIG (Atlanta); and HSI (Tampa). The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.

Assistant U.S. Attorney Mac Heavener of the U.S. Attorney’s Office for the Eastern District of Tennessee and Senior Trial Attorney David Gunn of the Civil Division’s Consumer Protection Branch in Washington are prosecuting the case.  They were assisted by Barbra Pemberton, Bryan Brandenburg, and April Denard from the U.S. Attorney’s Office.   





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GREENEVILLE, Tenn. – On May 23, 2018, two individuals were sentenced by the Honorable J. Ronnie Greer, U.S. District Judge, for their roles in a conspiracy to commit mail fraud.  Donald Kevin Collins, 41, of Elizabethton, Tennessee, was sentenced to serve 51 months in federal prison.  Upon his release, he will be supervised by U.S. Probation for three years.  He was also ordered to pay $1,381,552 in restitution. Charles Turner, 43, of Chattanooga, Tennessee, was sentenced to serve six months in prison, followed by six months home detention with electronic monitoring.  Turner must also perform 150 hours of community service, be supervised by U.S. Probation for three years and pay $1,381,552 in restitution.

Turner pleaded guilty in October 2017, to one count of a 16-count indictment charging him and Collins with conspiracy to commit mail fraud.  The indictment also charged Collins with 15 counts of mail fraud.  Collins also pleaded guilty in January 2018 to one count of conspiracy to commit mail fraud and 15 counts of mail fraud.  Details of the scheme are outlined in their plea agreements on file with U.S. District Court. According to these documents, Turner became involved in a conspiracy with Collins to defraud Mountain Empire Surgery Center (MESC) in Johnson City, Tennessee.  Beginning in mid-2009, Collins, who was the materials manager for MESC, devised a scheme to defraud MESC by submitting false invoices to MESC purporting to show that MESC had purchased and received supplies from a vendor called Turner Distributors, LLC (Turner Distributors).  In fact, MESC never received any supplies from Turner Distributors. Instead, at the instruction of Collins, Turner established Turner Distributors as a shell company. When MESC received legitimate medical supplies from companies like Cardinal Health, Collins falsified invoices and packing slips to make it appear as though the supplies originated from Turner Distributors.  Collins then submitted these falsified invoices and packing slips to the accounts payable personnel at MESC.   

Beginning in July 2009 and continuing through March 2016, MESC paid Turner Distributors after receiving the falsified invoices and packing slips submitted by Collins. To make payment, MESC mailed checks to the mailing address for Turner Distributors in east Tennessee. Upon receipt, Turner deposited the checks into a Carter County Bank account he opened in the name of Turner Distributors, withdrew cash, and split the proceeds with Collins.  Collins was then supposed to pay Cardinal Health for the cost of the supplies; however, since there was never any real agreement with Cardinal Health, the money was retained by Turner and Collins.

Although Turner initially believed that the business relationship was legitimate, he realized around April 2010 that he was involved in a criminal conspiracy with Collins after receiving a 1099 (an IRS form used to report miscellaneous payments made to nonemployee individuals during the calendar year) from MESC.  By this time, Turner, through Turner Distributors, had deposited 19 fraudulently obtained checks from MESC totaling approximately $74,146.  Although now aware of the conspiracy, Turner continued to participate in the conspiracy by depositing or cashing an estimated 161 additional MESC checks, totaling approximately $1,307,406, from April 2010 through March 2016.  In total, Turner and Collins fraudulently obtained 180 MESC checks amounting to $1,381,552.

“The U.S. Attorney’s Office will continue to work with our federal and state partners to prosecute those who conspire to use the U.S. Mail to commit fraud against legitimate businesses,” said U.S. Attorney J. Douglas Overbey.

FBI Special Agent in Charge, Renae McDermott said, “This investigation is but another example of our commitment to investigating fraud and rooting out those who willfully commit such crimes. We will continue working with our law enforcement partners to identify and stop those who defrauded their employer at the expense of others.”  

