A former U.S. sailor and two former Marines, who were all stationed in San Diego, have pleaded guilty to their role in a $65 million Tricare fraud, federal authorities announced this week.
Kyle Adams, the sailor, and Daniel Castro and Jeremy Syto all pleaded guilty June 24 for their role in the cross-country scam, according to the U.S. Attorney’s Office for the Southern District of California.
The plot involved Adams, Castro and Syto recruiting Tricare patients on behalf of the alleged ringleader of the plot to “receive extraordinarily expensive and largely unnecessary prescription compounded drugs,” according to the U.S. attorney’s office.
The three partook in the scam at varying times from October 2014 to July 2015, during which all were on active duty, according to authorities.
Two other former San Diego-based Marines, Josh Morgan and Bradley White, previously pleaded guilty to recruiting Tricare beneficiaries as part of the scheme, the attorney’s office said.
Aviation Boatswain’s Mate (Aircraft Handling) 1st Class James Edward Trice Jr. was found dead on the Carl Vinson on April 18.
Adams, Castro and Syto all admitted to working as recruiters for a Tennessee couple, Jimmy and Ashley Collins, who also have been charged, according to the attorney’s office.
“At the Collins’ direction, the defendants recruited TRICARE beneficiaries by promising to pay them to evaluate the medications as part of an ongoing medical study, when in reality, no study was taking place,” the attorney’s office said.
The beneficiaries were paid several hundred dollars to take part in the bogus evaluation, according to prosecutors.
Once Adams, Castro or Syto recruited a so-called “straw beneficiary,” the patient’s information was sent to Choice MD, a Tennessee clinic co-owned and operated by the Collinses, according to the attorney’s office.
Prosecutors say several medical professionals employed by the Collinses then wrote prescriptions for the straw beneficiaries, despite never reviewing or examining the patients in person.
The bogus prescriptions were sent to The Medicine Shoppe, a Utah pharmacy, which filled them and “and received massive reimbursement from TRICARE,” the attorney’s office said.
Between December 2014 and May 2015, Tricare was billed roughly $65.6 million for those prescriptions, prosecutors say, with the Collinses and the three recruiters — Adams, Castro and Syto — all getting a taste of the proceeds.
Adams, 33, the sailor who pleaded guilty last week, was in the Navy from 2012 to 2017, and his last assignment was with the Fleet Readiness Center Southwest at Naval Air Station North Island, California, according to his plea agreement.
He took part in the scheme from October 2014 to July 2015, bringing in straw beneficiaries that bilked Tricare out of nearly $11.5 million and netting himself more than $1 million, according to court records.
Syto, 26, was involved in the plot in 2015 while on active duty in the Marine Corps and was last assigned to Marine Aviation Logistics Squadron 11 at Marine Corps Air Station Miramar before he was honorably discharged in 2017, according to his plea agreement.
Tricare paid roughly $8.6 million in reimbursements for compounded medications prescribed to “straw beneficiaries directly recruited” by Syto, according to his plea agreement.
Syto made at least $264,000 for his recruiting efforts, according to records.
His attorney did not respond to an email seeking comment.
An investigation into the May 6 incident remains ongoing.
Castro took part in the scheme during the first half of 2015 and was honorably discharged from the Marine Corps later that year, according to his plea agreement.
Like Syto, his last assignment was with Marine Aviation Logistics Squadron 11 at Miramar, records show.
Castro “recruited and paid fellow Marines and their dependents” to be straw beneficiaries for the scam, and the 32-year-old also enlisted other recruiters to find even more bogus beneficiaries, according to his plea agreement.
Tricare paid roughly $11.9 million in reimbursements for the beneficiaries Castro brought in, according to his plea agreement, and the former Marine was paid more than $1 million for his efforts.
Castro’s attorney, Jeremy Warren, declined to comment.
The three are due to be sentenced in September and face maximum sentences of 10 years imprisonment and fines of $250,000, among other penalties, according to their plea agreements.
A superseding indictment filed earlier this year against the Collinses, Adams, Castro and Syto includes “a lengthy list” of items purchased with proceeds from the scheme that have been seized or restrained by officials, including an 82-foot yacht, two Aston Martin vehicles, “dozens of pieces of farm equipment and tractor-trailer trucks” and three parcels of Tennessee real estate.
The next court hearing for the Collinses is scheduled for Thursday, according to the attorney’s office.
Their attorneys did not immediately respond to emails seeking comment.
The corporate owners of The Medicine Shoppe have pleaded guilty and paid a fine, according to authorities.
Those medical professionals who wrote the prescriptions in Tennessee have also pleaded guilty, the attorney’s office said.