Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 1 of 51 FILED,N OPEN COURT ¿- '/¡PR DAG/CJB IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION ¿ UNITED STATES OF AMERICA ù VIOLATIONS: ,r JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D. 2016 GI-IARLES R. DJAftD, .,R" CN.EHK cRrM. NO. 15-00088-CG usAo No. 13R00521 ú v 2S û J ù ù tr tr 18 21 21 18 18 18 18 USC USC USC USC USC usc $ 1962(d) $ 846 $ 8a1(a)(1) $ 1349 $ 371 $ 19s6(h) USC $ r9s7 Forfeiture Notices tr SECOND SUPERSEDING INDICTMENT THE GRAND JURY CHARGES: I. INTRODUCTION At all times relevant to this Second Superseding Indictment: Tnn DnnnNDANTS 1. Defendant JOHN PATRICK COUCH, M.D. was a Mobile, Alabama physician with a medical degree frorn the Medical College of Georgia. He was licensed to practi<;e medicine in the State of Alabama, and obtained a Drug Enforcement Administration (hereinafter "DEA") Registration Number which allowed him to dispense Controlled 2. Substances. Defendant XIULU RUAN, M.D. was a Mobile, Alabama physician with a medical degree from Shandong Medical University, located in Jinan, China. He was licensed to practice medicine in the State of Alabama, and obtained a DEA Registration Number which allowed him to dispense Controlled Substances. P,trr,r 3. ClrNrc AND PuaRuacy Together, COUCH and RUAN owned and co-directed a pain management clinic 1 \¡ Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 2 of 51 named Physician's Pain Specialists clinic locations in Mobile, Alabama of - Alabama, P.C. (heleinafter "PPSA"). PPSA had two one located at 2001 Springhill Avenue, and the other' located at 4682 Airport Boulevard. COUCH was listed as the legistered agent for PPSA. 4. COUCH and RUAN also co-owned a pharmacy named C&R Pharmacy, which was located adjacent to the PPSA clinic on Airport Boulevard in Mobile, Alabama. COUCH was the registered agent for C&R Pharmacy. AppLrcasLE 5. F EDERAL L,Àw The Controlled Substances Act (heleinafter "CSA") governs the distribution and dispensing of various listed drugs, including narcotics, that are prescribed by physicians ancl otl'rer licensed health care providers. Licensed physicians and physician extenders may distribute and dispense Controlled Substances if they have a DEA Registration number and if they comply with all DEA regulations and all applicable federal laws. 6. The CSA assigns legal authority for the regulation of Controlled Substances to the DEA. The statute charges DEA with the prevention, detection, and investigation of the divelsion of Controlled Substances fi'om legitimate channels while at the same time ensuring that adequate supplies are available to meet legitimate domestic medical, scientific and industrial needs. 7, The DEA issues registration numbers to qualifying persons, who are authorized to dispense Controlled Substances. To issue a prescription for a Controlled Substance, a physician must be licensed to practice by a state authority and must have a DEA registration number. 8, Under Title 21, United States Code, Section 802(21) the term practitioner defined as a "physician is . . registered, or otherwise permitted by the United States or the jurisdictioninwhichtheheplactices... todistribute, dispense,... administer, .,. aControlled Substance in the course of professional practice . . . " Under Tifle 21, United States Code, 2 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 3 of 51 Section 822(a)(2), every person or entity who handles Controlled Substances must be registered with DEA or be exempt by legulation from registration. The DEA registlation grants plactitioners fedelal authority to handle Controlled Substances. However, the DEA registered practitioner may only engage in those activities that are authorized under state law for the jurisdiction in which the practice is located. 9. The practitioner is responsible for the proper plescribing and dispensing of Controlled Substances prescribed under his or her name. The practitioner is lesponsible for ensuring that the prescription conforms to all requirements of the law and legulations, both federal and state. Controlled Substances may only be distributed or dispensed lawfully in the Íranner prescribed by the mechanisrn created by the CSA. 10, Provisions of the CSA mandate that the person or entity registered with DEA must be able to account for all Controlled Substances which have been received, distributed, dispensed, or disposed. 11. Title 2I, Code of Federal Regulations, Sections 1306.05, 1306.11, and 1306.2I require a prescription for a Controlled Substance to be dated as of, and signed on, the day issued, bearing the patient's full name and address, the drug name, strength, dosage forrn, quantity prescdbed, directions for use, and the name, address, and DEA registration number of the prescliber. CoNrnollED 12. SUBSTANCES Defendants COUCH and RUAN each obtained DEA Registration Numbers, whiclr allowed them to dispense Corfrolled Substances. Between January 1,2011 and May 20, 2015, COUCH and RUAN wrote approximately 285,000 prescriptions for Controlled Substances. a J Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 4 of 51 13. The CSA, Title 21, United States Code, Section 801, et seq., and its implementing regulations set fbrth which drugs and other substances ale defined by law as "Controlled Substances," Those Controlled Substances are then assigned Schedule I, II, III, IV, or V - to one of five schedules - depending on their potential for abuse, likelihood of physical or psychological dependency, accepted medical use, and accepted safety for use under rnedical supervision, 14. The term "Schedule I" means the drug has no currently-accepted medical use and lacks safety under medical supervision. Schedule I substances cannot legally be presclibed. 15. The term "Schedule II" rneans the dlug or othel substance has a high potential abuse, the dlug has a currently accepted medical use with severe restrictions, and abuse fol of the drug or other substances may lead to severe psychological ol physical dependence. Certain Schedule Ii drugs have a high potential for abuse. This abuse can lead to addiction, overdose, and sometimes death. 16. The term "Schedule III" means the drug ol other substance has a high potential for abuse, but less than the drugs listed in Schedule II, the drug has a curlently acceptecl rnedical use with severe restrictions, and abuse of the drug or othel substances may lead to severe psychological or physical dependence. 17. The term "Schedule IV" means the drug or other substance has a low potential fcrr abuse relative to the drugs or other substances in Schedule III, the drug or other substance has a currently accepted medical use in treatment, and abuse may lead to lirnited (relative to the dlugs ol substances in Schedule III) physical ol psychological dependence. 18. Title 21, Code of Federal Regulations, Section 1306.0a(a) state that a valid plescription for a Controlled Substance must be issued fol a legitirnate medical purpose by an 4 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 5 of 51 individual practitioner acting in the usual course of his professional practice. An Order purporting to be a prescription issued not in the usual course of professional practice, or in legitimate and autholized research, is not a prescription within the meaning and intent of Section 309 of the Act (21 U.S.C. $ 829), The person knowingly issuing it shall be subject to the penalties provided for violations of the provisions of law relating to Controlled Substances. 19. Cerlifìed Automation of Reports and Consolidated Orders System (heleinafter' "ARCOS") is an automated, corlprehensive drug reporting system rnaintained by DEA, which monitors the flow of Controlled Substances from their point of manufacture through commercial distlibution channels to point of sale or distribution at the dispensing/retail level. ARCOS accumulates these transactions, which are then summarized into repofts. These DEA reports give investigators in Federal and state government agencies information that can then be used to identify the diversion of Controlled Substances into illicit channels of distribution. 20. COUCH and RUAN regularly prescribed large quantities of the following Controlled Substances at PPSA: A. use Oxycodone: The generic name for a highly addictive plescription analgesic. The of oxycodone in any form can lead to physical and/or psychological dependence, and abuse of the drug may lesult in addiction. It is classified as a Schedule II Controlled Substance, and is sold generically or under a variety of brand names, including OxyContin, Roxicodone, Percocet, and Endocet. B. Oxymorphone: The generic name fol a highly addictive prescription analgesic. The use of oxymorphone in any fonn can lead to physical and/or psychological dependence, and abuse of this drug may result in addiction. It is classified as a Schedule II Controlled and is sold generically or under a variety of brand names, including Opana, 5 Substance, Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 6 of 51 C. Hydrocodone: The generic name for a highly addictive prescription analgesic. The use ofhydlocodone in any form can lead to physical and/or psychological dependence, and abuse of this drug may lesult in addiction. As of October 6,2074, hydrocodone is classified as a Schedule II Controlled Substance. Prior to this date, it was classified a Schedule III Controlled Substance It is sold generically or under a variety of brand names, including Loltab, Norco, Zohydro, ar,d Vicodin, D. Hydromorphone: The generic name for a highly addictive plescription analgesic. The use of hydromorphone in any form can lead to physical and/or psychological dependence, and abuse of this drug may result Substance, and in addition. It is classified as a Schedule II Controlled is sold generically or under a variety of brand names, including Exalgo and Dilaudid. E. Fentanyl: The generic name for a highly addictive prescliption analgesic. The use offentanyl in any form can lead to physical and/or psychological dependence, and abuse of this drug may result in addiction. It is classified as a Schedule II Controlled Substance. It is sold genelically or under a variety of bland names, including Subsys, Abstral, Lazanda, Fentora, and Duragesic. F. Morphine: The genedc name for a highly addictive prescription analgesic. The use of morphine in any form can lead to physical andlor psychological dependence, and abuse of this drug may result in addiction. It is classified as a Schedule II Controlled Substance. It is sold generically or under a variety of brand names, including Avinza, MsContin, and Kadian. G. Benzodiazepines: The generic name for an addictive class of psychoactive drugs that are used to 1;eat a variety of nredical issue, including depression, panic disolders, anxiety disorders, and insomnia, among others. The use of benzodiazepines can lead to physical atdlor 6 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 7 of 51 psychological dependence, and abuse benzodiazepine class of brand names of these drugs may result in addiction. The of drugs is classifìed as Schedule IV Controlled Substances. Common benzodiazepines include Xanax (genelic: alprazolam); Valium (generic: diazepam), and Klonopin (genelic: clonazepam), among many othels. H. Carisoprodol: The generic name for a centrally acting skeletal muscle relaxant. Carisoprodol is classifìed as a Schedule iV Controlled Substance. It is sold generically or under' the brand nam.e Soma. 2L Beginning in20l3, RUAN became not only one of the most prolific purchasers of Controlled Substances in the State of Alabama, but also in the entire United States. He legularly out-purchased doctols in much largel cities in the United States. 