Agencies participating in this investigation included the FBI and Tennessee Bureau of Investigation-Medicaid Fraud Control Unit.   Assistant U.S. Attorney TJ Harker represented the United States in court proceedings.

 

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KNOXVILLE, Tenn. – Today, the Department of Justice announced it has charged more than 500 domestic violence cases involving firearms during Fiscal Year (FY) 2020. A Department priority since 2019 when Attorney General William P. Barr created the Department of Justice’s first ever-Domestic Violence Working Group, these charges are the result of the critical law enforcement partnership between United States Attorneys’ Offices and the Bureau of Alcohol, Tobacco, Firearms and Explosives, led by Acting Director Regina Lombardo, who has made domestic violence firearms-related investigations a priority.

“Keeping firearms out of the hands of dangerous criminal offenders is one of the Department of Justice’s top priorities,” said Attorney General Barr. “This is especially important when it comes to individuals with prior domestic violence convictions. The statistics are clear that when domestic violence offenders have access to guns, their partners and their families are at much greater risk of falling victim to gun violence. In fact, in some communities across America, roughly half of the homicides are related to domestic violence. The Department of Justice is committed to keeping guns out of the hands of those who are prohibited from having them, and we will continue investigating and prosecuting all domestic violence firearms related crimes.”

 “According to the CDC, data suggests that about one in six homicide victims are killed by an intimate partner,” said ATF Acting Director Lombardo. “Nearly half of female homicide victims in the U.S. are killed by a current or former male intimate partner. ATF is committed to aggressively pursuing prohibited possession of firearms due to domestic violence convictions and certain protective orders. It is another way we prevent violent gun crime within our communities.”

“The U.S. Attorney’s office for the Eastern Tennessee is a staunch advocate of national domestic violence awareness month. Domestic violence consists of depraved persons forcing their victims, under threat of pain, suffering, or death, to commit unthinkable acts. Talking about what happened to them and how they suffered can be one of the most difficult things for the victims of domestic violence, and those who care for and support them, to talk about. Nonetheless, we encourage everyone to find their voice and speak up against domestic violence. We must work together to break the silence and end the violence,” said U. S. Attorney J. Douglas Overbey.

Under federal law, individuals with domestic violence misdemeanor and felony convictions, as well as individuals subject to domestic violence protective orders, are prohibited from possessing firearms. The data shows that offenders with domestic violence in their past pose a high risk of homicide. In fact, domestic violence abusers with a gun in the home are five times more likely to kill their partners.

The Working Group, chaired by U.S. Attorney Erin Nealy Cox, of the Northern District of Texas, disseminates legal guidance on keeping guns out of the hands of domestic violence abusers using three federal statutes:

18 USC § 922 (g)(1), felon in possession of a firearm

18 USC § 922 (g)(9), possession of a firearm by a prohibited person (misdemeanor crime of domestic violence)  

18 USC § 922 (g)(8), possession of a firearm while subject to a domestic violence protective order

Based on the Working Group’s guidance, in FY 2020, U.S. Attorneys’ Offices nationwide brought 337 domestic violence felon-in-possession charges, 54 possession while subject to a protective order charges, and 142 possession by a prohibited person charges.

For more information on domestic violence or to get help, visit the National Domestic Violence Hotline website or call 1-800-799-SAFE (7233).

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Knoxville, Tenn. - In honor of National Police Week, U.S. Attorney J. Douglas Overbey will recognize the service and sacrifice of federal, state, local, and tribal law enforcement.  The week will be observed Sunday, May 10 through Saturday, May 16, 2020.

“There is no more noble profession than serving as a police officer,” said Attorney General William P. Barr.  “The men and women who protect our communities each day have not just devoted their lives to public service, they’ve taken an oath to give their lives to ensure our safety.  And they do so not only in the face of hostility from those who reject our nation’s commitment to the rule of law, but also in the face of evolving adversity – such as an unprecedented global health pandemic.  This week, I ask all Americans to join me in saying ‘thank you’ to our nation’s federal, state, local, and tribal law enforcement officers.  Their devotion and sacrifice to our peace and security will not be taken for granted.”

