An Indian American has been sentenced to 12 years in prison by a Texas court and ordered to pay $68 million in restitution for his involvement in an elaborate rogue internet pharmacy scheme.
Rakesh Jyoti Saran, 47, of Arlington, Texas, pleaded guilty to one count of conspiracy to commit healthcare fraud and other federal offences; two counts of mail fraud; and one count of conspiracy to distribute controlled substances, according to the Federal Bureau of Investigation (FBI).
Saran, who is the last defendant to be sentenced in this case, has been in federal custody since May 2009.
Saran was arrested Sep 21, 2005 on charges outlined in a 201-count federal indictment -- alleging that from November 1999 through Sep 20, 2005 he and co-defendants conspired to commit healthcare fraud, wire fraud, mail fraud, and money laundering and engaged in the illegal distribution of controlled substances in a drug diversion scheme, prosecutors said.
According to plea papers filed in court, Saran operated 23 Texas-incorporated pharmacies through two companies that he owned, Carrington Healthcare Systems, Inc. and Infinity Services Group, Inc., and purchased expensive pharmaceuticals at significant discounts from pharmaceutical wholesale suppliers.
Saran then sold the discounted pharmaceuticals outside the scope of the provisions of "contract pricing" available to Group Purchasing Organisations (GPOs), making substantial profits from the diverted transactions.
Saran also used his pharmacies to operate a "store front" website designed to facilitate the distribution of controlled substances to internet customers.
Additionally, Saran also played an integral role in providing promethazine cough syrup with codeine, hydrocodone, and alprazolam to individuals who illegally sold these drugs "on the street", acquiring approximately $20 million in proceeds for doing so.
As part of his plea agreement, Saran forfeited assets earned from his illegal activities, including more than $1,000,000 in cash seized at his residence; more than $375,000 found in bank accounts; approximately $390,000 in cashier's checks and money orders; several vehicles; and a custom home under construction in Arlington, which was sold by the US Marshals Service (USMS) for $1,200,000 through an Internet auction in May 2008.
All other defendants charged in the case, including managers and employees of Saran's various pharmacies, have pleaded guilty to their roles in the scheme and have been sentenced to various terms.