Owners of Dallas marketing firm indicted in $65M fraud scheme

The owners of a Dallas marketing firm were arrested last week, accused of orchestrating an elaborate scheme involving a fake nonprofit organization, a non-existent medical study, and kickbacks from compounding pharmacies that led to $65 million in fraudulent payments from Tricare, according to the U.S. Attorney's Office for the Northern District of Texas.

According to the indictment, Richard Robert Cesario and John Paul Cooper, co-owners of CMG RX LLC, marketed the creams to military members and their families on behalf of several pharmacies. The duo allegedly paid beneficiaries as much as $250 per month for each compound prescription they filled, telling customers the payments were "grants" for their participation in a Tricare-approved "Patient Safety Initiative." Cesario and Cooper even created a fake nonprofit organization, "Freedom from Pain Foundation," which they used to disguise nearly $2.5 million in kickback payments, investigators say.

The indictment also claims the two owners paid physicians cash kickbacks funneled through the nonprofit foundation as part of the "study." Cesario and Cooper allegedly accepted a portion of revenue from compounding pharmacies, which was paid to CMG RX as "employee wages."

CMG RX was formed in 2014, but ceased operations halfway through 2015 after Tricare implemented a new screening process for compounded drugs. If convicted, Cesario and Cooper would have to forfeit five homes, money in 18 bank accounts and 21 luxury vehicles.

The indictment outlines a kickback scheme that relies heavily on marketers, similar to what other prosecutors and legal experts have described in the wake of skyrocketing Tricare payments. Over the last year, widespread fraud within the compounding pharmacy industry has surfaced in several states, with Department of Justice officials estimating compounding creams are linked to as much as $500 million healthcare fraud nationwide. Last month, agents raided compounding pharmacies in four different states, including nine in Mississippi.

For more:
- here's the U.S. Attorney's announcement