A former detective who made $354,000 in the "Cream Scheme" is facing sentencing in Federal Court on Monday.
George Striker, who was a detective for the Chattanooga Police Department from 1993 to 1999, faces up to 10 years in prison and a fine up to $250,000. But his guideline sentencing range is 18-24 months.
His attorney, Richard Lee Gaines of Knoxville, is asking that he get probation.
In the locally-based scheme, individuals were recruited to order creams that were billed to insurance companies at rates as high as $15,000 a jar. Striker’s family alone received prescriptions which billed for $1.8 million.
After his arrest, Striker said he got into the cream business when he was approached by co-worker Jimmy Bettis at Charter Communications in Cleveland, Tn. He said he was told he could make supplemental income.
Striker said Michael Chatfield told him that the creams would come at no charge. Chatfield is one of five individuals awaiting a verdict of guilt or innocence from Federal Judge Sandy Mattice.
Striker said he was advised payments would come from Express Scripts, which handled insurance for Charter.
Striker said he began marketing the creams to family and friends and began getting lucrative "commissions."
Through Striker's efforts, insurance companies and the government's Tricare were billed over $7.6 million.
Attorney Gaines said, "It was only after months without followup from the medical professionals, a stack of prescriptions in his garage, and hundreds of thousands of dollars of revenue that Mr. Striker realized he had to be breaking the law."
Striker said, "I'm mad at Michael Chatfield and mad at myself for getting involved. I am disappointed in myself for being conned by Michael Chatfield."
Prosecutors gave this summary of Striker's role in the case:
George Striker was a downlink under Chatfield. He was employed at Charter Communications and first became involved in the scheme when he was approached by a coworker, Jimmy Bettis, about ordering creams for himself. He ordered eczema, scar, stretch mark, and wound management cream, as well as wellness pills, for which he had no need.
After he ordered creams for himself, he was approached by Chatfield to market creams for him. Chatfield told him that his “role would be to approach people, to ask them to sign up for these creams, to participate in a study, and that they would be paid $100 per person that signed up.”
Striker was told by Chatfield that he (and others who ordered creams) would not be required to “pay anything out of pocket.” Striker noted that he had “problems” with the creams in that they were not clearly labeled and it was difficult to determine “which ones were which.” Chatfield informed Striker “what insurance companies were currently covering the creams.”
Even though there was never a “survey” done (as far as Striker knew), Chatfield provided Striker with a form for the customers to sign stating that they may be compensated for participating in the survey. The customers were in fact compensated by the marketers.
Striker signed up his wife, daughter, two step-children, and his ex-wife for the creams. Striker’s children did not need the creams or the wellness pills; the only purpose in ordering them was “revenue.” He also signed up numerous other family members, including his father, uncle, cousins and their kids. Striker’s 13-year-old step-daughter, had eczema and acne cream ordered for her; she never spoke to a doctor. Later, a scar cream was added for her, as “Michael made a joke or told me that every kid has scars from growing up and things like that, so, we just added the scar cream.” Striker’s 11-year-old step-son, had eczema cream, wart removal cream, and wellness pills ordered for him, even though he needed none of them. Chatfield informed Striker that they could not order a cream containing fluticasone for the step-son because of his age, therefore they “put him down for something else.”
Text messages written in September 2014 recovered from Striker’s phone, revealed parts of the scheme. Chatfield informed Striker that the “wound creams” from FPS paid out “17 to 20K.” Chatfield informed Striker that Cigna Insurance was a “no go” because they imposed a $500 cap on compounds, an amount which did not provide for “much money after co pay.” Striker questioned Chatfield about his commission. Chatfield replied, “You’ll have 7k again at central. You made 5 (because) Brown family got reversed due to high co pays. I’ll send them elsewhere for this month to help it go down. You’ll have around 10k from fps and more that’ll be on your October pay check.”
Discussing commissions from the various pharmacies, Chatfield informed Striker that “Your wife and kids have 35 Revenue each” at FPS. Striker questioned the timing of his commission check so he could “know when to reimburse” his customers or “pay them for participating.” Striker, expressing concern for his cousin’s finances, informed Chatfield “She’s my cousin and they have a lot of bills on a teacher salary so I was just updating her. Nothing more. She is just one of the ones I hope keeps going thru for her purposes along with our income.” Chatfield replied, “Gotcha, do you think she would be able to get another person or two from her work?”
