Superseding Indictment Adds Charges And Members Of The Pagans To Pill Mill Case Against Doctor
Distribution resulting in death also added to indictment
PHILADELPHIA – A superseding indictment was unsealed today charging William J. O’Brien III, a doctor of osteopathic medicine, with causing a death through the illegal distribution of a controlled substance, and charges eight new defendants with O’Brien in a second conspiracy to distribute controlled substances. The superseding indictment also charges O’Brien with 95 additional counts of distribution of controlled substances - oxycodone, methadone, and amphetamines; and charges O’Brien and his ex-wife, a ninth defendant, Elizabeth Hibbs, 54, with money laundering, bankruptcy fraud, and making false statements under oath in a bankruptcy proceeding.
Charged in the conspiracy with O’Brien are: Michael Thompson, 49, Peter Marrandino, 48, Joseph Mehl, 48, Patrick Treacy, 47, Charles Johnson, 46, Frank Corazo, Jr., 52, Jennifer Lynn Chambers, 21, all of Philadelphia, and Joseph Mitchell, Sr., 39, of West Deptford, NJ, some of whom are members of the Pagans Motorcycle Club. Thompson and Corazo are also charged with health care fraud for allegedly using Medicaid health insurance to pay for the medically unnecessary controlled substances prescribed by O’Brien. Federal agents arrested six defendants this morning. According to the indictment, between March 2012 and January 2015, O’Brien dispensed, and his coconspirators unlawfully obtained for resale, approximately 378,914 pills which contained 10 mg, 15 mg or 30 mg of oxycodone; and approximately 160,492 methadone pills. The estimated street value of the controlled substances sold by the conspiracy was estimated at approximately $5 million. O’Brien generated for himself an estimated $2 million in cash proceeds from the alleged drug trafficking conspiracy.
According to the indictment, defendants Thompson, Marrandino, Mehl, Mitchell, and Treacy were members or associates of the Pagans and conspired with O’Brien to distribute large quantities of dangerous and addictive controlled substances for profit. Through their connection to the Pagans, the defendants had access to illegal drug distributors. O’Brien and the defendants allegedly developed a scheme whereby so-called “patients,” who were recruited by the defendants, would typically pay O’Brien a $200 cash “co-pay” in exchange for medically unnecessary prescriptions for controlled substances. With cash-paying “patients,” O’Brien could conceal money from creditors and the United States Bankruptcy Court where he had filed for Chapter 11 protection for his company WJO, Inc., a group of medical practices which he owned. The indictment further alleges that after filling the prescriptions they got from O’Brien, the “patients” would turn the pills over to the defendants who would sell the pills to drug dealers. Certain controlled substances, such as oxycodone (30 mg), were in high demand.
Distribution of Controlled Substances Resulting in Death
According to the indictment, in addition to medically unnecessary controlled substances, O’Brien prescribed other drugs for “patients” to create the appearance that he was operating a legitimate medical practice. Among the other drugs he prescribed was cyclobenzaprine, a muscle relaxant also known as Flexeril®. The indictment alleges that on or about December 17, 2013, in Levittown, O’Brien intentionally distributed, for no legitimate medical purpose, oxycodone, methadone, and cyclobenzaprine, to Person #21, and the death of Person #21 resulted from the combined use of these substances.
Health Care Fraud
Defendants Michael Thompson and Frank Corazo, Jr., were each Medicaid beneficiaries. According to the indictment, Thompson and Corazo each used Keystone First benefits to pay for medically unnecessary prescriptions for oxycodone pills that they obtained from William J. O’Brien III for the purpose of resale to drug dealers. It is further alleged that Thompson and Corazo falsely represented to Keystone First that the prescriptions were medically necessary.
Money Laundering and Bankruptcy Fraud
Defendants O’Brien and Hibbs were also charged with conspiring to launder the proceeds of O’Brien’s drug distribution operation, and conspiring to commit fraud on the United States Bankruptcy Court by hiding income, including income from O’Brien’s drug distribution operation. On or about November 15, 2010, O’Brien filed for bankruptcy protection for WJO, Inc. Defendant Hibbs, who was married to O’Brien when the bankruptcy petition was filed, was, at various times, the Chief Operating Officer and the Chief Executive Officer for WJO, Inc. The indictment charges that on or about July 10, 2012, O’Brien and Hibbs were fired from WJO, Inc., by the Trustee appointed by the United States Bankruptcy Court. O’Brien and Hibbs legally divorced in October of 2012 but continued to reside and work together and continued to act as husband and wife. The indictment charges that O’Brien and Hibbs diverted assets from WJO, Inc. to their personal accounts and to accounts controlled by them. In addition, it is alleged that O’Brien and Hibbs concealed other assets from the Trustee and from creditors of WJO, Inc. Both were also charged with knowingly making a false statement under oath during the bankruptcy proceedings.
If convicted of all charges, O’Brien faces a mandatory minimum sentence of 20 years in prison and a maximum sentence of life. The remaining defendants face substantial prison terms and fines, and are subject to criminal forfeiture proceedings.
The case was investigated by the Federal Bureau of Investigation, the Food and Drug Administration Office of Criminal Investigations, and the Department of Health and Human Services Office of the Inspector General. It is being prosecuted by Assistant United States Attorney Mary Beth Leahy.