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0 RIG IN!\[,.

1
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FtL.ED
20lfi JUN 16 PM

CASE UNSEALED PER ORDER OF COURT

~:Itt.

ClERK US DISTRICT tOtJJtf

3

$tUTHERN OIS HII;T

4

Or Cli.IFfANIA

IY-------1}.-~TY

5
6

UNITED STATES DISTRICT COURT

7

SOUTHERN DISTRICT OF c4LIFORNIA

8

January 2016 Grand Jury

9

UNITED STATES OF AMERICA,

10
11

12
13

I N D

15

HOOTAN MELAMED (1) ,
JEAN FRANCOIS PICARD ( 2)
JOHN PANGELINAN (3)
PHONG HUNG TRAN ( 4)
JONATHAN PENA (5),

I

I

Defendants.

18

--·-

-·-··-

-·----

--------

Title 18, U.S.C. , Sec. 371Conspiracy; Title 18, U.S.C.,
Sees. 1341 and 1346 - Honest
Services Mail Fraud; Title 18,
U.S.C., Sec. 1952(a) (1) and
(a) (2) - Travel Act; Title 18,
U.S.C., Sec. 2 - Aiding and
Abetting; Title 18, U.S.C.,
Sec. 981(a) (1) (C) and
Title 28, U.S.C., Sec. 246 l (c ) Criminal Forfeiture

The Grand Jury charges, at all times relevant:

19
20

C T M E N T

~.

v.

16
17

~

---~-----

I

14

16 GR 1409 H

Case No.

Plaintiff,

1

INTRODUCTORY ALLEGATIONS
1.

Defendant HOOTAN MELAMED was a pharmacist licensed wi t h the

21

s tate of California.

22

Age Pharmaceuticals,

23

in Bev erl y Hills, Cal ifornia.

24

pharma cies ,

inc luding

25

Compounding

Pharmaceuticals,

26

Portland

27

"Me lamed's Pharmac ies") .

28

c r eams a n d other custom pharmaceut i cals to patients.

He operated and was the de facto owner of New
Inc.,

RoxSan

Professional

VHC:nlv(l) :San Diego
6/16 /16
---

- ..

............

("New Age")

a compounding pharmacy located

He also had business interests in other
Pharmacy ,
Inc.

Pharmacy

Inc .

( "RoxSan") ,

("Concierge") ,
("Portl a nd

Alexso,

Pharmacy")

Concierge
Inc. ,

and

(together,

These compound p harmacie s supplied compound

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2.

1

Defendant

C.A.S.E.

LLC,

operating

3

Consultants .

4

creams for Melamed's Pharmacies.
3.

Among

Defendant

the

I

Versatile

products

JOHN

that

PANGELINAN

6

"marketed" durable medical equipment

7

was the president of Broad Med, Inc.

8
9

4.

was

PICARD

FRANCOIS

2

5

through

JEAN

he

was

a

"medical marketer,"

Healthcare
"marketed"

a

( "DME")

and
were

"medical

Dignity
compound

marketer"

for Company No.

1.

who
He

Defendant PHONG HUNG TRAN was the owner of Coastline Medical

Clinics in Southern California.

Dr.

Tran was previously a

licensed

10

physician in the State of California,

11

after his arrest and indictment by the San Diego District Attorney's

12

Office in January 2016.

13

5.

Defendant
DME

JONATHAN
Company

a

"marketed"

15

Pharmacies, and Magnetic Resonance Image

16

a

17

Marketing.

imaging

No.

was

14

diagnostic

for

PENA

but had his license suspended

1,

facility.

"medical

compound

He

marketer"

creams

( "MRI" scans)
operated

for

who

Melamed's

for Company A,

through

JP

Medical

FIDUCIARY DUTY OF PHYSICIANS

18

6.

19

Physicians,

including

medical

2 0 owed a fiduciary duty to the i r patients,

doctors

and

chiropractors,

requiring physicians to act

21

in their patients' best interests, and not for their own professional,

22

pecuniary, or personal gain.
WORKERS' COMPENSATION PROGRAMS

23
7.

24

The

California
employers

Workers'

Compensation

System

in California provide workers'

( "CWCS" )

25

required that

26

benefits to their employees for qualifying injuri es sustained in the

27

course of t h eir employment .

28

for

Under the

ewes ,

compensation

all clai ms for payments

services or bene f its provided t o the injured employee,
2

i ncluding

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» í ±º îð

1 medical and legal fees, were billed directly to, and were paid by, the
2

insurer.

3

California Insurance Code, and the California Code of Regulations, and

4

was administered by the California Department of Industrial Relations.

