The federal Sixth Circuit Court of Appeals has upheld the convictions and sentences of five individuals involved in the "Cream Scheme" that defrauded insurance companies and the federal government of millions of dollars.
Jerry Wayne Wilkerson, 39, Michael Chatfield, 30, Kasey Nicholson, 34, Billy Hindmon, 38, and Jayson Montgomery, 39, earlier were sentenced byJudge Sandy Mattice to prison terms for their roles in the scheme.
All five defendants were convicted on multiple counts of fraud. The sentences varied in length, with the largest sentence being reserved for Jerry Wayne Wilkerson, who will spend over 13 years in custody. Other sentences include Michael Chatfield – nine years, Billy Hindmon – four years and three months, Kasey Nicholson – two and a half years, and Jayson Montgomery – two years.
The 29-page ruling from the Sixth Circuit says, "This case is about a get-rich-quick pyramid scheme. Five defendant drug marketers extracted $35 million in two years from public and private insurers by convincing friends and family to order prescription creams and wellness tablets that they didn’t need, and then pocketing a cut of the insurance reimbursement for themselves.
"The government caught on, and the defendants were charged with and convicted of various counts of healthcare fraud, conspiracy to commit healthcare fraud, wire fraud, mail fraud, paying and receiving illegal kickbacks, and money laundering. Despite carefully targeting insurance companies that would reimburse without scrutiny, hiring a nurse practitioner to sign prescriptions without asking questions, inducing people to order creams by giving them a cut of the commission, and charging insurance companies thousands of dollars for creams with ingredients that could be purchased over the counter for a fraction of the price, the defendants claim that their convictions should be vacated because of their belief that all of this was perfectly legal.
"In the alternative, they argue that even if what they did was fraudulent, they should not be held accountable at sentencing for the total loss because at least some prescriptions were legitimate, though they don’t identify which ones or explain why.
"Because a rational factfinder could infer intent to defraud from the defendants’ actions, and because the defendants did not establish the legitimacy of any part of their operation, we affirm the convictions and sentences of all defendants."
The case was tried in Chattanooga and several of the defendants are from the local area.