Lici Beveridge

Gannett Mississippi

The U.S. government claimed civil forfeiture of multiple properties in the Pine Belt and other areas worth at least $11 million following an Internal Revenue Service investigation that uncovered alleged money laundering, health care fraud and other criminal acts.

"Based on the information obtained so far, the subjects of this investigation own and operate numerous pharmacies that market and prepare compounded medications," IRS Special Agent Darren Mayer said in a declaration in support for a complaint of forfeiture in rem, adding, "Many of the subjects have engaged in price rolling," in which a pharmacy submits a claim to an insurance provider to "test" the amount the provider will reimburse for a specific prescription, then canceling the claim. The employee then submits a claim for a compounded formulation to see if that is reimbursed at a higher rate.

ORIGINAL STORY: FBI served search warrants at Mississippi pharmacies

According to Cornell University Law School, civil forfeiture rests on the idea that the property itself, not the owner, has violated the law. Unlike criminal forfeiture, in rem forfeiture does not require a conviction or even an official criminal charge against the owner.

Other techniques Mayer described include split billing (splitting a prescription into smaller supplies, then charging a dispensing fee) and automatic refills despite doctors' orders or patients' wishes. Some patients reported having received prescription medicines without having seen the doctor who prescribed them.

Some of the pharmacies allegedly billed for ingredients not used in the compounded medications.

"Many of the pharmacies are known to use affiliates or shell companies to hide their involvement from certain insurance programs," Mayer said in his statement.

On Jan. 21, the FBI served numerous search warrants across Mississippi, the result of an ongoing statewide investigation involving federal and state agencies.

Mississippi Bureau of Narcotics spokeswoman Dolores Lewis in January told multiple media outlets that the matter is a health care fraud investigation initiated by the Mississippi Bureau of Narcotics and adopted by federal authorities.

The compounding pharmacy investigation includes nine warrants in Mississippi, one in Alabama, one in Florida and one in Utah, she said.

Hundreds of people were interviewed, and 24 vehicles, five planes and two boats have been seized, along with money from 80 bank accounts totaling $15 million, Lewis added.

No one was arrested in January as a result of the searches, which included pharmacies in Jackson and Hattiesburg, said FBI Special Agent in Charge Don Alway in an earlier story.

In closing, Mayer said in his declaration the investigation "uncovered evidence that the proceeds of the health care fraud and money laundering were used, directly or indirectly, to purchase the Defendant Real Properties" listed in the forfeiture claim.

Some of the properties sought for civil forfeiture include properties in the Canebrake subdivision and golf community; parcels in Sumrall and Purvis; some in Hattiesburg and Forrest County; properties in Perry County; numerous parcels in Tallahatchie, Madison, Hinds, Warren and Lafayette counties; and several in Florida, Georgia and Louisiana.

Claimants to the property include Chad Barrett, Jonnita Barrett, Brew Barr LLC, David Haws, Hope Haws, Joele Smith, Randel Smith, Hope E. Thomley, Howard Randall Thomley, Dorothy H. Walters, Trace M. Walters and Wade A. Walters.

Other claimants include Leaf River Investments LLC; Magnolia State Bank (also a creditor); Pearl River Valley Water Supply District; Ranjo Farms LLC; Ranjo Holdings LLC; Ranjo Louisiana Properties LLC; Ranjo Properties LLC; The First, A National Banking Association; Thomley Properties LLC; Thomley's Christmas Tree Farm LLC; and United Business Ventures LLC.

The complaint for forfeiture in rem was filed Jan. 20 by J. Scott Gilbert, assistant U.S. attorney for Mississippi Southern District.

However, even though the properties are forfeited to the United States government, claimants can try to get it back.

“The claimants have an opportunity to get back the property through the judicial process,” FBI Special Agent Jason Pack said.

Clarion-Ledger reporter Sarah Fowler contributed to this report.