Veterans sentenced for role in $65 million insurance fraud scheme

by Vern Evans

Two veterans convicted for helping bilk more than $65 million from the military health care program Tricare received prison sentences and orders to pay back millions of dollars they assisted in stealing, the Department of Justice announced Friday.

Marine veteran Joshua Morgan, 31, earned a sentence of 21 months while Navy veteran Kyle Adams, 36, secured a sentence of 15 months for their roles in the multilevel scheme to recruit service members and their dependents to carry out prescription drug fraud, the release said.

The pair convinced troops to receive pricey medications, like prescription creams and erectile dysfunction supplements, in return for a monthly kickback, while others involved in the massive scheme wrote bogus prescriptions and falsified paperwork to process the fraudulent insurance reimbursements.

Court documents said the scam, along with other fraud schemes, put the health care program at risk of insolvency in mid-2015.

“Today’s sentencing closes the last chapter on this outrageous fraud scheme that almost put TRICARE into bankruptcy,” United States Attorney for the Southern District of California Tara McGrath said in the statement.

The former sailor, Adams, brought approximately 88 people into the scheme, according to court documents. Another roughly 28 individuals were directly recruited by Morgan — who was a sergeant in Marine Aviation Logistics Squadron 11, based at Miramar Air Station, California, the documents show.

“It took very little work to sign people up to receive free money,” Morgan said, according to a sentencing court document, in which he also described himself as having been at the bottom of the Marine pay scale, with a large car payment, and badly in need of extra funds.

Morgan netted at least $2.6 million in illegal kickbacks while Adams took home at least $1 million, according to the court documents.

With his cut of the proceeds, Morgan lavishly spent his funds on nightclubs and top-shelf alcohol, the sentencing document continues. He also bought two luxury cars, which were seized by the government.

Fellow recruiter Adams ultimately conceded he “turned a blind eye” to the illegality of the scheme, contending that with the influx of so much money “he was not thinking clearly.”

The pair worked for Jimmy and Ashley Collins, a married couple in Tennessee, who the Justice Department said quarterbacked the scheme. In addition to the millions they were ordered to pay in restitution, Jimmy received a 10-year prison sentence while his wife earned 18 months in home confinement.

Authorities seized numerous items and properties purchased by the husband-and-wife team, and by others, with the proceeds of the fraud. That included an 82-foot yacht; luxury vehicles like Aston Martins; gold and silver bars; and three pieces of Tennessee real estate.

Other patient recruiters were previously sentenced to custody, the release said, as were the medical professionals who wrote the fake prescriptions and dishonestly handled other paperwork. The pharmacy that filled the fraudulent prescriptions, CFK, Inc., also previously pleaded guilty, the release said.

Attorneys listed in court records for Morgan and Adams did not immediately respond to Military Times’ request for comment.

Jonathan is a staff writer and editor of the Early Bird Brief newsletter for Military Times. Follow him on Twitter @lehrfeld_media

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