22. In the State of Alabama, oxycodone and molphine in RUAN was the number one purchaser of both 2011, 2012, 2073, 2014, and 2015. RUAN was also the top purchaser of fentanyl in the State of Alabama in 2012, 2013 , and 2014. 23. The amount of Controlled Substances purchased by RUAN was not only extremely liigh as compared to other doctors within the State of Alabarna, but also as cornpared to doctors throughout the United States. 24. In 2013 and 2014, RUAN lanked amongst the top purchasers of oxycodone, rnorphine, hydrocodone, and fentanyl in the entire Llnited States. 25, In 2015, RUAN only purchased controlled substances for five months before his arrest on May 20,2015. However, even when compared to other doctors nationwide who purchased drugs over twelve months in 2015, RUAN was still nationally ranked in morphine, oxycodone, and fentanyl. 26, Many of the prescriptions issued by defendants RUAN and COUCH were not 7 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 8 of 51 issued fol a legitimate medical purpose and were not issued within the usual course of plofèssional rnedical practice. PtrN MTNAGEMENT 27. The discipline of pain rnedicine is a recognized medical sub-specialty practiced by physicians in the United States. Legitirnate pain medicine experts have specialized knowledge, education, training, and experience and utilize a multi-disciplinary approach. 28. Despite some aspects of legitimate rnedical practice at PPSA, RUAN and COUCH ran what was, in essence, a pill mill, Their prirnary rnethod of pain managenent w¿Ls writing rnultiple prescriptions for high doses of Schedule II, III, and IV Controlled Substances, including, but not lirnited to: oxycodone (brand narnes: OxyContin, Roxicodone, Percocet, ancl Endocet), oxyrnorphone (bland nane: Opana), hydrocodone (brand narnes: Lorlab, Norco, Zohydro, and Vicodin) hydlomorphone (brand names: Exalgo and Dilaudid), fentanyl (brand names: Subsys, Abstral, Lazanda, FentoLa, and Duragesic), and rnorphine (brand names: MsContin, Avinza,*a fuAiun¡. Some of these prescriptions were divelted and/or abused by drug tlaffickers and addicts. TIRF Dnucs 29. Transmucosal instant-r'elease fentanyl ("TIRF") drugs are fentanyl-based a subset of drugs. TIRF drugs are sold under several brand names, including other Subsys, Abstral, Fentola, and Lazanda, all of which ale Schedule II Controlled Substances, 30. The primary difference between these blands is how the fentanyl is delivered to the patient: Subsys is an oral spray; Abstral is a dissolvable tablet placed under the tongue; Fentora is a buccal tablet placed in the cheek; andLazanda is a nasal spray. 31. The only FDA-approved indication for TIRF drugs is 8 "fol the management of Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 9 of 51 breakthrough pain in patients with cancer who are already leceiving, and who are tolerant to, around-the-clock opioid therapy for their persisterf pain." 32. Since fentanyl is approximately 100 tirnes mole potent than motphine, and 40-60 times more potent than 100% pure heroin, fentanyl in TIRF drugs is measured in micrograms, 33. Due to the extleme risk of misuse, abuse, addiction, and overdose death associated with TIRF drugs, the FDA requires that all practitioners, pharmacists, and patients must be enrolled in an FDA Risk Evaluation & Management Strategy ("REMS") program before they are allowed to prescribe, dispense, or take Subsys, Abstral, Fentora, or Lazanda. 34. Before prescribing a TIRF drug to a patient, the prescribel must fill out and sign a REMS forrn which explicitly states, "I understand that TIRF medicines ale indicated only for ttre management of breaktlu'ough pain in patients with cancer who are already receiving, and who ale tolelant to, around-the-clock opioid therapy for their underlying persistent pain." 35. TIRF drugs are exceptionally expensive. Insurance providers for PPSA patients who were prescribed TIRF drugs were billed anywhere from just under $1,000.00 per month for a patient presclibed 30 doses of Subsys 100mcg, all the way up to over' $21,000.00 per morfh fbr a patient plescribed 240 doses of Subsys 1,200mcg. 36. Due to both the exceptional danger and expense of TIRF drugs, many iusurance providers required prior approval bef'ore they reirnbursed for a TIRF plescription. 37 . Between January 20ll andMay 20,201.5, COUCH and RUAN wrote over 6,000 prescriptions for TIRF drugs to approximately 1,000 different PPSA patients. Virtually all of these patients filled their expensive TIRF drug plescriptions at C&R Pharmacy, which was owned by COUCH and RUAN. 38. Of the approximately 1,000 different PPSA patients prescribed TIRF drugs by 9 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 10 of 51 RUAN and COUCH, only a small pelcentage actually had cancer. Br LLrNG RnRu"lnn,rvr qNTÇ 39. A National Provider Identifier ("NPI") is a unique billing number assigned to physicians, as well as to physician extenders, who have the capability of billing f'or patient selvices. The unique NPI under which a bill is subrnitted is a clitical component used by healthcare insurance providers leimbursed, and if to cletermine whether a particulal patient service will be so, for how much. Physicians are typically reimbursed at a highel rate than physician extenders. 40. Defendants COUCH and RUAN both had their own unique NPIs. They also ernployed physician extenders, such as physician's assistants ("P4"), cerlified registered nrlrse practitionels ("CRNP"), and certified registered nurse anesthetists ("CRNA") at PPSA. Some of the physician extendels at PPSA also had tireir own unique NPIs. 41. One of the insurance companies billed by PPSA, Blue Cross/Blue Shield of' Alabarna ("BC/BS"), requiled claims to be billed under the name and NPI of the physician or physician extender who actually rendered the service. The BC/BS billing guidelines stated, "UndeL no circumstances should services performed solely by a fphysician extender] be billed undel a physician's name and NPI. Flowever, a physician may bill for these services under his/her nane and NPI if the physician also sees and renders services to the patient, reviews the notes of the physician extender, and concul' with the findings." 42. rate for These guidelines are in place, because BC/BS typically reimbursed at a higher services provided by a physician, as opposed to the same services plovided by a physician extender. 43. BC/BS, Cigna, UniterJ Healthcare, Tri-Care, and Medicare, among other insurance companies who plovide healthcare coverage, are all "healthcare benefits programs" as 10 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 11 of 51 that tenn is defined in Title 18, United States Code, Section 24(b). UNnoncovnR 44. Acrlvrly Between August 2014 and January 2075, a DEA Task Force Offrcer ("TFO") acted in an undercovel capacity (hereinafter "lJC") as a "patient" seeking Controlled Substances. Specifically: 45. On or about August 5,2014, the UC had an initial "patient" visit with COUCH at the PPSA Springhill location in Mobile, Alabama. During this initial visit, the UC told a coconspirator ernployee that he had previously been selÊmedicating with oxycodone and Lortab he purchased on the street. Thereafter, during this same offrce visit, the UC saw COUCH for' approxirnately 43 seconds and received a prescription for 90 tablets of Roxicodone 15mg, a Scheduled II Controlled Substance. The prescription was signed by COUCH. 46. On or about September 8, 2014, the UC, who was scheduled to have an appointment with COUCH, was seen instead by a co-conspirator employee at the Springhill PPSA location in Mobile, Alabama. This ernployee was not a rnedical doctor and was not authorized to prescribe ol dispense Contlolled Substances. During this visit, the UC was provided a prescription for 90 tablets of Roxicodone 15mg, a Schedule II Controlled Substance. The plescription appeared to have been signed by COUCH. The UC did not see, nor was he treated by, COUCH during this visit. 47. On or about November 5, 2014, the UC, who was scheduled to have arr appointment with COUCH, was seen instead by a co-conspirator employee at the SpLinghill PPSA location in Mobile, Alabama. This ernployee was not a rnedical doctor and was not authorized to prescribe ol dispense Controlled Substances. During this visit, the UC's Roxicodone 15mg prescription, a Schedule II Controlled Substance, was increased to 110 tablets. 11 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 12 of 51 This prescription was pre-dated and appeared to have been signed by COUCH. In addition, the UC received a second, post-dated prescription for the same drug and cluantity. The UC did not see, nor was he treated by, COUCH duling this visit. 48. On ol about January 29, 2015, the UC, who was scheduled to have an appointment with COUCH, was seen instead by a co-conspiratol employee at the Springhill PPSA location in Mobile, Alabama. This employee was not a medical doctor and was not authorized to prescribe or dispense Controlled Substances. Duling this visit, the UC received a prescription f-or'110 tablets of Roxicodone 15mg, a Schedule II Contlolled Substance, prior to any ph1'sical examination being performed. The prescliption appeared to have been signed by COUCH. The UC did not see, nor was he treated by, COUCH duling this visit. Tnr PPSA ENrnRpnrso 49. The PPSA Enterprise, including its leadelship, membership and constituted an enterprise, as defined by Title 18, United associates, States Code, Section 1961(4) (hereinafter "the PPSA Entelprise"), that is, a group of individuals and legal entities associated in fact. The PPSA Enterprise constituted an ongoing organization whose members fuirctioned as a continuing unit for a colnmon purpose of achieving the objectives of the PPSA Enterprise. The PPSA Enterprise was engaged in, and its activities affected, irferstate and fbleign commerce. 50. Members and associates of the PPSA Entelplise primarily operated the entelprise as a pill mill where numbers of prescriptions for Controlled Substances were written fot no legitimate medical purpose or outside the usual course of professional practice. In addition, members and associates of the PPSA Enterprise engaged in rnedical billing fraud and other crirninal violations. 51 . Membels of the PPSA Entelprise, including the Defendants COUCH and RUAN, I2 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 13 of 51 attempted to insulate themselves through the appearance of legitimate rnedical practice, which included the use of cursory physical exalns, alnong other means and methods. Many of the plescliptions issued by the Defendants were illegal because they wele not issued for a legitimate medical purpose, and not prescribed within the usual course of professional medical practice. The dispensing and distribution of Controlled Substances was undefiaken primarily for a profit motive. 