Former Carter Supt. business dealings called fraudulent

Jan. 25—A lawsuit filed last month in Boyd County Circuit Court calls the business practices of former Carter County Superintendent Ronnie Dotson "fraudulent."

Two plaintiffs and former business partners of Dotson and his son, Jacob, allege in a civil suit that the Dotsons committed "fraudulent acts, breach of fiduciary duties, embezzlement and mismanagement of a mutually owned pharmacy corporation."

Dotson, who was the superintendent of Carter County Schools for nearly 10 years, abruptly resigned from his position twice during the summer of 2021.

Dotson's reasoning for his exit, after the initial resignation, was placed on his son, Jacob, a pharmacist, who accepted a position in Hilton Head, South Carolina, and Dotson elected to follow.

Sometime after his exit from Carter County Schools, Dotson dived into the pharmacy industry alongside his son — launching ownership in a handful of pharmacies, including Cornerstone Care Associates, LLC, and CIA Drug, LLC.

The Dotsons reached out to the two plaintiffs named in the suit for "financial backing" to purchase and operate additional pharmacies in Summit, Lexington and Mount Sterling.

According to court records, ownership was to be fairly evenly split, with the Dotsons claiming 51% and the plaintiffs 49%.

Together the parties formed Corner Tech, Inc., a corporation dedicated to conducting pharmaceutical business.

Court documents indicate that it was the Dotsons who would manage "day-to-day business" — with Ronnie Dotson named Managing Partner and Chief Executive Officer and Jacob the President.

Plaintiffs in the suit allege that the Dotsons failed to obtain contracts with health insurers, negatively impacting competitive pricing compared to other pharmacies in the area that accepted Humana, Anthem, Medicaid, etc.

Due to lack of insurance contracts, the plaintiffs believe customers were uninterested in utilizing the pharmacies due to high pricing — affecting the profitability of the corporation as a whole.

In addition to the lack of contracted insurance companies, the suit continues by accusing the Dotsons of not obtaining required licensure and purchasing controlled substances under one pharmacy's name to sell at another.

According to court records, Corner Tech was required to pay fines to the federal government once the "illegal" actions were noted.

The plaintiffs and part-owners of Corner Tech elected to sell due to the legal issues in addition to the lackluster profits produced.

In this timeframe, the Dotsons notified the plaintiffs that they had found a buyer.

Court records state that the Dotsons resolved the legality issues by obtaining appropriate DEA licensures, which, according to the plaintiffs, made the corporation much more profitable.

After cleaning house of legal issues, the Dotsons, according to court documents, reported to the plaintiffs that the buyer backed out, and instead the Dotsons offered to buy out the plaintiffs "for a much less amount than the aforementioned buyer."

The suit states that the plaintiffs took the financial loss to officially cut ties with the Dotsons, only to later learn that the previous buyer had not backed out after all and proposed a price substantially higher than the price the Dotsons bought them out for.

Court records state that the misrepresentations made by the Dotsons resulted in "the plantiffs agree(ing) to sell their stock to the Dotsons for a much lower price causing ... pecuniary damages."

Prior to the plaintiffs selling their stock, the Dotsons are accused of ordering medications under Corner Tech, Inc., pharmacies to sell at their other pharmacy locations (owned by only the Dotsons) unbeknownst to the plaintiffs, according to court documents.

Via the civil suit, the plaintiffs further allege that the Dotsons sold these medications purchased by the shared business without compensating Corner Tech or the plaintiffs for the expenditures that only benefited the Dotsons.

In addition to using Corner Tech's funds for medications for outside pharmacies, the plaintiffs also accuse the Dotsons of paying employees of their outside pharmacies on Corner Tech and the plaintiff's dime without compensation.

All together, the civil suit cites nine counts of violations including fraud, embezzlement, mismanagement and tortious interference.

It is unclear at this time of writing if the Dotsons have responded or if they've been served with the suit at their South Carolina residences.

Prior to the legal fiasco, Ronnie Dotson's departure from Carter County didn't go without controversy, either.

In previous reports, Dotson refused to comment after he rescinded his initial resignation just to resign again less than a month later.

(606) 326-2652 — mjepling@dailyindependent.com