5
6

The CWCS was regulated by the California Labor Code,

ewes

8.
insurer,

or a

benefits

administered

third party administrator.

7 administrators
8

were

to

authorize

and

pay

by

ewes

The

for

the

medical

employer,

the

an

required claims
care

that

was

"reasonably required to cure or relieve the injured worker from the

9 effects of his or her injury."
10

9.

California law,

including but not limited to the California

11 Business and Professions Code,
12 California

Labor

Code,

the California Insurance Code, and the

prohibited

the

offering,

delivering,

13

soliciting, or receiving of anything of value in return for referring

14

a patient for goods or services paid for under the

15

10.

16 provide

ewes.

The United States offered a workers' compensation program to
medical

care

to

federal

workers

who

suffer

17

injuries or occupational diseases.

18

the Office of Workers' Compensation Programs.

19

the Department of Labor for adjudication and payment.

20

11.

21 benefits

Both

California

and

work-related

The program was administered by

the

Claims are submitted to

federal

included prescription medications

workers'

compensation

prescribed by a

doctor.

22

Compound creams were specialty medications prescribed for patients who

23

are unable

24

example, tablets, pills, or injections), for medications that must be

25

absorbed

to

take medications

through

the

skin,

26 medicines is not available.
27

or

in their standard formulations

where

the

specific

combination

(for

of

Compound pharmacies could custom-mix the

prescribed medi cines into a cream to be dispensed to the patient .

28
3

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ì ±º îð

1

12.

Both

California

and

the

federal

2 benefits included DME prescribed by a doctor.
3

that provides therapeutic benefits to a

4

certain medical conditions and/or

5

("IF

Unit")

was

a

device

workers'

DME was any equipment

patient in need because of

illnesses.

that

compensation

An

provides

Inferential Unit

low-level

electrical

6 stimulation to a body part to encourage healing.
7

count 1

8

CONSPIRACY TO COMMIT HEALTH CARE FRAUD, HONEST SERVICES MAIL FRAUD AND
VIOLATE THE TRAVEL ACT, 18 USC

9

13.

10
11

§

371

Paragraphs 1 through 12 of this Indictment are realleged and

incorporated by reference.

12

14.

Beginning on a date unknown to the grand jury and continuing

13

through at least June 2016, within the Southern District of California

14

and elsewhere,

15

PANGELINAN, PHONG HUNG TRAN and JONATHAN PENA and others did knowingly

16 and
17

defendants HOOTAN MELAMED,

intentionally

conspire

together

JEAN FRANCOIS PICARD,

and

with

each

other

and

JOHN

with

others to :

18

a.

commit Health Care Fraud, that is, to knowingly and with the

19

intent to defraud execute a material scheme to defraud a health care

20

benefit

21

fraudulent pretenses,

22

and property owned by, and under the custody and control of a health

23

care benefit program,

24

for

25

Title 18, United States Code, Secti on 1347;

26

program,

health

b.
the

c a re

and

to

obtain

by

means

of

materially

false

and

representations, and promises, any of the money

in connection with the delivery of and payment

benefits,

items,

and

services,

in

violation

of

commit Honest Services Mail Fraud, that is, to knowingly and

27

with

intent

to

defraud,

devi se

28

scheme to defraud and to deprive patients of the intangible right to a
4

and participate

in a

mate rial

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ë ±º îð

1

doctor's

2

thereof,

3

and 1346 i and

4

honest

services,

and

to

cause

in violation of Title 18,

c.

mailings

in

United States Code,

furtherance

Sections 1341

violate the Travel Act, that is, to use and cause to be used

5

facilities

in

interstate

6

establish,

carry on,

7

promotion, management, establishment, carrying on, and distribution of

8

the proceeds of an unlawful activity,

9

violation of California law,

and,

10

to perform acts to promote,

manage,

11

the

12

establishment,

13

unlawful

14

Sections 1952 (a) (1) and (a) (3).

proceeds

of,

and

intent

in

that is,

thereafter,

facilitate

carrying on,

activity,

with

to

distribute the proceeds of,

manage,

and facilitate

the

commercial bribery in
to promote and attempt

establish,
the

promote,

carry on,

promotion,

distribute
management,

and distribution of the proceeds of such

violation

15
16

commerce

of

Title

18,

United

States

Code,

FRAUDULENT PURPOSE

15.

It was

from

the

health

goal of

care

the

benefit

conspiracy to

17

money

18

prescription pharmaceuticals

19

secret pattern of bribes to doctors (and those acting with them and on

20

their behalf) ,

21

pharmacies and DME providers,

22

duty to their patients.

