A Chattanooga accountant, testifying in Chattanooga Federal Court, said he made $36,000 for "a few hours" work in a cream scam.
Ryan McGowan, who works for a local industry, said he met Michael Chatfield at UTC. Chatfield is on trial on healthcare fraud charges along with Wayne Wilkerson, Jayson Montgomery, Billy Hindmon and Kasey Nicholson.
The Whitwell native said Chatfield later called him, saying he could earn referral fees for recruiting others to agree to accept the "free" creams. The various creams were touted to help with pain, wound management, scarring, stretch marks and warts. There were also wellness pills.
McGowan said he was given some forms to have recruits sign. He was told that a doctor would give the customer a call, while getting the process started for billing insurance companies or the federal government what turned out to be exorbitant amounts for the cream - as much as $15,000 a jar. He was to get up to six refills on the creams he signed up for.
The witness said he also agreed to try the creams and got a call from Candace Craven, a nurse practitioner who worked at a small pharmacy in Cleveland, Tn. He said she asked him questions for a few minutes.
McGowan said he signed up 8-10 people, including his parents, his brother, his cousin, a co-worker, a friend's mother-in-law and his brother's girlfriend.
He said his father got "free" creams for warts, skin cancer, eczema, and age marks. His mother signed up for scar, skin and wound management creams.
McGowan afterward received a check in the mail signed by Chatfield for $17,000. Later, checks included ones for $4,300, $4,100 and $7,000.
The witness said he later was told that he "owed a co-pay" for the creams. He was instructed to meet "Wayne" at the Red Bank Post Office. Chatfield had advised that Wayne Wilkerson was the one "who got him into the business."
He said he met "a big guy named Wayne" who arrived in a black SUV. The meeting was on his lunch break at the post office on June 9, 2014. He said Wayne handed him 20 $100 bills and instructed him to buy six money orders to be sent to Willow Pharmacy in Madisonville, La.
McGowan said $88 was left over from the cash Wayne had given him, and Wayne told him to "keep the change."
The witness said he later learned there had been half a million dollars in billings from the creams given his recruits.
McGowan has not been charged in the fraud, though some who recruited others have been.
A second witness, Heather Burnette, told how she got into the cream scheme. The paralegal for a Chattanooga lawyer said a girlfriend, Carol Diamond, told her about it.
She said sometime in 2014 that Ms. Diamond had alerted her she was eligible for free cream for such maladies as stretch marks and scars.
The witness in the courtroom of Judge Sandy Mattice said, "It sounded great. There was no cost."
Ms. Burnette said the creams later arrived in the mail, but she said they "looked sketchy and I never used them."
She said, "The labels looked like they had been put on by my son."
She said a girlfriend told her that she tried one cream "and it turned her legs orange and streaky." She said, "I saw her legs and they were orange and streaky."
Ms. Burnette said a drug rep later told that "they needed my insurance card." She said the name of Billy Hindmon was mentioned in that connection.
Ms. Burnette said, "If I had known how much they were billing for the creams, I would absolutely not have taken part."
The government also called Nick Quincey, an Army staff sergeant at Fort Riley, Kan. He said he had spent his time in the military working on Humvees and other vehicles and "hanging out of a Blackhawk helicopter with a machine gun" for a year in Afghanistan.
He said he was at Fort Campbell in 2014 when he encountered Zach Rice, whom he had first met in Hawaii. He said Rice told him about the creams and he signed up, noting he hurts in his knees and back.
Sgt. Quincey said he received a call from Dr. Craven at the Cleveland Pharmacy and they talked about a minute. He was told the creams "were free through TRICARE" - the military healthcare program.
He said he quit using the scar cream because he could not see any change, but he felt the pain cream numbed his injuries "better than Icy Hot."
Sgt. Quincey also signed up for wellness pills, but they didn't seem to work for him.
He said Rice asked him to recruit others, saying he could make "50 bucks per person." He said he signed up co-workers and fellow soldiers and "made a couple thousand cash."
Sgt. Quincey said he later met Jayson Montgomery at a bar in Clarksville. He said there was also a dinner in Nashville, where Montgomery talked about setting him up with an LLC for accepting the money he was earning. He said he went to Montgomery's apartment "and he set it up online. He paid for it."
However, the witness said he never used it. He said, "I felt uncomfortable about it. It didn't feel right."
He said he also met "Billy" who "was on the same level as Jayson. They both worked for Wayne."
Steven McCall, a CVS official from Scottsdale, Ariz., said various aspects of the scheme raised all kinds of concerns.
He said it involved dispensing of drugs that were pushed by a marketer with making money in mind rather than by a doctor who personally examined a patient and found a need for a particular drug or cream.
Mr. McCall said, "It's a huge red flag if you see the same compound going to various family members."