“I am constantly amazed by the hard-working men and women who put on the uniform each day, choosing to risk their lives to serve their communities.  These men and women put their lives on the line in situations none of us can fully comprehend or appreciate, all in the pursuit of justice and the protection of the law-abiding public.  These men and woman on the front lines don’t back down, even in the face of unprecedented situations like the COVID-19 pandemic.  I want to personally thank each and every individual who strives to make our community safe with their continued support,” said U.S. Attorney J. Douglas Overbey.

In 1962, President Kennedy issued the first proclamation for Peace Officers Memorial Day and National Police Week to remember and honor law enforcement officers for their service and sacrifices.  Peace Officers Memorial Day, which every year falls on May 15, specifically honors law enforcement officers killed or disabled in the line of duty.  

Each year, during National Police Week, our nation celebrates the contributions of law enforcement from around the country, recognizing their hard work, dedication, loyalty and commitment to keeping our communities safe.  This year the COVID-19 pandemic has underscored law enforcement officers’ courage and unwavering devotion to the communities they swore to serve.

Based on data collected and analyzed by the FBI’s Law Enforcement Officers Killed and Assaulted (LEOKA) Program, 89 law enforcement officers died nationwide in the line of duty in 2019, and four officers from the Eastern District of Tennessee.

Comprehensive data tables about these incidents and brief narratives describing most of the fatal attacks are included in the sections of Law Enforcement Officers Killed and Assaulted, 2019.

The names of the fallen officers who have been added in 2020 to the wall at the National Law Enforcement Memorial will be read on Wednesday, May 13, 2020, during a Virtual Annual Candlelight Vigil.  Because public events have been suspended as a result of COVID-19, the vigil will be livestreamed to the public at 8:00 pm (EDT).  To register to view this free online event, please www.LawMemorial.org/webcast.

To learn more about National Police Week and the virtual candlelight vigil, please visit www.policeweek.org.

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GREENEVILLE, Tenn.  This week, a federal judge in Greeneville, Tennessee, sentenced seven individuals and seven related corporate entities for their roles in a multimillion-dollar health care fraud scheme.  

According to court documents and evidence presented at trial, Peter Bolos and his co-conspirators, Michael Palso, Andrew Assad, Scott Roix, Larry Smith, Mihir Taneja, Arun Kapoor and Maikel Bolos, as well as various companies owned or controlled by some of these individuals, deceived pharmacy benefit managers (PBMs), such as Express Scripts and CVS Caremark, regarding tens of thousands of prescriptions.  The PBMs processed and approved claims for prescription drugs on behalf of insurance companies.  Bolos and his co-conspirators defrauded the PBMs into authorizing millions of dollars’ worth of claims that private insurers such as Blue Cross Blue Shield of Tennessee, and public insurers such as Medicaid and TRICARE, paid to pharmacies controlled by the co-conspirators.

Peter Bolos was convicted by a federal jury in December 2021. Roix, Assad, Palso, Smith, Maikel Bolos, and various associated business entities pleaded guilty to their roles in the conspiracy.  Taneja, Kapoor, and Sterling Knight pleaded guilty to felony misbranding in a conspiracy with Bolos.  U.S. District Judge J. Ronnie Greer imposed sentences this week for all the defendants except Roix, whose sentencing hearing was rescheduled for June 15, 2022.

On May 16, the court sentenced Bolos to 14 years in prison and $2.5 million in forfeiture. On the same date, the court also sentenced Palso, 48, of Lutz, Florida, to 33 months in prison.  Bolos and Palso also were each ordered to pay nearly $25 million in restitution.

