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United States v. Michael Babich, Alec Burlakoff, Richard Simon, Sunrise Lee, Joseph Rowan, and Michael Gurry, John Kapoor

Docket 16-cr-10343-ADB

Case Status

May 2, 2019- Insys founder and former Executive Chairman John N. Kapoor, 76, of Phoenix, Ariz.; Richard M. Simon, 48, of Seal Beach, Calif., the former National Director of Sales; Sunrise Lee, 38, of Bryant City, Mich., a former Regional Sales Director; Joseph A. Rowan, 45, of Panama City, Fla., a former Regional Sales Director; and Michael J. Gurry, 55, of Scottsdale, Ariz., the former Vice President of Managed Markets, were convicted by a federal jury of RICO conspiracy.

Michael Gurry- sentenced on January 13, 2020.  The defendant is sentenced on Count 1 to 33 months in the custody of the Bureau of Prisons followed by 3 years of supervised release with conditions, no fine, special assessment of $100.00, restitution to be determined at a later date. Order of forfeiture to enter. Defendant is to self-surrender to the facility designated by the Bureau of Prisons on 2/25/2020.

Richard M. Simon- January 21, 2020.  The defendant is sentenced on Count 1 to 33 months in the custody of the Bureau of Prisons followed by 3 years of supervised release with conditions, no fine, special assessment in the amount of $100.00, restitution to be determined. Order of forfeiture to issue.

Joseph Rowan- January 21, 2020.  The defendant is sentenced on Count 1 to 27 months in the custody of the Bureau of Prisons followed by 3 years of supervised release with conditions, no fine, special assessment of $100.00, restitution to be determined. Order of forfeiture to issue.

Sunrise Lee- January 22, 2020- The defendant is sentenced on Count 1 to a year and a day in the custody of the Bureau of Prisons followed by 3 years of supervised release with conditions, no fine, $100.00 special assessment

Michael L. Babich-  January 22, 2020- The defendant is sentenced on Counts 1 and 2 to 30 months in the custody of the Bureau of Prisons to be served concurrently followed by 3 years of supervised release with conditions, no fine, Special assessment of $200.

Alec Burlakoff- January 23, 2020- The defendant is sentenced on Count 1 to 26 months in the custody of the Bureau of Prisons followed by 3 years of supervised release with conditions, no fine, special assessment of $100.00.

John Kapoor- January 23, 2020- The defendant is sentenced on Count 1 to 66 months in the Bureau of Prisons followed by 3 years of supervised release with conditions, fine of $250,000., special assessment of $100.00., Restitution in the amount of $59,755,362.45.

 

Case Information

On December 6, 2016, the defendants, former executives and managers of Insys Therapeutics Inc., were charged by indictment by the United States Attorney’s Office for the District of Massachusetts with conspiracy to commit racketeering, mail and wire fraud, and conspiracy to violate the anti-kickback law in relation to a nationwide conspiracy to bribe medical practitioners to unnecessarily prescribe a fentanyl-based pain medication and defraud payers of the medication, including insurers. The indictment alleges that Michael L. Babich, 40, of Scottsdale, Ariz., the former CEO and President of the company; Alec Burlakoff, 42, of Charlotte, N.C., former Vice President of Sales; Richard M. Simon, 46, of Seal Beach, Calif., former National Director of Sales; former Regional Sales Directors, Sunrise Lee, 36, of Bryant City, Mich. and Joseph A. Rowan, 43, of Panama City, Fla.; and former Vice President of Managed Markets, Michael J. Gurry, 53, of Scottsdale, Ariz., conspired to bribe practitioners in various states, many of whom operated pain clinics, in order to get them to prescribe a fentanyl-based pain medication, called Subsys. Subsys is a powerful narcotic intended to treat cancer patients suffering intense episodes of breakthrough pain. In exchange for bribes and kickbacks, the practitioners wrote large numbers of prescriptions for the patients, most of whom were not diagnosed with cancer.

The indictment also alleges that the now former corporate executives charged in the case conspired to mislead and defraud health insurance providers who were reluctant to approve payment for the drug when it was prescribed for non-cancer patients. They achieved this goal by setting up the “reimbursement unit” which was dedicated to obtaining prior authorization directly from insurers and pharmacy benefit managers. More information can be located by reviewing the Indictment and Press Release.

On January 5, 2017, the defendants appeared before the magistrate in federal court for their initial appearance and arraignment. The defendants have all pled not guilty and have been released on conditions approved by the court.

On October 24, 2017 a superseding indictment was filed added the defendant John N. Kapoor.
 

Documents

Updated May 7, 2020

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