52. il. Members of the PPSA Enterprise also engaged in wide-ranging climinal conduct. CHARGES COUNT ONE 53. The Grand Jury incorporates numbered paragraphs I-52 of this Second Superseding Indictment as if fully set forth herein. TUB PPSA ENrBRpnIsn 54. Beginning at least in or about 2015, the exact dates being unknown, 20Il and continuing through ol about May 20, in the Southern Distlict of Alabama and elsewhere, defendants JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D.; entities PPSA and C&R Pharmacy; and'other individuals known and unknown to the Grand Jury, constituted an Enterprise witliin the meaning of Title 18, United States Code, Section 1,961,(4), that is, a gror.lp of individuals and entities associated in fact, The PPSA Enterprise constituted an ongoing organization, the tnembers and associates of which functioned as a continuing unit for a common purpose of achieving the objectives of the PPSA Enterprise. PuRposrs Or Tsn ENrpnpRrsn 55. The purpose of the PPSA Enterprise included the fbllowing: 13 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 14 of 51 A. Providing the PPSA Enterprise and its leaders, membels and associates with an expanding base of patients for narcotics distribution; B. Genelating, preserving and protecting the PPSA Enterprise's profits and patient base through acts of, among other things, unlawful drug distribution, healthcare fraud, and kickback violations C. ; Prornoting and enhancing the PPSA Enterprise and its leaders, members and associates activities; D. Enriching the leaders, members and associates of the PPSA Entelprise financially; and 'E. Concealing and othelwise protecting the criminal activities of the PPSA Enterplise and its participants fi'om detection and prosecution. MB¿,Ns AND METHoDS oF 56. Tnn ENToRpRISE The manner and methods of the PPSA Enterplise included, but were not limited to, the following: 57. Defendants COUCH and RUAN co-owned and co-managed PPSA and C&R Pharmacy. Defendants COUCH and RUAN were aware that individuals would travel frorn numerous states to Alabama in older to illegally obtain Controlled Substances. Defendants COUCH and RUAN were aware that individuals requested prescliptions for large quantities of Schedule II, IiI, and IV Controlled Substances. Defendants COUCH PPSA pain management clinics in older to and RUAN operated the generate criminal proceeds through the illegal distribution and dispensing of Corfrolled Substances by means of prescliptions or orders without a legitimate medical purpose and outside the usual course of professional practice. Defendants COUCH and RUAN conspiled to insulate the PPSA Enterplise membels fi'om crirninal 14 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 15 of 51 prosecution by creating the appearance of a legitimate medical practice. 58. The Defendants RUAN and COUCH Substances based on fi'equently plescribed Contlolled theil own hnancial interests, Lather than the legitimate medical needs of the patient. Fol example,'RUAN and COUCH began prescribing tens of thousands of doses of the Schedule II Controlled Substance Abstral, a TIRF drug only apploved by the FDA for breakthlough cancel pain, to non-cancer patients after RUAN and COUCH each pulchased approxirnately $800,000.00 in stock of Galena Biophalrna, Inc., the manufactuLer of Abstral. in addition, RUAN and COUCH would switch patients' prescriptions to drugs, including the Schedule II Controlled Substance Subsys, they were paid to promote, even if the patients' rnedical needs were being met with their current prescription. Finally, at times, RUAN would determine a patient's plescription dose based on C&R Phalmacy's current inventory, as opposetl to what a particular patient needed. 59. The Defèndants RUAN and COUCH established a pharmacy, C&R Pharmacy, in order to illegally distribute and dispense Controlled Substances to the individuals receiving plescriptions fi'om the clinics. Defendarf RUAN also auanged for the dispensing of Controlled Substances directly fi'om one PPSA clinic location to Wolkers Compensation patients in order to generate large criminal proceeds for hirnself and COUCH. 60. Other co-conspirators, to include but not limited to Justin Palmer, who is not named as a defendant helein, would sign Defendant COUCH'S name on prescriptions and other' documents in ordel to expedite the unlawful prescribing and dispensing of Contlolled Substances for the PPSA Enterprise. 61. The Defendants RUAN and COUCH would refrain fì'om individualized and particularized treatment plans fol a number of patients in order to expedite the illegal dispensing 15 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 16 of 51 of Controlled Substances. The Defendants understood that the majority of individuals seeking Controlled Substances would allege cornplaints of neck or back pain. 62. Defendant RUAN and co-conspirators would typically require that a patient provide a urine sample every 60 to 90 days during the patient's visit at PPSA. These point-oÊ care urine drug screens (herein after PPSA's activities appear "UDS") would be conducted in order to make the clinic and to be proper and to ensure that the prescription of Corfrolled Substances appeared to be legitimate. 63. RUAN, COUCH and co-conspilatols did not loutinely utilize the UDS analyses for theil intended pulpose, which was to deterrnine whether a patient was taking the medications they had been prescribed and to ensure that the patients were not taking medications that they had not been presclibed. Rather, RUAN and COUCH used expensive gas chlornatographymass spectrometer' (herein after "GC/MS") testing as a source of additional revenue for PPSA, These tests can be a legitirnate part of the practice of pain management. Ilowevet, RUAN and COUCH fi'equently ignored inconsistent GC/MS results, and continued prescribing large quantities of controlled substances to patients regardless of the GC/MS results. 64. in addition, patient services performed by PPSA's physician extenders were fi'audulently billed to healthcare benefits programs undel the NPI of COUCH. This "up-coding" was done because healthcare providers typically paid mole in reimbursernent for ofhce visits or procedures handled by the physician, as opposed to a physician extender, such as a nurse. The reimbursements for this "up-coding" of services resulted in PPSA and the doctors being paid more per visit by certain healthcare providels than they were entitled to be paid. 65. The Defenclants RUAN and COUCH compensated some of the employee co- conspirators, to include but not limited to Justin Palmer and Bridgette Parker, neither of whom 16 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 17 of 51 ale named as defendants herein, based on the numbel of patients seen per day to induce the coconspirators to see as many patients as possible each day, thereby, generating more rnoney for the Enterplise. 66, The Defendants RUAN and COUCH and employee co-conspirators, to include but not lirnited to Justin Palmer and Bridgette Palker, neither of whom are narned as defendar-rts herein, would perfolm a cursoly physical examination of the patients in order to insulate the coconspirators, and in an attempt to justify the drugs being prescribed. The Defèndants RUAN and COUCH and employee co-conspilatols would examine individuals for the minimal amount of tir-ne possible in ordel to see the largest number of individuals each day and to generate the lalgest amount of criminal proceeds fol the PPSA Enterprise. 67, COUCH and RUAN incleased theil plofits by inducing Industlial Pharmacy Management ("IPM"), and later, Comprehensive RX Management ("CRM"), to pay thern kickbacks in t'eturn fol using their rnedical services, having tlueatened IPM & CRM with taking theil business elsewhere. This inducement was accomplished by RUAN soliciting kickbacks fol himself and COUCH, RUAN and COUCH increased their profits by receiving these kickbacks in exchange fol dispensing Controlled Substances provided by IPM, and later CRM, to workers' compensation patients, Some of the patients were insured tlilough f-ederal healthcare programs. The defendants RUAN and COUCH were paid an agreed upon rnonthly amount fi'om IPM, and subsequently from CRM, fol dispensing the Controlled Substances. These monthly checks to RUAN and COUCH were delivered to them in the Southeln Distlict of Alabarna by an interstate comrnelcial carriel. Defendant RUAN requested that r-nonthly kickback checks be made payable to one of his companies and be mailed to his lesidence in Mobile, Alabama rather than to PPSA clinics. t7 the Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 18 of 51 68. The defendant RUAN would verify, frequently by e-mail, with co-conspirator Christopher Manfuso, who worked for IPM and subsequently owned CRM, and who is not named as a defendant herein, which Controlled Substances resulted in highel reimbursables to PPSA and the defendants RUAN and COUCH. Based on those conversations between RUAN and Manfuso, RUAN requested and ordered those Controlled Substances to be deliveled to PPSA's dispensary at the PPSA Springhill Avenue location in Mobile, Alabama. 69. Controlled Substances were delivered to the PPSA Springhill Avenue location in Mobile, Alabama, by a commelcial interstate carLieL, to include but not limited to FedEx, and tlie United States Postal Service. Thereafter, Defendants RUAN and COUCH and other members of the conspiracy, would dispense the Controlled Substances based on the false represeutation that the Controlled Substances, with higher leimbursables, were the rnedications necessary to treat the Worker's Compensation patients. 70. The agreement between these parties was that RUAN and COUCI{ would leceive a guaranteed rnonthly payment and an additional percent of the profits genelated by dispensing in house medications, to include Scheduled II and III, Controlled Substances, which had been provided theni by IPM, and later, by CRM. to patients. 71. account The defendants COUCH and RUAN set up and mairfained an online PPSA with Blue Gross/Blue Shield ("BC/BS"), and other healthcare providers, so as to electronically subnit medical claims and so as to be reimbursed electronically by BC/BS, and other healthcare providers. 