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Tag: U.S. Attorney’s Office

Food City to pay $8.4M to settle opioids-related allegations

Abingdon-based K-VA-T Food Stores, operator of the Food City supermarket chain, has agreed to pay more than $8.4 million to the federal government to settle allegations under the False Claims Act (FCA) related to dispensing opioids and other controlled substances.

The U.S. Department of Justice announced the agreement with K-VA-T Food Stores Monday,

In a statement, K-VA-T Food Stores noted that “the allegations focused primarily on circumstances from more than a decade ago. K-VA-T has continually disputed the validity of these allegations, and the settlement agreement clearly states there is no admission of liability by K-VA-T. This case is another example of the many cases nationwide brought against manufacturers, distributors and retailers of opioid products.”

In October 2020, the entity K-VA-T Litigation Partnership filed a FCA qui tam action, which allows individuals or entities to sue wrongdoers over fraud against federal programs, in the U.S. District Court for the Eastern District of Tennessee, alleging Food City dispensed controlled substances in Georgia, Kentucky, Tennessee and Virginia that were medically unnecessary.

From January 2011 to December 2018, 24 Food City pharmacies, the government alleged, dispensed opioids and other controlled substances that were medically unnecessary, lacked a legitimate medical purpose and/or were not dispensed “pursuant to valid prescriptions.” Food City also, the government stated, submitted claims for payment for these drugs to federal health care programs like Medicare.

Baron & Budd, a Texas-based law firm, issued a press release Monday stating the whistleblower in the case is a former Food City pharmacy employee who regularly reported his concerns to management.

The initial 2020 lawsuit notes that Food City No. 821 in Bristol, Virginia, at one time received enough opioids for 25 pills per year for each of the 13,231 men, women and children who lived within five miles of the pharmacy.

“When pharmacies fill prescriptions for opioids and other powerful controlled substances without regard to their legitimacy or medical necessity, it significantly contributes to the opioid epidemic, causing great harm to our citizens and communities,” said Francis M. Hamilton III, U.S. attorney for the Eastern District of Tennessee, in a news release.

Of the $8.48 million owed to the government, more than $4.2 million is restitution. K-VA-T Litigation Partnership will receive more than $1.5 million. Food City will also pay an additional $78,621 to the states of Virginia and Kentucky for claims paid to Food City by state Medicaid programs.

The resolution was coordinated by the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for Eastern District of Tennessee, with assistance from the Department of Health and Human Services Office of Inspector General and the Defense Criminal Investigative Service.

In July, the Justice Department announced a $409 million settlement with Rite Aid to settle the government’s allegations under the FCA and Controlled Substances Act for dispensing “at least hundreds of thousands” of unlawful prescriptions for controlled substances.

K-VA-T Food Stores operates 158 retail outlets throughout Southeast Kentucky, Southwest Virginia, East Tennessee, North Georgia and Alabama.

Ex-Richmond Fed examiner pleads guilty to insider trading

A former Federal Reserve Bank of Richmond examiner on Tuesday pleaded guilty to committing insider trading and making false statements about his trading to the Richmond Fed.

Robert Brian Thompson, 43, of Chesterfield County’s Moseley area, was an examiner and senior manager with supervisory duties for the Richmond Fed, where he worked from 2004 through about May 2024. Thompson used confidential information from about seven publicly traded financial institutions that are under the Richmond Fed’s supervision when executing trades from October 2020 to February 2024, according to a news release from the U.S. Attorney’s Office for the Eastern District of Virginia.

In total, he completed 69 trades through seven institutions, reaping approximately $771,678 in profits.

“This was a clear violation of our well-established and well-communicated policies on ethics and conflicts of interest,” Richmond Fed spokesman Jim Strader said in a statement. “We fully cooperated with the authorities who investigated this matter.”

From October 2023 through this January, Thompson allegedly used “material nonpublic information” to trade in stock and options of McLean-based Capital One Financial and New York Community Bancorp, according to court filings from the Securities and Exchange Commission, which filed a civil case against Thompson in early November.

From 2022 until about May, Thompson was the Fed’s deputy central point of contact for large and foreign banking organizations, managing a team that supervised and examined 18 U.S. banking firms with at least $100 billion in total assets.

In October 2023, Thompson received an email from a Federal Reserve colleague with a preview of Capital One’s third quarter 2023 earnings that showed earnings per share results exceeded analysts’ expectations, according to an SEC case filing.

On Oct. 26, Thompson allegedly purchased 7,500 Capital One shares for an average of $90.40 per share. After the market closed that day, Capital One announced its third quarter earnings. When the market closed the following day, Oct. 27, Capital One shares were trading at $97.74 a share.

