Hundreds of San Diego-area Marines accused of defrauding the federal government – ​​NBC 7 San Diego

Honor, courage and commitment are the core values ​​of the United States Marine Corps. Yet the integrity of hundreds of soldiers involved in one of the military's largest fraud conspiracies in recent memory has been lost, according to federal prosecutors. The U.S. government has never disclosed what disciplinary action, if any, they received and is not answering questions about their current whereabouts.

The federal indictment details a complex and lucrative scheme that involved a Utah pharmacy issuing fake prescriptions from a Tennessee clinic as part of a bogus medical trial.

These prescriptions brought in a lot of money. At the height of the conspiracy, the clinic was billing TRICARE, the government-funded military hospital, more than $10,000 per prescription, sometimes more than $20,000. These were not life-saving drugs – rather, the pharmacy often wrote prescriptions for cosmetic creams, such as stretch mark creams and sunscreen, or a “general wellness pill.”

To find bogus patients, four Marines and one sailor acted as recruiters to identify service members and their families who would knowingly participate in the scheme in exchange for $300 a month in bribes. More than 350 Marines and service members participated, the vast majority stationed at Marine Corps Air Station Miramar.

“It took very little effort to recruit people to receive free money,” Joshua Morgan, one of the Navy's (now former) recruiting officers, told prosecutors.

Retired Marine and criminal defense attorney Gary Barthel frequently represents military personnel involved in similar schemes. The former military prosecutor has 40 years of experience in military law and has also served as legal counsel to commanding generals.

“The temptation is there,” said Barthel. “They are young. They are short of money and will seize the opportunity.”

Barthel told NBC 7 he was initially shocked by the allegations against hundreds of active-duty Marines in San Diego, but said it was not unusual for soldiers to be recruited for criminal activities.

“Young soldiers in particular,” Barthel said, “don't make much money. It's easy for them to look the other way. Marines are usually trained to take risks, and that's why it's easy for them to do that.”

The conspiracy was successful. It began in 2014 and brought in $65 million. The main players, the married clinic owners, spent the money on a lavish lifestyle. According to prosecutors, this included an 82-foot yacht, two Aston Martins, gold and silver bars, dozens of pieces of farm equipment, semi-trailers and three properties in Tennessee.

“The floodgates for fraud opened'

The clinic owners weren't the only ones who realized how easy it was to steal from Uncle Sam. Dozens of other clinics and pharmacies treated TRICARE like a personal piggy bank. The rise in the number of fake prescriptions for homemade drugs created a $2 billion problem for the military health program seemingly overnight. It was so bad that TRICARE nearly filed for bankruptcy.

So how did we get here?

In 2012, TRICARE changed its policy on formularies, which are customized medications designed specifically for patients. They are often prescribed when a drug, ingredient or dosage is not commercially available. For example, when a patient is allergic to an ingredient in a common formula.

In 2012, TRICARE allowed pharmacies to charge for each individual drug. The Defense Department said this “opened the floodgates for fraud.” Before 2012, the average prescription at a pharmacy cost $100. Within two years, the average cost of a 30-day supply rose to $13,000.

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The fraud scheme ends

About a year later, the fraud came to a halt after dozens of indictments were filed across the country as part of a nationwide crackdown on organized fraud involving counterfeit drug prescriptions.

Which brings us back to San Diego. The Justice Department brought charges against 11 people. All pleaded guilty and were convicted.

The mastermind of the plot, clinic owner Jimmy Collins, was sentenced to ten years in prison. He and his wife Ashley, also a co-conspirator, had to repay the $65 million. The two doctors who wrote the fake prescriptions were sent away for two years, and the five recruiters received prison sentences ranging from six to 21 months.

The Justice Department sent out more than a dozen press releases about the case, touting its investigation and its findings. But those releases glaringly lacked details about the disciplinary actions taken against hundreds of bogus Navy patients.

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There were no details of prosecutions, plea deals, verdicts, dishonorable discharges, demotions, reprimands, financial compensation or fines.