On May 17, the court sentenced Smith, 52, of Tampa, to 42 months of imprisonment.  The now-defunct corporate entities that Smith created, Alpha Omega Pharmacy, Germaine Pharmacy, Zoetic Pharmacy, ULD Wholesale LLC, and Tanith Enterprises, all were sentenced to pay nearly $25 million in restitution.  The court also sentenced Taneja, 47, of Tampa, to 10 months of imprisonment and a $10,000 fine.

On May 18, the court sentenced Kapoor, 48, of Temple Terrace, Florida, to three years’ probation and a $10,000 fine.  Sterling Knight, a now-defunct corporate entity that Kapoor and Taneja created, was sentenced to pay $21 million in restitution.  The court also sentenced Maikel Bolos, 36, of Tampa, to 15 months of imprisonment and a $25,000 fine.

On May 19, the court sentenced Assad, 37, of Tampa, to 24 months of imprisonment and to pay nearly $25 million in restitution.  HealthRight was sentenced to pay $4.25 million in restitution.

“The significant sentences imposed by the court reflect the seriousness of this large-scale fraud scheme, in which the defendants’ deceived consumers in order to facilitate the distribution of drugs without proper medical oversight, and overbilled insurers for illegal prescriptions,” said Deputy Assistant Attorney General Arun G. Rao, head of the Civil Division’s Consumer Protection Branch.  “The department will continue to work with law enforcement partners to prosecute those who take advantage of telemedicine to perpetrate fraud schemes that violate the Food, Drug, and Cosmetic Act.”

“The scale of the prescription-drug fraud scheme orchestrated by these defendants and their conspirators was astonishing, and the Court’s prison sentences reflect the seriousness of their crimes,” said U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee.  “The financial harm caused by health care fraud hurts all Americans, and the United States Attorney’s Office for the Eastern District of Tennessee will continue to support the cooperation among its federal law enforcement partners that is necessary to bring criminal swindlers like these defendants to justice.”

“This sentencing is the result of a multi-agency investigation into a complex telemedicine pharmacy fraud scheme, requiring substantial investigative resources,” said Special Agent in Charge Joseph E. Carrico of the FBI’s Knoxville Field Office.  “The FBI, with its law enforcement partners, will remain vigilant to assure that unscrupulous individuals who exploit our health care system are brought to justice.”

“Distributing misbranded prescription drugs in the U.S. marketplace places patients’ health at risk,” said Special Agent in Charge Justin C. Fielder of the FDA Office of Criminal Investigations (OCI) Miami Field Office.  “We will continue to pursue and bring to justice those who put profits ahead of public health.”

“Bolos and his co-conspirators abandoned their responsibilities in the health care industry through an elaborate fraud scheme and manipulated the system without regard for patient need or medical necessity to line their pockets,” said Special Agent in Charge John Condon of Homeland Security Investigations (HSI) Tampa.  “These significant sentences should serve as a warning to anyone who attempts to deceive the government and steal from taxpayers.”

“Providers who solicit beneficiaries’ personal information and use it to defraud federal health care programs not only undermine the integrity of those programs; they also divert valuable taxpayer dollars for self-serving purposes,” said Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services, Office of Inspector General (HHS-OIG).  “HHS-OIG is proud to work alongside our law enforcement partners to investigate and hold accountable perpetrators of federal health care fraud.”

“The U.S. Postal Service, Office of Inspector General, will continue to vigorously investigate those who commit frauds against federal benefit programs and the U.S. Postal Service,” said Special Agent in Charge Matthew Modafferi of the U.S. Postal Service, Office of Inspector General. Northeast Area Field Office.  “The sentences in this case sends a clear message to pharmaceutical companies that tactics like these will not be tolerated.  The U.S. Postal Service, Office of Inspector General would like to thank our law enforcement partners and the Department of Justice for their dedication and efforts in this investigation.”

“Today’s sentencing holds the conspirators accountable for their reprehensible scheme that mislead patients and defrauded the federal government,” said Amy K. Parker, Special Agent in Charge, OPM OIG.  “The OPM OIG, along with our law enforcement partners, is committed to investigating individuals that seek to enrich themselves at the expense of patients, taxpayers, and the federal healthcare programs.”

