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January 14, 2015

Authorities Arrest 5 Linked to ‘Pill Mill’ that Used L.A. Medical Clinic to Generate Illegal Prescriptions and Distribute the Narcotics in Texas

Filed under: California Defense Attorney — fayarfa @ 6:48 am

LOS ANGELES – After a federal grand jury issued a 33-count indictment last week, federal authorities in Texas and Southern California this morning arrested five defendants linked to a narcotics trafficking ring that sold illegal prescriptions for cash and obtained drugs that were shipped to Texas for sale on the black market. Two other defendants named in the indictment are currently being sought by authorities.

Those arrested this morning include the operators of the now-closed Southfork Medical Clinic, who allegedly sold unnecessary prescriptions for drugs that included oxycodone (best known by the brand names OxyContin and Percocet), hydrocodone (commonly sold under the brand names Vicodin, Norco and Lortab), alprazolam (best known by the brand name Xanax), carisoprodol (a muscle relaxant sold under the brand name Soma) and promethazine with codeine (a cough syrup sold on the street as “purple drank” and “sizzurp”). A doctor at Southfork wrote prescriptions “while acting and intending to act outside the usual course of professional practice and without a legitimate medical purpose,” and Southfork employees forged another doctor’s handwriting and signature on illegal prescriptions, according to the indictment.

The doctor employed by Southfork during the charged conspiracy, Madhu Garg, issued more than 10,000 prescriptions – with nearly 80 percent of those for hydrocodone or alprazolam, most of which were at the maximum dosage – over a 15-month period, according to records maintained by the State of California.

The conspirators also used Los Angeles as a base of operations to acquire and deliver bulk shipments of prescription drugs to Texas, according to the indictment. The investigation resulted in the seizure of multiple drug loads, including a January 2013 seizure of nearly 10,000 pills from the residence of ringleader Jagehauel Gillespie, and a July 2010 seizure of 48 bottles of promethazine with codeine from a car being driven across Texas by Gillespie and another defendant.

“Los Angeles is a major source of the deadly and addictive prescription drugs that are diverted to street sales across the Western United States,” said Acting United

States Attorney Stephanie Yonekura. “This case in the latest in a series of prosecutions clearly demonstrating that law enforcement is committed to stemming the tide of drugs being diverted to the black market, as well as putting an end to medical professionals who abuse their prescription pads and their ethical obligations.”

The indictment describes multiple undercover operations conducted during the investigation. During an October 2013 meeting at Southfork, Gillespie agreed that Garg would prescribe oxycodone and promethazine with codeine for an undercover cooperator in exchange for the person returning to the clinic with bottles of the prescribed cough syrup. Later that day, Garg gave the undercover witness prescriptions for those drugs, and Garg agreed to issue more prescriptions later that week under a different patient name. Six days later, during another meeting at Southfork, Gillespie gave the undercover witness forged prescriptions for oxycodone and promethazine with codeine using another doctor’s name and medical license number.

“These arrests demonstrate law enforcement’s continuing intolerance for those who are simply drug traffickers operating behind the thinly veiled guise of a medical practice,” said Anthony D. Williams, Special Agent in Charge of the DEA’s Los Angeles Field Division. “Dr. Garg and her employees brazenly wrote and distributed thousands of illicit prescriptions with no legitimate necessity, allowing a countless number of highly addictive prescription opioids to hit the streets of Los Angeles and Texas. The DEA will persist its longstanding efforts to investigate and dismantle pill mills like Southfork Medical.”

All seven defendants are charged with conspiring to distribute narcotics, a charge that carries a statutory maximum penalty of 20 years in federal prison. Additionally, each of the defendants is charged in at least one substantive counts of distributing a controlled substance, charges that could increase a prison term if they are convicted.

The five arrested this morning are:

Jagehauel Gillespie, 39, of Houston, the operator of Southfork who allegedly charged flat fees of up to $500 for prescriptions and who will face a statutory maximum sentence of 149 years in federal prison if he is convicted;

Dr. Madhu Garg, 63, of Glendora, California, the medical doctor who wrote prescriptions at Southfork, allegedly without any medical necessity, before the Medical Board of California revoked her license in late 2013;

Diane Nunez, 24, of Long Beach, California, who oversaw day-to-day operations at Southfork;

Daniel Clay, 45, of Houston, who allegedly shipped controlled substances from Southern California to Texas; and

Ray Steven Benton, 56, of Baldwin Hills, California, a “capper” who recruited patients to obtain prescriptions at Southfork.

These defendants will be making initial court appearances this afternoon in the district in which they were arrested, meaning that Garg, Nunez and Benton will be arraigned in

United States District Court in Los Angeles (and Gillespie and Clay will be appearing in federal court in Houston).

The two fugitives currently being sought are:

Jessica Poe, 32, of Inglewood, California, Gillespie’s girlfriend, who allegedly forged a doctor’s signature on prescriptions; and

Joseph Tyree Boyance, 35, whose whereabouts are presently unknown, a “capper” who recruited patients to obtain prescriptions at Southfork; and

The drug ring allegedly was based at the Southfork Medical Clinic, which until last February operated at 1818 South Western Avenue in the Harvard Heights district of Los Angeles.

In addition to the drug counts, Garg is charged with money laundering for allegedly wiring money obtained from the drug conspiracy to an account in Kuala Lumpur.

“IRS Criminal Investigation contributes our financial expertise in an effort to halt the illegal sale and distribution of prescription drugs,” stated IRS-Criminal Investigation Special Agent in Charge Erick Martinez. “Our goal is to stop criminal enterprises that profit from the illegal trade of dangerous narcotics and take away any financial benefit they receive from their criminal activity.”

Benton is also charged with firearms offenses, and both Gillespie and Benton are charged with using fake identities and fraudulent driver’s licenses to fill prescriptions at Los Angeles-area pharmacies.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.

The case related to Southfork is the product of an investigation by the Drug Enforcement Administration’s Los Angeles and Houston field divisions, Internal Revenue Service-Criminal Investigation, the Los Angeles Police Department, the California Department of Justice, and the Texas Department of Public Safety.

CONTACT: Assistant United States Attorney Benjamin Barron

Organized Crime Drug Enforcement Task Force   (213) 894-3542

Central District of California DOJ / Release No. 15-003 / January 13, 2015

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