Creator of Fraudulent Pharmacy Sentenced to 5 Years in Prison

MARCH 16, 2019
A fraudulent Chicago-area pharmacy creator has been sentenced to 5 years federal prison for his role in a $1.6 million health care fraud scheme in which he was reimbursed through Part D for hundreds of prescription claims for drugs that were never actually dispensed.

James Calhoun, 74, of Des Plaines, Illinois, was sentenced by US District Judge John Z. Lee of the Northern District of Illinois. Judge Lee also ordered Calhoun to pay $1.6 million in restitution. Calhoun pleaded guilty in September 2018 to 1 count of conspiracy to commit health care fraud.

As part of his guilty plea, Calhoun admitted that he defrauded Medicare Part D of $1.6 million through an elaborate scheme in which he created a fictitious pharmacy on paper called “Cal’s Pharmacy” and used it to process hundreds of prescription claims for drugs that were never dispensed. For most of its existence, the pharmacy had no physical location or inventory, he admitted.

Calhoun further admitted that he enrolled himself as a beneficiary in a Part D program and, from around January 2012 continuing through at least May 2015, Calhoun went to doctors’ appointments to try to obtain prescriptions for drugs that he would then pretend to fill at Cal’s Pharmacy, including and most often for the drug Arixtra, an expensive daily injection. Calhoun also admitted that acting as Cal’s Pharmacy’s owner, a fact that was concealed through the use of a straw owner, Calhoun collected all of the Part D reimbursement payments made to Cal’s Pharmacy. In addition to pretending to fill prescriptions for himself, Calhoun admitted that he fabricated prescription claims for 3 other people, including his codefendant and wife, Betty Calhoun. Calhoun also admitted that later on in the scheme, when Medicare started to deny the prescription claims, Calhoun appealed the denial and knowingly created and submitted to Medicare false and fabricated checks as part of his appeal, including to an administrative law judge, claiming they showed his payment for Arixtra prescriptions from Cal’s Pharmacy.  

Betty Calhoun pleaded guilty to 1 count of health care false statements in November 2018 and was sentenced to probation.     

This case was investigated by the FBI and HHS-OIG. Trial Attorney Leslie S. Garthwaite of the Criminal Division’s Fraud Section prosecuted the case.