Southlake, Plano men accused in $65 million healthcare scam

Two North Texas men accused of bilking the Defense Department’s healthcare system of more than $65 million were in custody Wednesday facing fraud charges, the U.S. attorney’s office reported.

Richard Robert Cesario, 44, of Plano and John Paul Cooper, 47, of Southlake have been indicted on charges of conspiracy to commit healthcare fraud, four counts of receipt of illegal remuneration (service) and six counts of payment of illegal remuneration, a news release said.

Cesario founded the Dallas company CMGRX LLC in 2014 and was CEO and treasurer. Cooper was the company president and secretary. They were arrested Tuesday.

TRICARE is the name of the healthcare program that provides coverage to active duty service members, the National Guard and reserve members, retirees, their families and survivors.

According to the indictment, the Dallas company marketed compounded pain and scar creams to TRICARE beneficiaries even though they did not have medical, nursing or pharmaceutical licenses. Cesario and Cooper paid TRICARE beneficiaries $250 per month for each prescription they got filled at a partner pharmacy, mostly for compounded creams for pain, scars, migraines and vitamins.

“They disguised these payments to TRICARE beneficiaries as ‘grants’ for participating in a medical study they referred to as TRICARE-approved study to evaluate the safety of compounded drugs,” the news release said.

Federal agents said the study was not approved by TRICARE and its sole purpose was to compile a list of TRICARE beneficiaries.

The suspects are also accused of paying physicians $60 for each compounded pain or scar cream prescription they wrote, and $30 for each compounded vitamin prescription they wrote to beneficiaries, federal agents said.

The two bilked TRICARE from 2014 until mid-2015, when the company ceased operations after TRICARE changed its coverage of compounded drugs, the news release said.

If convicted, the defendants would forfeit property, including money from 18 bank accounts, four homes in Plano, Frisco and Southlake, a home in Jacksonville, Fla., 21 cars and trucks including three Mercedes-Benzes, a Jaguar, a Maserati, a Ferrari, a Porsche and an Aston Martin.

The conspiracy charges carry a maximum sentence of 10 years in federal prison and five years on the illegal remuneration charges.

This story was originally published February 24, 2016 at 3:59 PM with the headline "Southlake, Plano men accused in $65 million healthcare scam."