The government is recommending that Michael Chatfield be sentenced to a guideline range of between 14 years and 17 and a half years for his role in the "Cream Scheme." Attorneys for Chatfield are seeking house arrest or probation.
Chatfield is due to be sentenced in Winchester by Judge Sandy Mattice on July 23.
Chatfield was found guilty of 19 counts of wire fraud, eight counts of mail fraud, five counts of money laundering, four counts of payment of illegal remuneration, one count of receipt of remuneration, one count of conspiracy to commit healthcare fraud, and one count of healthcare fraud.
Attorneys for Chatfield objected to the loss amount attributed to him by the pre-sentence report, objected to an enhancement for over 10 victims, and objected to an enhancement for his role as a leader or organizer of the criminal activity.
Chatfield objected to the specific loss amount by claiming the government did not prove that “each and every claim” attributed to him was fraudulent, and he should be treated the same as George Striker, "whom he speculates was sentenced based on his amount of gain." Prosecutors said Striker got a break for pleading guilty and testifying against Chatfield.
Prosecutors Perry Piper and Franklin Clark wrote, "The United States suggests that a lengthy sentence of incarceration is warranted, one which captures the harm perpetrated by the defendant. . . The United States submits that the advisory guideline range as calculated by the Probation Office is correct and the government respectfully requests that the Court adopt it as the advisory guideline range."
The pre-sentence report attributes over $11 million in loss to Chatfield. This figure includes $8,623,589.88 from various private insurance companies, $2,032,942.60 from Tricare, and $954,273.64 from the Hamilton County Department of Education.
The prosecutors said, "The entire purpose behind this scheme was to unjustly enrich Chatfield and his co-defendants. The fact that some people who ordered the creams might have had some tangential 'need' for the products does not change the fact that it was still a scheme to defraud. If the motivating factor behind the supposedly non-fraudulent transactions was to sell beneficial products to people who needed them, then Chatfield and the other defendants could have sold the $10 ingredients from WalMart directly to the patients. Instead, they picked and chose individuals with specific health insurance plans, selling creams they knew would be reimbursed at grotesquely inflated prices."
They said Chatfield was second in command "with more than 10 downlinks. He issued all of the checks to his downlinks. He personally instructed individuals on how much to pay to customers and which customers to target. He also instructed his downlinks to set up shell entities to receive their money obtained as a result of this scheme.
"Upon learning that George Striker was contacted by federal agents looking into this matter, Chatfield did not merely encourage Striker to refrain from speaking to law enforcement. Rather, Chatfield encouraged Striker to lie to federal agents, and he even assisted in suggesting and developing a specific lie – designed to conceal his participation in the crime. 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’ (IA). It’s been months ago. I don’t remember.”
A large number of testimonials were submitted in behalf of Chatfield.
Prosecutors said, "It must be pointed out that a substantial portion of the praise Chatfield receives in these testimonials is tainted by the personal financial gain the authors’ received as a result of Chatfield’s fraud. Authors of character letters receiving money from Chatfield as part of this scheme include:
• Jacob Burgess $17,000
• Matthew Tyler Burgess $118,900
• Brandon Chatfield $81,700
• Grayson Chatfiel $19,000
• Hal Chatfield $484,300
• Brendan Hawks $5,000
• Derrick Hogans $81,000
• Michael Rimer $9,800
"Additionally, the following letter writers’ insurance companies were billed as part of the fraudulent scheme:
• Jacob Burgess $119,548.66
• Matthew Tyler Burgess $125,247.92
• Brandon Chatfield $112,021.50
• Grayson Chatfield $27,744.02 • Michael Rimer $78,447.10
• Melissa Archey $206,824.93 • Garrett Fuller $27,744.02 • Natalie Chatfield $108,184.25
• Davis Eldridge (Kelley, Ruben and Rufus) $284,570.47 through Willow $234,770.81 through Central $63,438.22 through Soothe
• Michael Rimer $66,597.76.
"Particularly troubling is the letter from Hal Chatfield, who praises his son. This is to be expected. However, Michael Chatfield (as part of the scheme through Top Shelf) paid his father $480,000, through Core Enterprises, LLC, a company Hal Chatfield created to receive his ill-gotten gains. Hal would not inculpate his son while testifying in the grand jury, but when pressed on what he did to earn this money, Hal admitted on at least five occasions that he did absolutely nothing. Perhaps a more objective letter from Hal Chatfield would have included the fact his son paid him nearly half a million dollars, for doing nothing, with proceeds from the fraudulent scheme."