72. Specifically, as part of said conspiracy, rnembers of the conspiracy, both known and unknown to the Grand Jury, fraudulently plocured electronic payment from healthcare pt'oviders, to which they wele not entitled. The submission of bills to healthcare providels and 18 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 19 of 51 the payment fiom the healthcare plovidels caused interstate wile tlansmissions, to include e- mails, and electronic wire transfers, to be sent to and fi'orn the state of Alabama to places outside the state of Alabarna, to include the Southern District of Alabarna. Membels of the conspiracy would also use or cause to be used commercial interstate calriers and the United States Postal Service, and would use or cause to be used interstate wire cornmunications, that is e-mails and telephone calls, to be used for other purposes in fultherance of said scheme and altifice to defi'aud. fun 73. CoNSpTRACY During at least in or about 2011 and continuing thereafter through at least in or about May 20, 2015, the exact dates being rurknown, in the Southern Distlict of Alabanra, Southern Division, and elsewhere, the defendants, JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D., being persons employed by and associated with the PPSA Enterprise, which PPSA Enterprise engaged in, and the activities of which affected, interstate and foleign com.merce, did knowingly, willfully and unlawfully combine, conspire, confedelate, and agree, togethel and with each othet', and with persons known and unknown to the Grand Jury, to violate Title 18, United States Code, Section 1962(c), that is, to conduct and participate, directly and indirectly, in the conduct of the affairs of the PPSA Enterplise, through a pattern of racketeering activity, as that term is def,rned in Title 18, United States Code, Sections i961(1) and (5), consisting of: TnB PlrrnRN OF RncxnrnrRrNc 74. Acrrvrry The patteln of lacketeering activity, as defined in Title 18, United States Code, Sections 1961(1) and 1961(5), thlough which the defendants and their co-conspirators agreed to conduct and participate in the conduct of the affairs of the PPSA Enterprise consisted of: T9 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 20 of 51 1\. Multiple offenses involving the felonious rnanufacturing, t'eceiving, conceaiment, buying, selling or othelwise dealing in Controlled Substances, in violation of Title 2l,United B. States Code, Sections 8a1(a)(1) and 846; and Multiple acts indictable under Title 18, United States Code, Section 1343 (Relating to'Wile Fraud) and Title 18, United States Code, Section 1341 (Relating to Mail Fraud). 7 5. . It was part of the conspiracy that each Defendant agreed that a conspilatol would commit at least two acts of lacketeering in the conduct of the affairs of the PPSA Enterprise. 76. All in violation of Title 18, United States Code, Section 1962(d). COUNT T\ryO 77, The Grand Jury incorpolates Superseding Indictment as if 78. fully numbered palagraphs l-52 of this Second set forth herein. Beginning duling, or at least in,2011, and continuing theleaftel through May 20, 2015, in the Southern District of Alabarna and elsewheLe, the defendants, JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D., conspired with each other and with otliers, both known and unknown to the Grand Jury, to knowingly and unlawfully distribute and dispense, possess with intent to distribute and dispense, and cause to be distributed and dispensed, Schedule lirnited to: II Controlled Substances, including, but not oxycodone (brand names: OxyContin, Roxicodone, Percocet, ancl Endocet,), oxymorphone (bland name: Opana), hydromorphone (brand names: Exalgo and Dilaudid), and morphine (bland names: MsContin and Avinza), by means of prescriptions, among other means and methods, outside the usual course of plofessional medical practice and not for a legitimate medical purpose, in violation of Title 21, United States Code, Section 8a1(a)(1). 20 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 21 of 51 79. All in violation of Title 21, United States Code, Section 846. COUNT THREE 80. The Grand Jury incorporates numbered paragraphs l-52 of this Second Supelseding Indictrnent as if fully set forth herein. 81. Beginning during, or at least in, 2011, and continuing thereaftel thlough May 20, 2015, in the Southern District of Alabama and elsewhere, the defendants, JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D., conspired with each other and with others, both known and unknown to the Grand Jury, to knowingly and unlawfully distribute and dispense, possess with intent to distribute and dispense, and cause to be distlibuted and dispensed, a Scheduled II Controlled Substance, that is: a mixture and substance containing detectable amount of N-phenyl-N-f1-(2-phenylethyl)-4-piperidinyl] propanamide, which is commonly referred to as fentanyl (brand names: Subsys, Abstral, Fentora, Lazanda, Actiq, and Duragesic), outside the usual coulse of professional medical practice and not for a legitimate rnedical purpose, in violation of Title 21, United States Code, Section 841(a)(1). 82. Because the conspiracy involved more than 40 gralns of fentanyl, the penalty plovisions of Title 21, United States Code, Section 841(bX1XB)(vi) apply, 83. All in violation of Title 2l,United States Code, Section 846. COUNT FOUR 84. The Grand Jury incorporates numbered paragraphs l-52 of this Second Superseding Indictment as if fully set forth herein. 85, Beginning during, or at least in,2011, and continuing thereafter through 2015, in the Southern District of Alabama and elsewhere, the defendants, 2l l u4.ay 20, Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 22 of 51 JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D., conspired with each other and with others, both known and unknown to the Grand Jury, to knowingly and unlawfully distribute and dispenss, possess with intent to distribute and dispense, and cause to be distributed and dispensed, Schedule III Controlled Substances, including, but not limited to: hydrocodone, by means of prescriptions, among other means and methods, outside the usual course of professional medical practice and not for a legitimate medical purpose, in violation of Title 21, United States Code, Section 8a1(aXl). 86. All in violation of Title 21, United States Code, Section 846. COUNTS FIVE THROUGH SEVEN 87. The Grand Jury incolporates numbered paragraphs 1-52 of this Second Supelseding Indictment as if fully set forth herein. 88, On or about the date set forth below, in the Southern District of Alabama, Southern Division, the defendant, JOHN PATRTCK COUCH, M.D., aided and abetted by others, both known and unknown to the Grand Jury, did knowingly, intentionally, and unlawfully distribute and dispense a mixture and substance containing detectable amount of oxycodone, to wit: Roxicodone 15mg, a Schedule II Controlled a Substance, to an undercover DEA Task Force Offrcer for no legitimate medical purpose and outside the usual coulse of professional practice. 89. The allegations set forlh in paragraphs 87-88 above, are heleby realleged and incorporated by reference for each of the following counts, as though fully set forth therein: Count Date Patient Controlled Substance 22 Number of Pills Strength Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 23 of 51 FIVE 08105114 "UC Patient" Roxicodone 90 15mg SIX 09108114 "UC Patient" Roxicodone 90 15mg SEVEN tU05lt4 "UC Patient" Roxicodone 110 15mg 90. In violation of Title 21, United States Code, Section 8a1(a)(1) and Title 18, United States Code, Section 2(a). COUNTS EIGHT THROUGH TEN 91. The Grand July incorpolates numbered paraglaphs 1-52 of this Second Superseding Indictment as if 92. On ol fully set forth helein. about the date set forth below, in the Southem District of Alabama, Southeln Division, the defendant, XIULU RUAN, M.D., aided and abetted by others, both known and unknown to the Gland Jury, did knowingly, intentionally, and unlawfully distribute and dispense a mixture and substance containing detectable arnount a Schedule II a Controlled Substance, to the patients identified below, for lio legitimate medical purpose and outside the usual course of profèssional practice. 93, The allegations set forth in paragrapl-rs 9l-92 above, are hereby realleged and incorporated by refelence for each of the following counts, as though fully set forth therein: Count EIGHT Date Prescribed 212612015 Patient D.G Controlled Substance Number of Pills Abstral J¿ Subsys 60 Abstral 32 Subsys 60 60 Oxycontin Norco 23 90 Strength 400 mcg 400 rncg 400 rncg 400 mcg 40 mg 10 rng Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 24 of 51 NINE TEN 4127120t5 7lt5l20r4 K.L. E.G. Fentora Oxycontin Oxycodone Fentora Zohydro ER 600 rncg 80 mg 15 me 600 rncg 50 mg 56 60 120 112 60 94. In violation of Title 21, United States Code, Section 8a1(aX1) and Title 18, United States Code, Section 2(a). COUNT ELEVEN 95. The Gland Jury incorporates numbered paragraphs I-52 of this Second Supelseding Indictment as if fully set forth herein. 96" On or about November 25,2014, in the Southern Distlict of Alabama, Southern Division, the defendant, xrul,u RUAN, M.D., aided and abetted by othels, both known and unknown to the Grand July, did knowingly, intentionally, and unlawfully distribute the fbllowing Contlolled Substance: A rnixture and substance containing a detectable amount of Oxyrnorphone, a Schedule II Controlled Substance, under the brand name Opana, for no legitimate medical purpose, and outside the usual course of professional plactice, to individual identified herein 97. as an D.W. In violation of Title 21, United States Code, Section 8a1(aX1) and Title 18, United States Code, Section 2. 98. The use of the prescribed substance resulted in death and serious bodily injury to D.W., thus the penalty provisions set out in Title 21, United States Code, Section 841(bX1XC) apply, 24 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 25 of 51 COUNT TWELVE 99. The Grand Jury incorporates numbered Superseding Indictment as 100. if fully set paragraphs l-52 of this Second forlh herein. On or about October 10, 2012, in the Southem District of Alabarna, Southern Division the defèndant, xrul,u RUAN, M.D., aided and abetted by others, both known and unknown to the Grand Jury, did knowingly, intentionally, and unlawfully distribute the following Controlled Substance: (1) A mixture and substance containing a detectable amount of Morphine Sulfate, a Schedule II Controlled Substance, under the brand name MS-Contin, for no legitimate medical purpose, and outside the usual course of professional plactice, to individual identified herein an as J,B. i01. In violation of Title 21, United States Code, Section 8a1(aX1) and Title 18, United States Code, Section 2. 102. The use of the presclibed substances resulted in death and serious bodily injuly to J.B, thus the penalty provisions set out in Title 21, United States Code, Section 841(bX1XC) apply. COUNT THIRTEEN 103. The Grand Jury incorporates numbered paragraphs I-52 of this Second Superseding Indictment as if fully set forth herein. 104. On ol about Malch 5 and Malch 11,2015, in the Southern District of Alabama, Southern Division, the defendant, JOHN PATRICK COUCH, M.D., 25 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 26 of 51 aided and abetted by others, both known and unknown to the Grand Jury, did knowingly, intentionally, and unlawfully distribute the following Controlled Substances: (1) A mixture and substance containing a detectable Oxycodone Hydrochloride, a Schedule II Controlled amount of Substance, under the brand name Roxicodone; (2) A mixture and substance containing a detectable amount of Oxycodone, a Schedule II Controlled Substance, under the brand name OxyContin, for no legitirnate medical purpose, and outside the usual course of professional plactice, to individual identified herein as an K.D. 105. In violation of Title 21, United States Code, Section 8a1(a)(1), and Title 18, United States Code, Section 2. i06. The use of the plescribed substances resulted in death and serious bodily injury to K.D,, thus the penalty provisions set out in Title 21, United States Code, Section 841(bXlXEXi) apply. COUNT FOURTEEN I07. The Grand Jury incorporates numbeled paragraphs I-52 of this Second Supelseding Indictment as if firlly set forth herein. 