MS Coast man set to plead guilty in PPE price gouging scheme that targeted VA hospitals
An Ocean Springs businessman is set to plead guilty to one federal charge in a healthcare fraud scheme where personal protective gear was purchased and resold at much higher prices to Veterans Affairs hospitals across the U.S. during the COVID-19 pandemic.
Kenneth Ritchey’s attorneys, Sidney Lampton and Scott Gilbert of Jackson, confirmed Ritchey’s intent to plead guilty to conspiracy to defraud the United States. A plea date has not yet been set.
Ritchey is facing a maximum prison sentence of up to 5 years, up to a $250,000 fine, and up to three years of post-release supervision.
Though Ritchey’s attorneys couldn’t comment Tuesday, Gilbert said, “I look forward to the case being resolved.”
Ritchey became the target of a federal criminal investigation involving hoarding PPE gear and other alleged crimes as early as April 2020 when federal agents raided Gulf Coast Pharmaceuticals Plus LLC, a wholesale distribution business Ritchey’s wife owns and he ran. The warehouse is on North Halstead Road in Ocean Springs.
Ritchey, the charging documents say, worked with 12 alleged co-conspirators to buy up and hoard PPE they later sold at higher prices during the early months of the COVID-19 pandemic — all at the expense of Veterans hospitals and other entities desperate to protest employees from the coronavirus.
The PPE gear Ritchey was selling was marked up as much as 300% over costs, the records say, and providers brought them out of fear of being unable to get the equipment during the national emergency due to the COVID-19 pandemic.
300,000 masks. 21,850 gloves. MS Coast businessman pleads guilty to COVID-19 price gouging
Some providers did ask about the inflated prices, the records say, and the co-conspirators either sent them messages to dissuade them from reporting the business for price gouging or Ritchey and others created fraudulent receipts to the providers to cover up the crimes.
His co-conspirators, the indictment says, included a warehouse manager and employee in Jackson County, nine sales representatives with an office in Broward County, Florida, and another unnamed co-conspirator, believed to be a Harris County pharmacist convicted of crimes involving Ritchey.
A federal grand jury had indicted Ritchey on six federal charges that included conspiracy to commit healthcare fraud and wire fraud, making false statements, conspiracy to defraud the United States, and conspiracy to hoard designated scarce materials.
Before facing federal charges, Ritchey pleaded guilty to a state charge of price-gouging involving the Jackson VA center. A judge sentenced him to five years in prison, but suspended the prison term and ordered him to serve three years under supervision and pay over $54,000 in restitution.
PPE gear bought online and at home improvement stores
In addition to GCPP, Ritchey controlled another entity and retail pharmacy in Jackson County that profited from the price-gouging scheme.
To carry out the scheme, Ritchey allegedly directed his employees to buy the gear and awarded them by paying them, for example, 50 cents for each N-95 mask they acquired, plus expenses.
The co-conspirators bought the gear at home improvement stores in Mississippi, Louisiana, Texas, Alabama, Florida, Georgia, South Carolina and North Carolina, and they often used military and other discounts in places they could make bulk purchases.
The staff also bought other gear online.
New federal charges detail how Coast businessman ‘exploited’ COVID fears across Southeast
GCPP paid an average of $3.49 for each N-95 mask but then sold them and other PPE “by as much as 300% over its costs and exploited the fear and desperation of healthcare providers, including VA healthcare facilities, to acquire PPE and other designated materials during a declared national emergency.”
GCPP bought over 1 million N-95 masks, 550,000 procedural masks and thousands of other PPE and materials.
Salespeople knew about price gouging
The salespeople, the charging documents say, were aware of the price gouging scheme and even sent messages to one another about other states that had laws against price gouging.
The messages include this thread about where they could sell in the PPE at an inflated cost.
“Are we still not sending mask(s) to Washington?”
“Washington is OK,”
“So what do we need to look our for(,) FL(,) CA and NY, NY?”
“Yes, please (.)“
“State of emergency (sic) kinda gets me worried though(.)“
Co-conspirators charged in PPE fraud scheme
Of the 12 alleged co-conspirators, three have faced federal charges
The former head buyer at GCPP, Brandon J. Reich of Broward County, Florida, has pleaded guilty to a federal charge of conspiracy to commit healthcare fraud as part of the PPE price-gouging scheme.
Reich is awaiting sentencing and faces up to 5 years in prison and up to a $250,000 fine.
Florida man pleads guilty in alleged medical equipment price gouging scheme
Another alleged co-conspirator, 30-year-old James Wesley “Trey” Martin of Ocean Springs, has pleaded not guilty to a federal charge of making false statements.
Martin allegedly committed his crime while working as a warehouse manager and permit holder at GCPP.
Martin is accused of creating fraudulent paperwork at Ritchey’s direction for Jada Gilbert, a former pharmacist in charge at Blue Ribbon Pharmacy in Harris County, Texas.
Gilbert called Martin to ask that he create the fraudulent paperwork after CVS Caremark decided to audit Gilbert’s pharmacy in 2019.
In April, Gilbert pleaded guilty in federal court in Gulfport to a federal charge of conspiracy to commit healthcare fraud.
As part of her plea, Gilbert admitted conspiring with others to create fraudulent invoices and purchase logs for high-adjudication pharmaceutical products, namely specialized products to treat burns, that she had never ordered or dispensed.
Gilbert admitted she was trying to conceal her crime when she submitted the fraudulent paperwork to CVS benefit managers during the audit.
Assistant U.S. Attorneys Jonathan Buckner and Sara Porter are prosecuting the case.