Chatfield informed Striker that he “made 17k total for August and as long as you don’t lose anyone and refills keep going (unless insurance cuts off some, I haven’t heard of any more but I can’t guarantee) you’re over 21 k.”
After discussion regarding Striker’s customers, Chatfield stated, “Nice, at least we got hamby to get his wound and wellness come monday that’s 20k in Revenue. Jeff will just have the Co pay issue one time and it’ll go down just like yours and Jimmy and ericka and everyone else has.”
Chatfield explained to Striker that the co-payment on some customers would be expensive in the beginning, but after a short period the co-pay would be “close to zero.” Striker and Chatfield then agreed to submit that customer’s prescriptions.
Chatfield asked Striker if the “Walter family be okay with wellness tablets?” When Striker said they would, Chatfield replied, “Send all 4 of them wellness tablets. 25k in revenue extra.”
Striker asked Chatfield, “Where is these large copay amounts (for Striker’s customers) being paid out of?” Chatfield replied, “I’m giving you extra.”
Regarding Striker’s commission, Chatfield informs him, “Okay so (the children) are 11 so pharmacy won’t let us use more than one cream of fluticasone be it’s too much for a child. So I’ll add (the children) a wellness tablet (19k in revenue) and a wound for Valerie and something else she wants which will be around 22k total for those 2. So a total of 40-42k revenue from your family at Central.”
Chatfield and Striker discussed Striker’s father, Joseph Striker, and what insurance he had. Striker informed Chatfield that his father had Tricare insurance for his prescriptions. Ultimately, Joseph Striker ordered creams through George Striker and Chatfield using Tricare.
During a February 2015 in person meeting with Chatfield and Jimmy Collins, Striker surreptitiously recorded the conversation. Striker confirmed that they were paying $100 for the evaluation. disputing Chatfield’s claim that the payment amount for the evaluation was only $25 to $50.) Striker was questioning why the federal agents (who had visited Striker the day before) would be asking him questions. Chatfield told him that “they don’t know you’re selling,” but if they asked, Chatfield told Striker that he did not “have to tell that.”
Chatfield informed Striker that they were “going to have an evaluation in the next few days,” illustrating that there had not been an actual evaluation procedure up to that point (which would have encompassed all of 2014 and the first month of 2015).
In fact, Striker never took part in an evaluation and he was not aware that any people he signed up participated in one.
This conversation occurred on February 10, 2015; Chatfield and Striker started marketing the creams in the spring of 2014. Chatfield explained to Striker and Collins why they did not have an evaluation procedure in place, and then stated that they could approach customers and say “hey, we got an approved an evaluation now. Go back out and fill it out.”
“We would have to cover our butt to have them do an evaluation after the fact.”
Chatfield stated, “We don’t have an actual evaluation from the patient.” Striker questioned Chatfield regarding what he should say to law enforcement regarding who referred him for the creams. Chatfield responded “…say someone from work told you. Say ‘I can’t remember’ say ‘one of my customers told me.’ It’s been months ago. I don’t remember.”
Collins theorized that the agents were going to “work their selves through Willow. They’re gonna find their golden goose.” Chatfield added, “'Cause that’s where the fraud happened.”
Recounting the conversation with an agent, Striker said he told the agent a lie: “initially, I said ‘a customer, I think a customer of mine referred me, ‘cause they saw my scars and said, you know, go see these people.’”
Chatfield advised Striker to “stick to that answer since you said it to an agent already.” Striker explained that the agent asked him if he knew Michael Chatfield. Striker said “No…so I lied there to ‘em.” Chatfield responded, “Okay.”
Collins also added that Striker could say he didn’t know “Michael’s” last name, to which Chatfield chuckled.
Striker then asked about reimbursing customers for their co-pays. When questioned by Collins as to who had done that, Chatfield added, “That’s not--that’s not how you word it, though.”
At some point, Chatfield suggested that it was the fault of Charter employees for not turning in an evaluation. Chatfield coached Striker to say the payments were for an evaluation. Collins then theorized that if Striker sufficiently paid his customers for the evaluation then they would not turn on him when they spoke with law enforcement.
At some point in the conversation, Collins, with Chatfield present, asked Michele Craven to come into his office. Collins introduced Craven to Striker so “if (law enforcement) in the future asked me, have you ever met” (because Craven had written prescriptions for him), Striker could say that he met her.
Jimmy Collins, a former Birchwood resident, was arrested in California on health care fraud charges.