Court documents and evidence at trial established that Bolos, Assad, and Palso owned and operated Synergy Pharmacy in Palm Harbor, Florida.  Under their direction, Synergy employed Roix, a Florida telemarketer operating under the name HealthRight, to generate prescriptions for Synergy and the other pharmacies involved in the scheme.  The prescriptions were typically for drugs such as pain creams, scar creams and vitamins.  Evidence showed that to obtain the prescriptions, Roix used HealthRight’s telemarketing platform as a telemedicine service, cold-calling consumers and deceiving them into agreeing to accept the drugs and to provide their personal insurance information.  HealthRight then paid doctors to authorize the prescriptions through its telemedicine platform, even though the doctors never communicated directly with the patients and relied solely on the telemarketers’ screening process as the basis for their authorizations.  Because this faulty and fraudulent process made the prescriptions invalid, the drugs were misbranded under the Food, Drug and Cosmetic Act. Evidence showed that Synergy and the other pharmacies nonetheless dispensed the drugs to consumers as part of the scheme so that Bolos could submit fraudulent reimbursement claims.

Court documents and evidence at trial further established that during the conspiracy, which lasted from May 2015 through April 2018, Bolos and Palso, along with Assad, paid Roix millions of dollars to buy at least 60,000 invalid prescriptions generated by HealthRight.  Evidence showed that Bolos selected specific medications for the prescriptions that he could submit for profitable reimbursements at inflated prices, and that Bolos, Palso, and Assad used illegal means to hide this activity from the PBMs so it could remain undetected.

The convictions resulted from a multi-year investigation conducted by the HHS-OIG (Nashville); FDA-OCI (Nashville); U.S. Postal Service, Office of Inspector General (Buffalo); FBI (Knoxville and Johnson City, Tennessee); OPM-OIG (Atlanta); and HSI (Tampa). The U.S. Marshals Service also assisted in the investigation and the forfeiture of assets.

Assistant U.S. Attorney Mac Heavener of the U.S. Attorney’s Office for the Eastern District of Tennessee and Senior Trial Attorney David Gunn of the Civil Division’s Consumer Protection Branch in Washington are prosecuting the case. They were assisted by Barbra Pemberton, Bryan Brandenburg and April Denard from the U.S. Attorney’s Office.

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CHATTANOOGA, Tenn.  On August 24, 2023, David Michael Apps, 50 of Chattanooga, Tennessee, was sentenced to 54 months in prison by the Honorable Charles E. Atchley, Jr., in the United States District Court for the Eastern District of Tennessee at Chattanooga.

As part of the plea agreement filed with the court in February 2023, Apps agreed to plead guilty to an information charging him with one count of wire fraud in violation of 18 USC § 1343.  In addition to the 54 months’ term of imprisonment, Apps was also sentenced to 3 years’ supervised release, ordered to pay $1.08 million in restitution, and forfeited $4,200 in cash seized by the United States.

According to court records, from 2014 through 2021, Apps was involved in a scheme to embezzle over $1.3 million while acting as the business manager of Broad Street United Methodist Church in Cleveland, TN.  App’s scheme included the use of an official church credit card to pay for personal expenses.  Some of these expenses included payment for personal travel, automobiles, medical bills for family members, boat/watercraft and marina fees, and other personal items, none of which was related to church business.  Apps used his federal firearms license to funnel additional stolen money through his business account by using stolen church money to acquire a large supply of firearms.  Apps also wrote checks to himself under the guise of church member donations to support supposed medical bills relating to his false claim that he had brain cancer.  Apps additionally failed to pay the church’s payroll taxes over a period of years, which resulted in over a $1 million tax liability to the IRS from the church.

Assistant United States Attorney Steven Neff represents the United States.

The investigation was conducted by the FBI as part of the Smoky Mountains Financial Crimes Task Force.

