Henderson man pleads guilty in $100M health care fraud scheme

Randy Crowell, 56, entered the plea last week in federal court in the Southern District of New York on one count of conspiracy to commit health care fraud. The case stretches from Utah, where Crowell’s wholesale distribution company was based, to street corners of Manhattan and the Bronx, where people sold their prescriptions to low-level collectors for $40 a bottle or more.

Crowell gained about $16 million in profits, court records show.

“Everything is still a work in process, so I can’t talk about it at this time,” he said Tuesday.

Crowell ran the scheme between 2010 and 2012 as the operator and owner of a licensed wholesale distributor of prescription medications based in St. George, Utah. During that time, he and co-conspirators funneled prescription medications from the black market to pharmacies nationwide.

Federal prosecutors say the operation, to make the most money, focused on expensive medications, including prescriptions used to treat patients for HIV and AIDS.

“Randy Crowell perverted for profit a health care system designed to get safe and effective medications to patients who need them,” Manhattan U.S. Attorney Preet Bharara said in a statement. “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.”

The prescriptions passed hands several times through the black market, starting when patients, to make money, sold to collectors. Patients sold their prescriptions after receiving them for free or at little cost through programs like Medicaid.

Collectors used lighter fluid and other hazardous chemicals to remove patient labels on the bottles and pushed them higher up the black market’s chain to “aggregators,” who sold them to partners with access and connections to distributors, including Crowell’s company. Crowell’s company then resold the bottles as new medication at full price to pharmacies, including some in New York City.

During that time, Crowell’s company received the prescriptions in unsealed cardboard boxes, sometimes with bottles that were already opened. Prosecutors say Crowell directed employees to inventory the bottles and remove any that still had patient labels before shipping them out to pharmacies.

Other parts of the fraud included fabrication of documents, frequent changes of the telephone numbers used to contact co-conspirators and payment to them through shell companies.

As a result of his plea, federal prosecutors filed paperwork for forfeiture of $290,657 held by Green Valley Medical Distributors, one of Crowell’s companies.

Crowell faces up to 10 years in prison. As part of his plea deal, he also agreed to forfeit about $13 million obtained through the fraud.

His sentencing is set for May 11.

The New York FBI’s Health Care Fraud Task Force investigated the case.

Contact Ben Botkin at bbotkin@reviewjournal.com or 702-384-8710. Follow @BenBotkin1 on Twitter.