Federal charging documents leave little doubt that the bogus patients were indeed aware of the fraud scheme, stating that Marine recruiters “instructed TRICARE bogus patients to falsely state on a preprinted form that they had seen a physician…the patients had neither seen a physician nor spoken to a physician about the prescription drugs prescribed to them.”

And prosecutors apparently knew exactly who these Marines were. Documents show that recruiters kept detailed records of their bribe payments to the fake recipients, which made it much easier for prosecutors to put the pieces of the puzzle together.

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Since January, NBC 7 Investigates has repeatedly asked the Southern District of California Attorney General's Office and the U.S. Department of Justice whether the government plans to bring charges against the Marines who accepted forged prescriptions in exchange for bribes.

A spokeswoman said the Justice Department would not discuss the case beyond what is stated in the department's press releases and sent us the following statement:

“The United States has prosecuted several individuals, including some military personnel, who played key roles in the fraud scheme, knew about and understood the scheme, and had the intent to defraud Tricare. The Department of Justice has a long-standing practice of neither confirming, denying, nor commenting on investigations or inquiries concerning individuals not charged with a federal crime.”

A representative from MCAS Miramar asked NBC 7 to contact the Department of Defense, who in turn asked us to file a Freedom of Information request with the U.S. Marine Corps, which we did. However, such public records requests often take more than a year to process.

The Naval Criminal Investigation Service also refused to release information about the disciplinary actions of its soldiers.

Military law expert Barthel advised us not to wait too long for answers.

“The Justice Department will not prosecute these soldiers,” Barthel said. “They will target the main perpetrators of the conspiracy.”

Although the $65 million program would not have been possible without the help of these ordinary Marines.

“They couldn't have committed these crimes if there weren't 350 other people down there who were getting bribes to get these prescriptions written,” Barthel said. “I would be shocked if the command took no action, no disciplinary action.”

The Marines may have faced consequences in a military court, but NBC 7 could not find that information in publicly available military court records.

“It really reflects badly on the organization, on the military institution,” Barthel told NBC 7. “If the commands didn't take action in a case like this, then they're sending the wrong message to the other Marines in the unit. In other words, you can get away with it. … Not only are they robbing soldiers and veterans of their health insurance, they're robbing taxpayers of money.”

Changes at TRICARE

TRICARE is administered by the Defense Health Agency. NBC 7 also asked them for an interview for this article, but they declined. However, a spokesperson sent us a statement detailing the changes to pharmacy prescription reimbursement.

In May 2015, the DHA implemented a screening process for all ingredients in formulations. Ingredients whose safety, efficacy and medical necessity are unknown are not cost-shared. This screening process is similar to the one implemented by pharmacy benefits manager Express Scripts for its commercial customers. These measures resulted in a 98% reduction in costs.

In addition to implementing rigorous screening measures where appropriate, the DHA ordered a temporary suspension of claim payments.

In general, a temporary suspension of compensation payments may be requested to protect state interests for a reasonable period of time in order to complete investigations or necessary criminal, civil and administrative proceedings.

In addition, approval requirements have been introduced to ensure that the ingredients of legal preparations are checked and to enable the treating physician to provide evidence of the safety, efficacy and medical necessity of the preparation.

In addition, following the increase in April 2015, the DHA began administrative audits of pharmacies to verify the validity of prescription drug claims. The audits include detailed verification of claims and inquiries from providers and pharmacies. All overpayments identified have been reclaimed.

Finally, the Department of Justice, in collaboration with the DHA and the Defense Criminal Investigative Service, established the Compound Pharmaceutical Fraud Task Force to conduct civil and criminal investigations of pharmacists, physicians, and distributors involved in the compound pharmacy scheme.

By law, DHA/TRICARE can recover up to one dollar of losses from civil settlements. Double or treble the damages, fines, or penalties awarded in civil settlements are paid back to the U.S. Treasury. Settlement refunds are applied to TRICARE benefit amounts for the year in which the money is received.

Since 2013, with the assistance of ESI, our pharmacy benefits contractor, TRICARE has recovered $35,812,489 from pharmacies that manufacture drugs themselves.