108, On or about March 18 and 31,2014, in the Southern Distlict of Alabama, Southern Division, the defendant, JOHN PATRICK COUCH, M.D., aided and abetted by others, both known and unknown to the Grand Jury, did knowingly, intentionally, and unlawfully distribute the following Controlled Substances: (1) A mixture and substance containing a detectable amount of Oxymorphone, a Schedule Ii Controlled Substance, and 26 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 27 of 51 (2) A rnixture and substance containing a detectable arnount of Morphine Sulfate instant Release, a Schedule Il Controlled Substance. fol no legitimate medical purpose, and outside the usual course of professional practice, to an inclividual identified herein as P.C. 109, In violation of Title 21, United States Code, Section 8a1(aX1) and Title 18, United States Code, Section 2. 110, The use of the presclibed substances resulted in death and selious bodily injury to P.C., tlrus the penalty plovisions set out in Title 21, Uniled States Code, Section 841(lrxlXC) apply. COUNT FIFTEBN 11 1. The Grand Jury incorporates nurnbered paragraphs l-52 of this Second Supelseding Indictment as if fully set forlh helein. 112. Beginning during, or at least in,2011, and continuing tlu'ough May 20,2015,in the Southern District of Alabama, Southern Division, and elsewhere, the defendarfs, JOI{N PATRICK COUCH, M.D. and XIULU RUAN, M.D., did knowingly, willfully, and unlawfully combine, conspire, confedelate, and agree with each other, and with othels, both known and unknown to the Grand Jury, to commit celtain offenses against the United States, to wit: to knowingly and willfully execute, and attempt to execute a scheme and artif,rce to defi'aud a healthcale benefits program, and to obtain, by rneans of false and fraudulent pretenses, representations, and promises, money and property owned by, and under the custody and control of, a healthcare benefits program in connection with the delivery of and payment for healthcare benefits, items, and services, in violation of Title 18, United States Code, Section 1347(a). 27 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 28 of 51 On¡ncrrvn oF 113. THE CoNspln¡,cv The objective of the conspilacy was to unlawfully increase, through false and fraudulerf lnanners, means, and pletenses, the reimbursements leceived by PPSA and C&R Pharmacy from private, state, and fedelal healthcare beneFrts prograns. M¿.NNBR AND MEANS oF THE CoNsptR¿rcv 114. The manner and means used to achieve this objective included, but weLe not limited to, the following: A. Billing patients' insurance providels for Controlled Substances that were not prescribed fol a legitirnate medical pulpose or were prescribed outside the usual couÍse of plofessional practice; B, Submitting false, fi'audulent, and materially misleading medical information to patients' insurance providers fbr the purpose of getting their insurance providers to pay for extremely dangelous and expensive TIRF drugs; C. Running and then billing patients' insurance providers for various lab tests, including urine drug screens, for no legitimate medical purpose and outside the usual course of professional practice; D, Falsely and fraudulently billing patients' insurance providers fol office visits using a physician's national provider identifiel nurnber, when the pþsician did not see, treat, ol render any service to the patient. 115. All in violation of Title 18, United States Code, Section 1349. COUNT SIXTEEN 116. The Grand Jury incorporates numbered paragraphs Superseding Indictment u, if fully set forth herein. 28 I-52 of this Second Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 29 of 51 I17. From in or about March 5,2011, and continuing through in or aboutMay 20, 2015, in the Southern District of Alabama, Southern Division, and elsewhere, the defendants, JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D., did knowingly, willfully, and unlawfully combine, conspire, confederate, and agree together witli each other, and with co-conspirators "M.D." and Christopher Manfuso, neither of wirorn are named defendants herein, and other persons, both known and unknown to the Grand Jury, to commit certain offenses against the United States, to-wit: to knowingly and willfully offer, pay, solicit, and receive any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind in leturn for refelling an individual to a person for the firnishing or alranging for the furnishing of any item or service fol which payment may be made in whole ol in part under a Fedelal health care program, and in return for purchasing, leasing, ordering, and arranging for or lecommending pulchasing, leasing, and ordering any good, facility, seLvice, or item for which payment may be made in whole ol in palt under a Fedelal health care program. In violation of Title 42,United States Code, Section l320a-7b(b). Ou.lrcrrvn oF THE CoNsprRrcv 118, The objective of the conspiracy was for RUAN and COUCH to unlawfully receive illegal kickbacks as an inducement and in exchange fol lefemals of workels compensation patients. MINNBR AND MEANS oF THE CoNsptRlcv I19. was Industrial Pharmaceuticals Management ("IPM"), owned by co-conspilator M.D., a California-based compally that specialized in dispensaries establishing and managing in-house in rredical clinics that treated wolkers compensation ("Vy'C") patients. Once contract was signed allowing IPM to manage the in-house dispensary, IPM supplied a the dispensary with drugs and plovided doctors with potential formularies. To induce and in 29 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 30 of 51 exchange for doctors' in-house dispensing business, there were tirnes tliat IPM paid celtain doctors large sums of rnoney in the form of monthly "guarantees." I20. In March 2011, RUAN and COUCH entered into contracts with IPM, wheleby IPM agleed to manage a WC dispensary within PPSA. These contracts were signed by conspirator M.D. co- Christopher Manfuso was the legional manager who ovelsaw the IPM dispensary at PPSA. l2l. To induce RUAN and COUCH to sign these contracts, IPM offered to pay RUAN and COUCH monthly guaranteed payments of $45,000.00 and $18,000.00, respectively. A second contract between IPM and RUAN increased his gualantee to $53,000.00 per month. Once the contracts were signed, these guaranteed payments corfinued to be made each month in exchange fbr RUAN and COUCH leferring their WC patients to the IPM dispensary within PPSA. I22. In December 2013, Manfuso left the employment of IPM and formed a new dispensary company called Comprehensive RX Management ("CRM"). When 'WC he formed CRM, Manfuso purchased some of IPM's customer accounts, including the accounts of RUAN and COUCH, The kickback payments in exchange for WC patient referrals continued with RUAN's payments incleasing up to $80,000.00 pel month. 123. Between May 24, 20II and January 21, 2015, IPM and later CRM paid 5864,770.41 to COUCH and 5L,765,132.46 to RUAN to induce, and in exchange for, RUAN and COUCH referring their WC patients to the IPM dispensary. 124. The kickback payments made by IPM, and later CRM, were not paid to PPSA. Rather, the monthly "guarantees" were paid controlled by RUAN and COUCFI. 30 to separate personal and business accounts Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 31 of 51 125. RUAN and COUCH leceived a combined 52,629,902.87, in their personal capacify, as an inducement and in exchange for WC patient referrals. Ovnnr Acrs 126. On ol about September 20, 2012, COUCH received a check numbered 11667, payable to John Patrick Couch, M.D,, from iPM, in the amount of $38,543.70. I27. On or about February 25, 2013, RUAN received a check numbered 12649, payable to Ruan Conrpanies,LLC, from IPM, in the amount of $53,000.00. 128. On or about September 18,2013, COUCH received a check numbered 13570, payable to Physicians Compounding Solutions, LLC, fi'om IPM, in the amount of $21,860.95. 129. On or about August 15,2014, COUCH received a check number 1280, payable to Physicians Compounding Solutions, LLC, from CRM, in the amount of $33,020.85. 130. On ol about November 18, 2014, RUAN received a check numbered 1452, payable to Ruan Companies,LLC, from CRM, in the amount of $80,000,00. 131. On or about January 21,2015, RUAN received a check numbered i555, payable to Ruan Companies,LI"C, from CRM, in the amount of $75,000.00. 132. All in violation of Title 18, United States Code, Section 371. COUNT SEVENTEEN I33. The Grand Jury incorporates Superseding Indictment as if I34. fully set numbered palagraphs l-52 of this Second forth helein. From in or about August 2012, and continuing through May 20,2015, in the Southeln District of Alabarna, Southern Division, and elsewhere, the defendants, JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D., did knowingly, willfully, and unlawfully combine, conspire, confederate, and agree with 31 each Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 32 of 51 other, with co-conspirator Natalie Perhacs, who is not named as a defendant herein, and with other persons, both known and unknown to the Grand Jury, to commit certain offenses against the United States to- wit: to knowingly and willfully offer, pay, solicit, and receive any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, and in return for purchasing, leasing, ordering, and arranging for or recommending purchasing, leasing, and ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program. In violation of Title 42,Untted States Code, Section l320a-7b(b). Os.IBcrIVn oF THE CoNsprRlcv 135. The objective of the conspiracy was the unlawful payment to and receipt of illegal kickbacks by RUAN and COUCH as an inducement and in exchange for their prescribing of the TIRF drug Subsys to patients at PPSA. MINNnR AND MEANS oF THE CoNsprRrcv 136. In January 2012, the FDA approved a new TIRF drug under the brand name Subsys. Subsys was manufactured by Insys Therapeutics, Inc. 137. The only FDA-approved indication for Subsys was for the "management of breakthrough pain in adult cancer patients who are already receiving and who are tolerant to around-the-clock opioid therapy for their underlying persistent cancer pain." Subsys is rnarketed in single-dose spray bottles in strengths of 100mcg, 200mcg, 400mcg, 600mcg, 800rncg, l200mcg, and 1600mcg. 138. Due to both the extrerne dangers and expense of Subsys, many healthcare providers required prior approval before they would reimburse 32 for a patient's Subsys Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 33 of 51 other, with co-conspitator Natalie Perhacs, who is not named as a defendant herein, and with other persons, both known and unknown to the Gland Jury, to commit certain offenses against the United States to- wit: to knowingly and willfully offèr, pay, solicit, and leceive any remunelation (including any kickback, bribe, or rebate), directly or indilectly, overtly or covertly, in cash ol in kind in return for refen'ing an individual to a person for the furnishing or arranging for the furnishing of any item ol service for which payment nay be made in whole or in palt under a Federal health care progratn, and in letuln fol purchasing, leasing, oldering, and arranging fol or' recommending pulchasing, leasing, and ordering any good, facility, service, ol item for which payment may be made in whole or in part under a Federal health care program. In violation of Title 42,United States Code, Section I320a-7b(b). OsJpcrlvn oF TI{E CoNsprnncv 135, The objective of the conspiracy was the unlawful payrnent to and receipt of illegal kickbacks by RUAN and COUCH as an inducement and in exchange fol their presclibing of the TiRF dlug Subsys to patients at PPSA, M,tNNrn AND MEANS oF 136. Tr'rE CoNsplR¿.cv InJanuary 2012, the FDA apploved a new TIRF drug under the brand rlame Subsys. Subsys was manufàctuled by insys Therapeutics, Inc. 137. The only FDA-approved indictation fol Subsys was f'or the "management of breakthrough pain in adult cancer patients who are already receiving and who are tolerant to around-the-clock opioid therapy for theil underlying pelsistent cancer pain." Subsys is marketed in single-dose spray bottles in strengths of 100mcg,200rncg,400mcg,600rncg,800mcg, 1200mcg, and 1600mcg. 138. Due to both the extreme dangels and expense of providers requiled plior approval before they would 32 Subsys, ma11y healthcale reimburse for a patient's Subsys Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 34 of 51 prescription. 