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Knoxville, Tenn. – U.S. Attorney J. Douglas Overbey of the Eastern District of Tennessee today announced that more than $65 million in Department of Justice grants is available to help communities combat human trafficking and serve adults and children who are victimized in trafficking operations.

“Our nation is facing difficult challenges, none more pressing than the scourge of human trafficking.  Human traffickers pose a dire threat to public safety and countering this threat remains one of the Administration’s top domestic priorities,” said Katharine T. Sullivan, Principal Deputy Assistant Attorney General for the Office of Justice Programs. “The Department of Justice is front and center in the fight against this insidious crime. OJP is making historic amounts of grant funding available to ensure that our communities have access to innovative and diverse solutions.”

“It is important to take the time to focus on the victim in the aftermath of a traumatic crime like human trafficking and to address their needs for safety and justice.  Our office will continue its efforts to build that trust and restore the hope of those victims and their communities. We all play a role in helping victims as they rebuild their lives within our communities,” said U.S. Attorney J. Douglas Overbey.    

The funding is available through OJP, the federal government’s leading source of public safety funding and crime victim assistance in state, local and tribal jurisdictions. OJP’s programs support a wide array of activities and services, including programs that support human trafficking task forces and services for human trafficking survivors. 

A number of funding opportunities are currently open, with several more opening in the near future. Missing and Exploited Children Training and Tecnical Assistance Program:https://ojjdp.ojp.gov/funding/opportunities/ojjdp-2020-17351

Total Available $1.8 million                                      Deadline 4/6/2020 (Extended)

Multidisciplinary Task Force Program to Combat Human Trafficking:

Total Available $22 million                                       Opens week of 3/16/2020

Preventing Trafficking of Girls:

 Total Available $1.7 million                                      Opens week of 3/16/2020

Research and Evaluation on Trafficking in Persons: https://nij.ojp.gov/funding/opportunities/nij-2020-17324

Total Available $2.5 million                                      Deadline 4/20/2020   

Services for Victims of Human Trafficking:

Total Available $16.5 million                                    Opens week of 3/16/2020

Specialized Training and Technical Assistance on Housing for Victims of Human Trafficking:     

 Total Available $2 million                                        Opens week of 3/16/2020

 Human Trafficking Training and Technical Assistance Program:

Total Available $5 million                                          Opens week of 3/16/2020

Improving Outcomes for Child and Youth Victims of Human Trafficking:                          

Total Available $6 million                                          Opens week of 3/16/2020

Integrated Services for Minor Victims of Labor Trafficking:

Total Available $8 million                                          Opens week of 3/16/2020

For more information regarding all OJP funding opportunities, visit https://www.ojp.gov/funding/explore/current-funding-opportunities

 

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CHATTANOOGA, Tenn. - On February 27, 2023, David Michael Apps, 50 of Chattanooga, Tennessee, pleaded guilty to an information charging him with wire fraud in violation of 18 U.S.C. 1343.  Apps is scheduled to be sentenced on July 27, 2023 at 2:00 p.m., before the Honorable Charles E. Atchley, Jr., in the United States District Court for the Eastern District of Tennessee at Chattanooga. 

According to court documents filed by the United States, from 2014 through 2021, Apps, the business manager of Broad Street United Methodist Church in Cleveland, Tennessee, devised a scheme in which he used an official church credit card to pay for personal expenses in excess of $1.5 million dollars.  Some of these expenses included payment for personal travel, automobiles, medical bills for family members, boat/watercraft and marina fees, and firearms, none of which was related to church business. Apps also wrote checks to himself under the guise of church member donations to support supposed medical bills relating to his false claim that he had brain cancer.  The specific count of conviction involves the use of the church credit card to buy a luxury watch from an expensive retailer in California for $3,711. 

Apps faces a possible sentence of up to 20 years’ imprisonment on the wire fraud count, along with significant fines, restitution, and forfeiture of property.

Assistant United States Attorney Steven Neff represents the United States.

The investigation was conducted by the FBI as part of the Smoky Mountains Financial Crimes Task Force.

Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.                                                

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