The SEC alleges that Thompson sold his stock at an average of $100.98 per share, gaining more than $79,300 in profits.

Between Jan. 18 and Jan. 26, Thompson learned through conversations with other Fed staff members that NYCB would be announcing substantial, unexpected losses related to loans it acquired as part of its March 2023 acquisition of Signature Bank, according to the SEC.

On Jan. 29, Thompson purchased 1,600 out-of-the-money put option contracts that expired Feb. 16, which would earn a profit if NYCB’s stock price fell by the expiration date, for a total cost of almost $14,500, according to the SEC.

On Jan. 31, NYCB released its fiscal 2023 earnings results. By close, its shares were trading for $19.41, a 37% drop from its closing price the previous day.

On Feb. 1, Thompson sold his NYCB put options and gained more than $505,500 in profit, the SEC alleges.

According to court filings related to his plea deal, Thompson also made false statements on his 2020, 2021, 2022, 2023 and 2024 Form Ds, annual forms that require employees to disclose whether they have any assets, including any equity invested in any banks that are members of the Fed system and/or bank holding companies. A federal regulation also prohibits Federal Reserve employees from trading in bank securities altogether to avoid conflicts of interest.

A Federal Reserve Board of Governors spokesperson said in a statement: “There is no place at the Federal Reserve for the misuse of confidential information. We have robust safeguards in place to ensure that those who have access to supervisory information understand their responsibilities and obligations, including the outright prohibition on trading in bank stocks. We require regular training, as well as affirmations by our staff that each person understands and is committed to the highest standards of professional behavior.”

Thompson reported in those Form Ds that he had no equities in any publicly traded financial institutions and that he hadn’t engaged in any activity that would constitute conflicts of interest, violations of Richmond Fed policies or violations of law.

As of the date that Thompson filed his fiscal 2023 form, he allegedly held bank stock and options with a market value of more than $500,000, according to court filings in the SEC case.

Thompson is scheduled to be sentenced in U.S. District Court on March 19, 2025, and faces a maximum penalty of 20 years in prison for one count of insider trading and five years in prison for one count of making false statements.

Thompson’s attorneys did not immediately reply to a request for comment.

Portsmouth business owner pleads guilty to $1.3M Medicaid fraud

The owner of a Portsmouth home health care and mental health care services business with a location in Chesapeake pleaded guilty Monday to charges stemming from illegally receiving more than $1.32 million through Medicaid fraud, the Eastern District of Virginia U.S. Attorney’s Office announced Tuesday. 

Whitteney Guyton pleaded guilty to one count of health care fraud and six counts of making false statements; she owned and operated Synergy Health Systems, according to an indictment filed March 22, 2023, in the U.S. District Court for the Eastern District of Virginia. Assistant U.S. Attorneys Elizabeth M. Yusi and Clayton D. LaForge are prosecuting the case. 

Guyton has more than 23,000 followers on TikTok, where she describes herself as a “mother, wife, owner of consulting firm, real estate, restaurant and fashion line,” and sometimes discusses building wealth. In addition to Synergy, Guyton is CEO of We Buy the Block, a real estate investment group, and was a co-owner of a Hampton brewing company that closed in 2023. In 2022, Guyton was included in a Virginia Business list of 100 People to Meet in 2023. 

From June 2016 through October 2018, Guyton engaged in a scheme to defraud the Virginia Department of Medical Assistance Services (DMAS), which administers Medicaid in the state, the U.S. Attorney’s Office alleged. Guyton billed Medicaid for services she claimed Synergy provided; however, the company’s records were “falsified, incomplete, failed to comply with basic Medicaid requirements, and included inflated time,” according to the statement from the U.S. Attorney’s Office.

Medicaid requires assessments by a registered nurse for personal care and by a licensed mental health professional (LMHP) for mental health services. Guyton had a licensed clinical social worker (LCSW) contractor from 2016 to July 2017, but did not have another LMHP to conduct assessments or reassessments until October 2018. 

“Guyton instructed her staff to forge the original LCSW’s signature on assessments and certifications,” the release noted. “Guyton and Synergy submitted documents to DMAS for authorization for [mental health support services] for over 35 patients that contained forged signatures and authorizations, fraudulently billing and receiving over $740,000 from DMAS.”

Additionally, Guyton and Synergy forged signatures of a registered nurse and fraudulently billed over $50,000 from DMAS, and Synergy billed an additional $480,000 for patients in hospitals or health care facilities or for patients who didn’t have documentation of assessments being performed, according to the U.S. Attorney’s office. 

Scheduled to be sentenced Jan. 10, 2025, Guyton faces up to 10 years in prison. She did not immediately respond to a request for comment Wednesday.