139. Starting in or about Aplil2012, and continuing up to May 20,2015, RUAN ancl COUCH wlote thousands of prescliptions for Subsys, nearly all of which went to PPSA patients who did not have cancer. 140. A vast majority of these prescriptions for Subsys were filled at C&R Pharmacy, which was owned by RUAN and COUCH. 141. By early 2013, RUAN and COUCH had become two of the top ten lalgest volume prescribers of Subsys in the entire nation. 142. In Aplil representative Subsys 2013, insys Therapeutics hired Natalie Pelhacs to be the Subsys drug for RUAN and COUCH. Perhacs's commissions wel'e tied to the amount of RUAN and COUCH plescribed to their patients. During the 25-montl-r period between Aplil 2013 and May 2015,Insys Therapeutics paid Perhacs over f1700,000.00. 143. One of Pelhacs's roles as the representative handling RUAN arid COUCH was to set up speaker engagements during which RUAN and COUCH were to present information about Subsys to other potential presclibers of the engagements on behalf of dlug. Pelhacs attended these speaking Insys. However, on many occasions, the speaking engagements were only attended by, RUAN and COUCH, PPSA employees, and Insys employees. I44. Between August 2012 and May 2015, Insys paid RUAN and COUCH combined total in excess of $1 a 15,000.00. While this money was ostensibly paid for "speaking fees," it was actually paid to induce, and in exchange for, RUAN and COUCH prescribing high volumes of Subsys. OvrRr Acrs I45. On or about March 1,2013, RUAN received check number 10479, payable to J3 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 35 of 51 Xiulu Ruan, in the amount of $2,400.00. 146. On or about }i4ay 9,2013, COUCH leceived check number'11090, payable to John Patrick Couch, in the amount of $3,200.00, 147. On or about February 13,2014, COUCH received check number 1920, payable to John Patlick Couch 1099, in the amount of $1,600.00. 148. Ruan On or about May 1, 2014, RUAN received check number 3057, payable to Xiulu XLR Propefties, LLC., in the arnount of $6,000.00. I49. On ol about October 31,2014, COUCH received check numbel 5091, payable to John Patlick Couch 1099, in the amount of $3,750.00. 150. On or about November 14,2014, RUAN leceived check numbet'5390, payable to Xiulu Ruan XLR Propefiies, LLC., in the amount of $3,750.00. 151, All in violation of Title 18, United States Code, Section 371. COUNT EIGHTEEN 152, The Grand July incorporates numbered paragraphs l-52 of this Second Supelseding Indictment as if fully set forth herein. 153. From in or about September 2014, and continuing through in or about February 2015, in the Southern District of Alabama, Southern Division, and elsewheLe, the clefendants, . JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D., did knowingly, willfr"rlly, and unlawfully combine, conspire, confederate, aud agree ivith other', and each with other persons, both known and unknown to the Grand Jury, to commit ceftain offenses against the United States to-wit: to knowingly and willfully solicit and receive any remuneration (including any kickback, bribe, ol rebate), dilectly or indirectly, oveltly ol covertly, in cash or in kind in retum for referring an 34 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 36 of 51 individual to a person for the fuinishing or alranging for the furnishing of any item or selvice for which payment may be made in whole ol in part under a Federal health care program, and in return for purchasing, leasing, ordering, and arranging for or recommending pulchasing, leasing, and ordeling any good, facility, service, ol item for which payment may be made in whole ol in part under a Federal health care program. In violation of Title 42,United States Code, Section 1320a-7b(b). Os¡ncrrvB oF THE CoNsprnncv 154. The objective of the conspiracy lvas the unlawful receipt of illegal kickbacks by RUAN and COUCH, through C&R Pharmacy, as an inducement and in exchange for their' prescribing of the TIRF dlug Abstral to patients at PPSA. MINNBR AND MEANS oF THE CoNsprRncv 155. In January 2017, the FDA approved a new TIRF drug under the bland name Abstral, Duling the tirne period alleged in this count, Abstral was manufactured by Galena Biopharma, Inc. 156. The only FDA-approved indication for Abstral was for the "rnanagement of bleakthrough pain in cancer patients 18 years of age and older who are ah'eady receiving, and who are tolerant to, opioid therapy for their underlying persistent cancer pain." Abstt'al was marketed as a dissolvable oral tablet in dosage strengths of 1O0rncg,200mcg,300mcg, 400rncg, 600mcg, and 800mcg. 157. Due to both the extreme dangels and expense of Abstral, many healthcare providers required prior approval before they would reimburse for a patierrt's Abstral prescliption. 158. RUAN and COUCH began prescribing Abstlal in early 2011. I{owever, they clid this very sparingly until October 2073. 159. Begiruring in the 4th quarter of 2013, RUAN and COUCH went fiom prescribing 35 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 37 of 51 a fe\ / hundred micrograms of Abstlal per month to plesclibing millions of micrograms of Abstral per month. This meteoric lise in RUAN and COUCH prescribing Abstral coincided with each doctor purchasing approxirnately $800,000.00 of stock in Abstral's manufacturer, Galena Biopharma. After buying a cornbined total of approximately $1,600,000.00 in Galena stock, RUAN and COUCH quickly became the Number One and Nurnber Two prescribers, lespectively, of Abstral in the entire United States. 160. Between 30o/o the 4th quartel of 2013 though the 4th quarter of 2014, apploximately of all Abstral prescriptions written in the entire nation were written by RUAN and COUCH, RUAN, alone, accounted for approximately 1 out of every 5 Abstral plescriptions wlitten duling this time period. Nearly all of the prescriptions RUAN and COUCH wlote fcrr Abstral wele written off-label ftrl patients who did not have "underlying persistent cancel pain." 161. Despite leading the nation in Abstral plescribing in2014, RUAN and COUCH dlastically cut back the number of prescriptions they wrote between April and September' 2014. This dip from over 2,000,000 micrograms per month to less than 1,000,000 coincided with a dramatic drop in the price of Galena stock. 162. On or about October 1,2074, after foul straight months in which neither RUAN nor COUCH presclibed mole than 1;000,000 rnicrograms of Abstlal, Galena enteled into a rebate agreement with C&R Phalmacy whereby, Galena would pay a scaled rebate based on the volume of Abstral purchased by C&R Pharrnacy. C&R Pharmacy was owned by RUAN and COUCH, and almost exclusively fìlled prescriptions wlitten by RUAN and COUCH. 163. Immediately aftel entering into the rebate agreement, RUAN and COUCH lesumed prescribing lalge volumes of Abstral. 164. Theleafter, in Febluary 2015, C&R Pharmacy 36 received a payment of 597,924,A0 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 38 of 51 as a rebate based on the volume of Abstlal purchased by the phannacy. Ovnnr Acrs 165. On or about October 1,2014, C&R Pharmacy, which is joiritly owned by RUAN and COUCH, entered into a rebate agreement with Galena Biophalma. 166. On or about February 78,2015, Galena Biopharma executed a wire ü'ansfer in the anrount of $97,924.00 to the C&R Pharmacy bank account ending in x7003. 167. All in violation of Title 18, United States Code, Section 371. COUNT NINETEEN 168. The Gland Jury incorporates number paragraphs l-52 of this Second Superseding Indictment as if fully set forth helein. 169. From on or about January 1,2071 through in or about May 20,2015, in the Southern District of Alabarna, Southem Division, and elsewhere, the defendants, JOHN PATRICK COUCH, M.D. and XIULU RUAN, M.D., did conspire with one anothel and others, both known and unknown to the Grand Jury, including co-conspirators Natalie Perhacs, Justin Thomas Palmer, and Bridgette Parker, none of whom are named as defendants herein, to execute and attempt to execute a scheme and artihce to defi'aud, described below, and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, to wit: (1) V/ire Fraud in violation of Title 18, United States Code, Section 7343, and (2) Mail Fraud in violation of Title 18, United States Code, Section 1341. On.rncrlvr oF THE CoNsplRncy I70. The objects of the conspiracy, among others, were to procure payments from a- JI Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 39 of 51 healthcare providers replesentations; and to which PPSA and the defendants were not entitled by false to procure payments fbr dispensing Contlolled Substances Compensation patients, which Controlled Substances were selected because to 'Workels of the higher reimbursable to the defendants lathel than fol the needs of the patient. M¿.NNIN AND MEANS OF THE COT.ISPTRICY l7l. The defendants COUCH and RUAN set up and maintained an online PPSA account with Blue Cross/Blue Shield ("BC/BS"), and other healthcare providers, so as to electronically submit medical clairns and so as to be reimbulsed electronically by BC/BS, and other healthcare providers. I72. Members of the conspiracy, both known and unknown to the Grand Jury, fi'audulently subrnitted claims for patient visits with COUCH ol RUAN, which had, in fact, been patient visits with a PPSA Physician Extender', rather than a doctol. The reirnbursements for this "up-coding" of seLvices resulted in PPSA being paid approximately 300lo more per doctor visit by BCBS, and other healthcare providers, than the payment to which PPSA and the doctors were entitled. I73. RUAN would verify by e-mail with co-conspirator Manfuso, who is not named a defendant herein; who worked for IPM and subsequently owned CRM, and who did not as live in the State of Alabama, which Controlled Substances lesulted in higher reimbursables to PPSA and the defendants and, based on that fact, RUAN requested and ordered those Controlled Substances to be delivered to PPSA's dispensary at the PPSA Springhill Avenue location in Mobile, Alabama. 