A Southern California proprietor of compounding pharmacies located in several states has recently been sentenced to three years in federal prison for tax evasion and health care fraud.
Matthew Peters, 38, pleaded guilty to the charges on August 4, a U.S. Department of Justice press release said. Peters influenced health care providers through various means to write prescriptions for compound pharmaceuticals and have them dispensed by pharmacies he owned. Compounded drugs are specially mixed and therefore result in larger payouts from benefit programs.
“Far too often, Matthew Peters bent and skirted the law to pad his pockets and fund a lavish lifestyle,” Scott Erik Asphaug, acting U.S. attorney for the District of Oregon said in the release. “Peters’ crimes, and the illicit actions of others like him, only serve to increase the cost of healthcare and prescription medications for ordinary Americans.”
Peters’ fraud was discovered in 2015 through false reimbursement claims to CVS Caremark where he sought $3.4 million for medication his pharmacies dispensed, the release said. CVS initiated an audit that found nearly $250,000 in “potentially unwarranted reimbursements.” Many claims also lacked proof of receipt from patients.
During his scheme, which generated millions in defrauded funds, Peters also eluded the payment of personal income taxes by claiming business expenses of $5 million for personal homes in California and Nevada as well as using “millions in cash transfers to straw entities and trust accounts in the names of others for Peters’ personal use,” the release said. “All told, between 2014 and 2017, Peters underreported his income tax liability by more than $5.4 million.”
Peters will serve three years in federal prison and three years of supervised release. He has also been ordered to pay more than $3,441,263 in restitution to the IRS, the release said.
“Instead of providing honest pharmaceutical services, Mr. Peters instead focused his energies on a scheme designed to benefit only himself at the expense of the most vulnerable people in our communities,” Special Agent in Charge Bret Kressin, IRS Criminal Investigation, Seattle Field Office, said in the release.
