A federal investigator testified Tuesday that a local leader in the "cream scheme" sent out an email to associates soon after it was learned that the federal healthcare agency for veterans was going to continue paying for compound drugs.
The witness said Wayne Wilkerson wrote on Jan. 9, 2015: "It's money making time. Saddle up."
Wilkerson, who is from Ooltewah, is on trial on federal criminal charges of healthcare fraud along with Michael Chatfield, Kasey Nicholson, Billy Hindmon and Jayson Montgomery.
Investigator Erik Srock of the Department of Defense's Office of Inspector General said there was a meeting in January of 2015 of TRICARE officials on the topic of exorbitantly expensive compound drugs. TRICARE decided at the time to continue the payments, but not long afterward cut them off.
Costs for compound drugs (with several ingredients that are specially prepared) were a major factor in TRICARE running out of money and having to go to Congress in mid-year for a special appropriation.
Billings to the federal government, private insurors and even to the self fund of the Hamilton County Schools was as high as $15,000 for a bottle of cream - said to relieve pain and cure scars, warts and skin disorders.
The witness said the Chattanooga group was involved in a scheme built on multiple kickbacks. He said they had agreements with pharmacies and physicians.
Wilkerson was wired hundreds of thousands of dollars monthly to the Top Tier LLC he set up. With some pharmacies he got a "commission" of 30 to 35 percent and with others 40 percent of the cream receipts.
In turn, he paid lesser commissions to those who worked under him recruiting others to agree to take the creams.
The others who are charged also had LLCs that were set up to receive the large amounts of cream revenue and pass lower commissions on to "recruiters." Some of the recruiters had their own LLCs as well.
He said Matthew Perkins, a recruit under Ms. Nicholson, "would pay them $25 or $50 or buy them an alcoholic drink" to get people to sign up to accept the creams.
Investigator Srock said prescriptions in the case were written by Susan Vergot and Candace Cravens, who were at a pharmacy in Cleveland, Tn., and by nurse practitioner Toni Dobson. Dr. Vergot and Ms. Cravens have been charged. Ms. Dobson has not.
The witness said pharmacies involved included Willow Pharmacy, Central Rexall, Florida Pharmacy Solutions and Soothe.
A defense attorney noted that the pharmacies were getting from 60-70 percent of the take and asked if they were going to be prosecuted. The agent said, "Other agencies are looking at the pharmacies."
He was also asked why others were not charged, including Brian Kurtz, identified as "somewhat of a silent partner" of Wilkerson. It was noted that the government can choose whether to go after someone criminally or civilly or not at all.
The government is expected to close its case, which is being heard by Judge Sandy Mattice without a jury, on Wednesday.