17.t. Controlled Substances were delivered to the PPSA Splinghill Avenue location in Mobile, Alabama, by a commercial interstate carrier, to include but not limited to FedEx, and the 38 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 40 of 51 United States Postal Service. Thereafter', RUAN and COUCH and othel members of the conspiracy, would dispense the Controlled Substances based on the false representation that the Contlolled Substances, with liigher reirnbursables, were the medications necessaly to treat the 'Worker' s Compensation patient. I75. RUAN and COUCH were paid an agreed upon monthly amount fi'orn IPM, and subsequently frorn CRM, for dispensing the Controlled Substances. These rnonthly checks were delivered to RUAN and COUCH by an interstate commercial camier. 176. In carrying out theil scherne, members of the conspiracy would Lrse ol cause to be used commelcial interstate carriers and the United States Postal Service, and would use or callse to be used interstate wire communications, that is e-mails and telephone calls, to be used for other purposes in furtherance of said scheme and arlifìce to deflaud. 177. Specifically, as part of said conspiracy, members of the conspiracy, both known and unknown to the Grand Jury, fraudulently procured electronic payment from BCBS, and othel healthcare providers, to which they were not entitled. The submission of bills to BCBS and the payrnent fì'om BCBS caused wire transmissions, to include e-mails, and electronic wire transfers, to be sent to and from the state of Alabama to places outside the state of Alabama, to include the Southern District of Alabama. I78. Perhacs and others aided materially rnisleading documentation RUAN and COUCH in subrnitting fàlse, fiaudulent, and to patients' insurance ploviders in an effort to get reimbursed for the off-label prescribing of dangerous and expensive TIRF cancer drugs. ll9. All in violation of Title 18, United States Code, Section 1349. COUNT TWENTY 180. The Grand Jury incorporates numbeled paragraphs 1,-52 39 of this Second Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 41 of 51 Superseding Indictrnent as if fully set forth herein. 181. From on or about or about March 5, 2011, thlough in ol about li4ay 20, 2075, in the Southern District of Alabarna, Southern Division, and elsewhere, the defendant, XIULU RUAN, M.D., aided and abetted by Chlistopher Manfuso, who is not named as a defendant helein, ancl by others, both known and unknown to the Gland Jury, did knowingly conspile, confèderate, and agree with other persons, both known and unknown to the Grand Jury, to commit an oflènse against the United States, in violation of Title 18, United States Code, Section 1957, to wit: to knowingly engage and attempt to engage, in monetary tlansactions by, through and to a hnancial institution, affecting interstate and foleign comlnerce, in criminally clelived ploperty of a value greater than $10,000, that is, alnong other means and methods, transfelring funds from bank accounts to othel individuals by wile transfèrs, such property having been derived from a specified unlawful activity, that is, violations of and conspilacies to violate Title 18, United States Code, Section 1349 (conspiracy to commithealthcare fraud), and Section 371 (conspiracy to violate the Anti-Kickback Statute); and Title 2I,United States Code, Section 846 (conspiracy to distribute Controlled Substances). 182. In violation of Title 18, United States Code, Section 1956(h). COUNTS TWENTY-ONE AND T\ryENTY-T\ryO 183. The Gland Jury incorporates Supelseding Indictment as if filly numbeled paragraphs l-52 of this Second set forth herein. 184. On or about the dates set forth below, in the Southern District of Alabama, Southem Division, the defendant, XIULU RUAN, M.D., 40 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 42 of 51 aided and abetted by others, both known and unknown to the Grand Jury, knowingly engaged and attempted to engage in the following monetary transactions by, through and to a financial institution, affecting interstate or foreign commerce, in crirninally derived ploperty of a value greater than $10,000; that is the deposit, withdrawal, transfer, and exchange of U,S. cunency, funds, ol monetaly instrurnents, such property having been derived tì'om a specified unlawful activity, namely violations of and conspiracies to violate Title 18, United States Code, Section 1349(conspilacy to commit healthcare fraud), and 371(conspiracy to violate the anti-kickback statutes); and Title 21, United States Code, Section 846 (conspilacy to distribute Controlled Substances). 185. With respect to Counts Twenty-One caused funds and Twenty-Two set forth below, RUAN to be wired fiorn the bank accounts identifìed below to the individuals and the accounts listed in the "Recipient" column. Count Date TWENTY -ONE 0811412014 TV/ENTY -TWO 091261201,4 Originating Financial Institution and Account Wire transfèr from State Bank & Trust Acct. ending 5553, in the name of XLR Exotic Autos LLC 'Wire tlansfbl from State Bank & Trust Acct. ending 5553, in the name of XLR Exotic Autos LLC Recipient Amount JPMorgan Chase Bank, Acct. ending9273, Dallas, Texas sr24,355.87 Comerica Bank Acct. # ending 7629,ïan Diego, California $ 1 10,000.00 186. All in violation of Title 18, United States Code, Section 1957 and 2(a). FORFEITURE NOTICES Pursuant to Rule 32.2(a), Fed. R. Crim. P., the allegations contained in Counts One through Twenti,-Jv¿o of this Second Supelseding Indictrnent are hereby repeated, r'ealleged, and incorporated by reference herein as though fully set forth at length for the purpose of alleging forfeiture. 41 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 43 of 51 RtcxBronnrNc Fonrurunn (CouNr (RICO Cousrln,rcv) O¡qn) The defer:rdants, JOHN PATRICK COUCH and XIULU RUAN, are hereby notihed that, upon conviction of the violation of Title 18, United States Code, Section 7962, as charged in Count One of this Second Superseding Indictment, the defendants shall folfeit, pursuant 1o Title 18, United States Code, Section 1963: All Ð intelests acquired and maintained in violation of Title 18, United States Code, Section 1962; b) rights All interests in, securities of, clairns against, of any kind affording a source of and property and contractual influence over, the enterprise named and desclibed herein which the defendant established, operated, controlled, conducted, and participated in the conduct of, in violation of Title 18, United States Code, Section 1962; and c) All property constituting and derived from proceeds obtained, directly and indirectly, from racketeering activity in violation of Title 18, Uriited States Code, Section 1962. The property subject to folfeiture to the United States pursuant to Title 18, United States Code, Section 1963(a)(1), (a)(2)(A) - (D), (aX3), and Title 21, United States Code, Section 853(a)(3), includes, but is not lirnited to, the following assets: A. XIULU RUAN's Alabarna Medical License, number MD25262; B. JOHN PATRICK COUCH's Alabama Medical License, nurnbel C. JOHN PATRICK COUCH's Georgia Medical License, number 42552; D. JOHN PATRICK COUCH's California Medical E. A sum MD20444: License, number 82209; of money in the amount of at least $40,000,000.00 in United States currency, representing the total amount of proceeds obtained by the defendants, as a result of theil violation of Title 18, United States Code, Section 1962; F. The contents of the accounts and funds associated with PPSA and C&R Pharmacy as listed on Page 49, G. The contents of the accounts H, associated with RUAN as listed on Page 49-50. The contents of the accounts associated \¡/ith COUCH as listed on Page 49-50. 42 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 44 of 51 L J. The vehicles associatecl with RUAN, as listed on Page 50. The vehicles associated with COUCH, as listed on Page 50. K. The leal property associated with RUAN, L. as listed on Page 51. The leal property associated with COUCH, as listed on Page 51. All pulsuant to Title 18, United States Code, Sections 1963(a)(l), (a)(2)(A)-(D), and (aX3), and Title 21, United States Code, Section 853(aX3). CoNsprR,rcy ro DrsrRrsurE AND DrspnNsr Fonrprrunp (Ç_qutrs- Tlvg rgngq,s¡r f'oun) Aun DrsrnrBurroN on n CoNTRoLLED SunstA¡Lcn lCouNts FryplunquçB FouBTEEN) The allegations contained in Counts Two through Fourteen of this Second Supelseding Indictment are heleby re-alleged and incorporated by refblence fol the purpose of alleging folfeitule pursuant to Title 21, United States Code, Section 853(a)(1) and (a)(2). Upon conviction of an offense as set forth in Counts Two tlirough Foutteen of this Second Superseding Indictment, the defendants JOHN PATRICI( COUCH and XIULU RUAN shall forlèit to the United States of Arnerica, pursuant to Title 21, United States Code, Section 853(a)(1) and (a)(2), any property, real or personal, which constitutes or is derived fi'om any proceeds the defendants COUCH and RUAN, obtained, directly ol inclirectly, as the lesult of such violation(s), and any property used, or intended to be used, in any manner or palt, to commit, or to facilitate the commission of, such violation(s). The ploperty to be forfeited includes, but is not lirnited to, the following: A. XIULU RUAN's Alabama Medical License, number MD25262; B. JOHN PATRICK COUCH's Alabama Medical License, numbel MD20444; C. JOHN PATRICK COUCH's Georgia Medical License, number 42552; D, JOI{N PATRICK COUCH's Califolnia Medical License, number 82209; E. A money judgment against JOHN PATRICK COUCH and XIULU RUAN representing a surn of money equal to the proceeds the defendants obtained, dilectly or' indirectly, as a result of F. a violation of Title 21, U.S.C. $ 846. The contents of the accounts associated with PPSA and C&R Pharmacy, as listed 43 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 45 of 51 on Page 49. G, The contents of the accounts associated with RUAN, as listed on Page 49-50. H. The contents of the accounts associated with COUCH, as listed on Page 49-50 I. J. The vehicles associated with RUAN, as listed on Page 50. The vehicles associated with COUCH, as listed on Page 50. K. T'he real property associated with RUAN, L. as listed on Page 51, The leal property associated with COUCH, as listed on Page 51. All pursuant to Title 21, United States Code, Sections 853(a)(1) and (a)(2). CoNsplucv ro VrolATE ANTr-Krcxe,Acr( Sr.lrurn FonpnrruRn CouNrs SrxrnnN Tr{RouGH Ercnr The allegations contained in Counts Sixteen through Eighteen are hereby lealleged and incorpolated by leference fol the purpose of alleging folfèiture pursuant to Title 18, United States Code, Section 981(a)(l)(C), and Title 28, United States Code, Section 2461(c). Upon conviction of the offense in violation of Title 18, United States Code, Section 371 set forth in Count Sixteen, Seventeen, ol Eighteen, of this Second Superseding Indictrnent, the defendants, JOHN PATRICI( COUCH and XIULU RUAN shall folfeit to the United States, pulsuant to Title 18, United States Code, Section 98i(a)(1)(C), and Title 28, United States Code, Section 246I(c), any propelty, real or personal, which constitutes or is delived, from proceecls traceable to a violation of an offense constituting specihed unlawful activity, including an act or' activity constituting an offense involving a Federal healthcare offense under Title i 8, United States Code, Section 1956(oX7XF), or a conspiracy to cornmit such an offense. The property to be forfeited includes, but is not limited to, the following: A. A money judgment against COUCH and RUAN representing a sum of money equal to the proceeds the defendants obtained as a lesult of such, or ploceeds traceable to such violation. B. The contents of the accounts associated with PPSA and C&R Pharmacy, as listed 44 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 46 of 51 on Page 49 C. The contents of the accounts associated with RUAN, as listed on Page 49-50. D. The contents of the accourrts associated with COUCH, as listed on Page 49-50. E. The vehicles F, The vehicles associated with RUAN, as listed on Page 50. associated with COUCH, as listed on Page 50. G. The real property associated with RUAN, H. All as listed on Page 51. The leal property associated with COUCH, as listed on Page 51. pur:suant to the provisions of Title 18, United States Code, Section 981(a)(1)(C), and Title 28, United States Code, Section 2461(c). CoNsplnncy ro Comurr Hollru CanB Fn.¡rur FoRrnrruRr (CouNr Frrr¡BN).,tNo CoNsptnrcy ro CoMMIT WIRE AND MArL Fn¡,un Fonnurunn (ÇounTN-lilnropN) The allegations contained in Counts Fifteen and Nineteen of this Second Supelseding Indictrnent are heleby le-alleged and incorpolated by leference fol the purpose of allegirig forfeiture. Pursuant to the provisions of Title 18, United States Code, Section 981(a)(1)(C) Title 28, United States Code, Section 2461(c), if anct convicted of the offenses set tbrth in Count Fifteen or Count Nineteen, defendants JOHN PATRICK COUCH and XIULU RUAN shall forfeit pt'operty, real or personal, which constitutes or is dedved fiom proceeds traceable to the offense, or a conspiracy to commit such offense. The property to be folfeited includes, but is not limited to, the following: A, A money judgment against JOHN PATRICK COUCH and XIULU RUAN representing a sunì of money equal to the ploceeds the defendants obtained, dilectly or' indirectly, as a result of a violation of Title 18, U,S.C. $ 1349. B. The contents of the accounts associated with PPSA and C&R Pharmacy, as listed on Page 49. C The contents of the accounts associated with RUAN, as listed on Page 49-50. D. The contents of the accounts associated with COUCH, as listed on Page 49-50. E, The vehicles associatecl witli XIULU RUAN, 45 as listed on Page 50. Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 47 of 51 F. The vehicles associated with COUCH, as listed on Page 50. G. The leal ploperty H. associated with RUAN, as listed on Page 51, The real property associated with COUCH, as listed on Page 51. All pulsuant to the provisions of Title 18, United States Code, Section 981(a)(1)(C), and Title28, United States Code, Section 2461(c). CoNsptRncy To Coumrr MoNBrnRy TRANSACTToNS Irrr Pnolanry DERTvED FRoM SpoclnrBo UNL,qwnuL Acrrvlry FoRrnrrunn (CquNt TwENTÐ; +Url NTS TwENrv-O¡{n nuo Twcr',¡rv-Two Pursuant to Title 18, United States Code, Section 982(a)(1), if defendant XIULU RUAN is convicted of Count Twenty or Count Twerfy-One or Twenty-Two, lie shall forfeit to United States all property, real oL personal, involvecl the in such offense(s) and all ploperty tlaceable to such ploperly. The Propelty to be forfeited includes, but is not limited to, the following: A. A money judgment against RUAN, lepresenting a sum of money equal to all property, real or personal, involved in such offense(s), and all property traceable to such propefty. B. The contents of the accounts associated with PPSA and C&R Pharmacy, as listed on Page 49. C. The contents of the accounts associated with RUAN, as listed on Page 50. D, E. The vehicles associated witli RUAN, as listed on Page 51. The real property associated with RUAN, as listed on Page 51. All pursuant to Title 18, United States Code, Section 982(a)(1). SunsrrrurE If any of the property ASSETS described above as being subject to forfeiture, as a lesult of any act or omission of the defendarfs, JOHN PATRICK COUCH and XIULU RUAN, (a) canuot be located upon the exercise ofdue diligence; (b) has been transferred or sold to, or deposited with, a third party; 46 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 48 of 51 (c) (d) (e) ofthe coult; has been substantially diminished in value; ol has been commingled with othel propelty which cannot be divided without has been placed beyond thejurisdiction difflrculty; it is the intent of the United States, pursuant to Title 18, United States Code, Section 1963Qn), and Section 982(b)(1), Title 21, United States Code, Section 853(p), as incorporated by 28 U,S.C. ç 246I, and Rule 32.2 Fed, R. Crirn. P,, to seek forfeiture of any other property of said defendants up to the value of the forfeitable property described above. TRUE BILL GRAND JURY TRICT OF ALABAMA S KENYEN R. BROWN UNITED STATES ATTORNEY By: DEBORAI] A. GRIFFIN Assistant United States J A S AR Attorney M IS Assistant United States Attomey Chiet, Climinal Division APRIL 2016 47 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 49 of 51 The accounts and funds associated with PPSA and C&R Pharmacv: 1. V/ells Fargo account ending inx6971, in the name of PPSA; 2. Wells Fargo account ending xl7I9, in the name of C&R, L.L.C.; 3, Wells Falgo account ending x7003, in the narne of C&R Pharmacy, L.L.C.; 4. 525,595.71 from JPMorganChase check ending 2682, payable to C&R Pharmacy; and 5. 5175,773.13 fi'om Bank of Arnerica account ending 7563, payable to C&R Pharrnacy. The banl< and financial accounts associated with RUAN: 1, State Bank & Trust (hereinafter'"SB&T) account ending in x5553, in the name of XLR Exotic Autos, L.L.C.; 2. SB&T account ending inx5264, in the naÍìe of Ruan Companies,L.L.C; 3, SB&T account ending inx6I97 in the name of Xiulu Ruan; 4. V/ells Fargo account ending inxI92I, in the name of XLR Propefties, L.L.C.; 5. Wells Fargo account ending in x72I2, in the nanìe of Physicians Weight Loss and Wellness, L.L.C.; 6. Community Bank account ending in x9013, in the name of Xiulu Ruan; 7 . Capital One Shalebuilder Investment Account ending in x6197 -0I in Ruan's name; 8. Voya Financial 401K account plan ending 9. College Counts 529 Fund, inx7645 in Ruan's nalne; accounts ending inx3712 10. College Counts 529 lìund, accounts ending in x3713. The contents of the following accounts associated with COUCH: 1. Wells Falgo account ending in x0015, in Couch's nalne; 2. Wells Fargo account ending in x6997, in the name of Physician's Compounding Solutions, L.L.C,; 3. Wells Fargo Account ending inx9824, in Couch's nalne; 4. Wells Fargo account ending in x6989, in the narre of JPC Properties, L.L.C.; 5. Trustmark accouut ending in x0135, in Couch's name; 6. &,7 E-Trade Investment accounts ending inx4755 andx8497; 8. Voya Financial 40lK account plan# ending inx7645; 49 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 50 of 51 9. &, 10. AllianzAnnuity accounts ending inx6369 11. - and x5389; 13. Coliege Counts 529 Fund, accounts ending inx2423, x8641 and X2406, all owned by Couch. The followins vehicles associated with RUAN: 1. Aston Marlin DB9 Volante, VIN #SCFAB02AX6GB04617' 2. Audi R8 Spyder VIN #V/UATNAFG2BN002379 J. 2007 Benlley Continerfal GT, VIN #SCBDR33V/47C048251; 4. 1987 5. Ferrari F430 Convertible, VIN #ZFFEW59A070 1 5684 1, 6. Felrari 599 GTB, VIN #ZFFFC60A270 506I9; 7 I 99 8. 2008 Larnborghini, VIN #ZHV/BU 47M7 8LA028 80 ; 9. 2005 Mercedes SLR, VIN #WDDAJ76845M000070; 10. 2011 Mercedes Model SLS AMG, VIN #WDDRJ7HA2BA002474; 11. 2013 Mercedes SLS AMG GT, VIN #V/DDRK7JA0DA010048; 12, Shelby Series 1, VIN #5CXS41816XL000159; 13. Spyker C8 Laviolette VIN #XL98411G692363202; 14. 2005 Bently Armage (VIN #SCBLC43FX5CXl0639); 15. 2005 Bentley Continental GT (VIN SCBCR63W65C024205); i6. 2006 Saleen 57 (VIN 1S9S8181265000074); 17. 2007 Porsche 91 1 GT3 (VINV/P0AC299975792687); 18. 2005 Polsclie 9TC (VIN WP0C829965S675240) BMV/ M6, VIN #WBAEEI4OOH256O72T; 4 Lamborghini Diablo, VIN #ZA9DUO 7P2RL A12227 ; The followins vehiclqs associated with COUCH: 2008 Cadillac Escalade, VIN 1GYFK66848R221963; VIN ZAM45VLA3D007257 2. 20 1 3 Maserati, 3 2015 Porsche 911, VIN #WP0882496FS135380; 4. 2006 Porsche 5 1969 Clrevrolet Corvette Sting Ray (VIN 1943795707748) 4; 91i Cabriolet (VIN WP0C8299X6S165878) 50 Case 1:15-cr-00088-CG-B Document 269 Filed 04/28/16 Page 51 of 51 The followine real propertv associ¿tlad'ui!h RUAN: 1. 2. 2800 Churchbell Ct. Mobile, Alabama; 1323 Lercy Stevens Road, Mobile, Alabama, 36695 (Mobile County), (Parcel number R022707253000005.002), and which is more particularly described as: Lot 2 Byrum Family Division Map Book 129 Page 35. The followins real properfy associated with COUCH: 1 319 Woodbridge Drive Daphne, Alabama; 2 Unit#7,25040 Perdido Beach Blvd Orange Beach, Alabama; J Unit C-804 ,28105 Perdido Beach Blvd Orange Beach, Alabama. 51 Case 1:15-cr-00088-CG-B Document 269-1 Filed 04/28/16 Page 1 of 1 h PENALTY PAGE CASE STYLE: UNITED STATES v. JOHN PATRICK COUCH, et.al. DEFENDANTS: JOHN PATRTCK COUCH (COUNTS I - 7, 13 & 14,15 - 19) XIULU RUAN (COUNTS I - 4, I - 12, 15 - 22) USAO NO: 13R00521 AUSAs: Deborah A. GriffTn and Christopher Bodnar CODE VIOLATIONS: COUNT 1: COUNTS 2 . 4: COUNTS 5-14: COUNT 15: COUNTS 16-18: COUNT 19: COUNT 20: COUNTS 2I & 22: 18 U.S.C. 21 U.S.C. 21 U.S.C. 18 U.S.C. 18 U.S.C. l8 U.S.C. 18 U.S.C. 18 U.S.C. $1962(d), RICO Conspiracy $ 846, Drug Conspiracy $ 841(a)(1), Distribution of a Controlled Substance $ 1349, Healthcare Fraud Conspiracy $ 371, Conspiracy to Violate Anti-Kickback Statute $ 1349, Wire ancl Mail Fraud Conspiracy S 1956(h), Conspiracy to Commit Money Laundering $ 1957, Money Laundering PENALTIES: COUNTS 1,2,4-10, & COUNT 3: COUNTS 11-14: COUNTS 15,20 -22: COUNTS 16 - 18: 19: 20 yrs/$250,000/5 yrs SRT/$100 SA 5 yrs to 40 yrs/$2,000,000/5 yrs SRT/$100 SA 20 yrs to life/$10,000,000/5 yrs SRT/$100 SA 10 yrs/$250,000/3 yrs SRT/$100 SA 5 yrs/$250,000/3 yrs SRT/$100 SA 48 Case 1:15-cr-00088-CG-B Document 269-3 Filed 04/28/16 Page 1 of 1 IN THE TJNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION UNITED STATES OF AMERICA ) ) ) ) ) ) ) v JOHN PATRICK COUCH, M.D. and, xrul-u RUAN, M.D. Criminal No. 15-00088 NOTICE TO THE COURT Comes now the United States of America, by and through Kenyen R. Brown, the United States Attorney for the Southern District of Alabama, and Assistant United States Attorney Deborah A. Griffin, and in accordance with Criminal L.R. 7. provides the following brief statement describing the differences between the superseding and the second superseding charges: 1. Counts Three and Four are new, as are Counts Eight through Fourteen. Counts Seventeen and Eighteen are also news. Respectfully submitted this the 28th day of Apnl,2016. KENYEN R. BROWN UNITED STATES ATTORNEY by: /s/ Deborah A. Griffin Deborah A. Griffin (GRIFD9200) Assistant United States Attorney 63 S. Royal Street, Suite 600 Mobile, Alabama 36602 Telephone: (251) 441-5845