25

and DME

that

by

submitting

were

claims

for

generated through

a

to induce the doctors to refer patients to particular
in violation of the doctors'

fiduciary

MANNER AND MEANS

23
24

programs

fraudulently obtain

16.

The

conspirators

use d

the

following

manner

and

means

in

pursuit of their fraudulent purpose:

26

a.

It was

a

par t

of

27

PICARD,

28

the payment of per- patie n t referral

PANGELINAN and PENA,

the

conspi r acy

that

defendants MELAMED,

and other co-conspirators,

knowing that

fe e s was unl awful, pai d doctor s to
5

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1

recommend certain goods and services and refer workers'

2

patients to specific providers for those goods and services/ including

3

to

4

pharmaceuticals/

5

which the co-conspirators had financial interests for other goods and

6

services.

pharmacies

b.

7

in

which

MELAMED

to Company No.

had

an

interest

compensation

for

prescription

1 for DME, and to other providers in

It was a further part of the conspiracy that defendant TRAN,

8

knowing that receiving a per-patient referral fee was unlawful/ agreed

9

to

accept

per-patient

from

11

conspirators or in which they had an interest.
It

was

a

further

to

co-conspirators

workers'

c.

patients

the

10

12

compensation

bribes

part

of

companies

the

owned

conspiracy

to

refer

by

his

co-

that

the

co-

13

conspirators paid or accepted specific bribe and kickback amounts for

14

specific kinds of prescriptions/

15

Unit referral, $150-200 for each Flurbiprofen cream prescription, $150

16

for each Gabapentin cream, and $50 per Terocin patch.

17

d.

It

was

a

further

including:

part

of

the

between $200-250 per IF

conspiracy

that

the

co-

18

conspirators bribed and solicited marketers and doctors to prescribe

19

compound creams and patches over other types of medications/ because

20

these custom pharmaceuticals can be billed at high rates to insurance

21

companies.

22

e.

It

23

conspirators

24

contain the most expensive components/ in order to bill at high rates

25

to insurance companies/ instead of customizing the medications to the

26

needs of particular patients.

27

f.

It

28

conspirators

was

a

further

crafted

was

a

part

compound

further

concealed

from

of

the

conspiracy

creams

and

other

part

of

patients,
6

the
and

that

the

pharmaceuticals

conspiracy
intended

that
to

co to

the

co-

cause

the

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» é ±º îð

1

doctors,

including Dr.

TRAN,

to conceal from patients,

the kickback

2 and bribe payments made to doctors for referring patients to companies
3

owned by the co-conspirators or in which they had an interest,

in

4 violation of the doctors' fiduciary duty to their patients.
5

g.

It

was

a

further

part

of

the

conspiracy

that

the

co-

6 conspirators obscured the true nature of their financial relationships
7 in order
8

to

conceal

including by

9 space

or

their

entering

provide

corrupt payments

sham agreements

marketing

10 payments were made

services,

in exchange for,

to

for

patient

purportedly

when

in

lease

office

the

corrupt

reality

or to induce,

referrals,

the referral of

11 patients.
12

h.

13

conspirators,

14 was
15

It

was

a

further

part

of

the

conspiracy

that

the

co-

knowing that the payment of per-patient referral fees

unlawful,

inserted

intermediaries

(referring

to

them

as

"marketers" or "marketing companies") to hide and obscure the flow of

16 payments from providers to doctors, when in reality the payments were
17 unlawful volume-based, per-patient referral fees.
18

i.

It

was

a

further

part

of

the

conspiracy

that

the

co-

19

conspirators obscured the true nature of their financial relationships

20

in order

21

including by creating separate companies in the names of nominees and

22

straw owners, to pay and receive kickback and bribe money.

23

j.

to

conceal

their

corrupt payments

for

patient

referrals,

It was a further part of the conspiracy that, knowing that

24

per-patient referral fees were unlawful, the co-conspirators disguised

25

their

26

vacations, sports tickets, cash, or patient referrals.

27
28

bribes

k.
paying

and

kickbacks

to

doctors

by

providing

gift

cards,

It was a further part of the conspiracy that MELAMED, after
doc tors

and

marketers

kickbacks
7

and

bribes

to

prescribe

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1

compound creams,

2 Age,

then filled

the prescriptions

or sent those prescriptions

3

including RoxSan,

4

kickback from those pharmacies.

5

1.

It

6 conspirators
7 meetings
8
9

Concierge,

was

a

discussed

the workers'

part

via

through New

to other pharmacies to be filled,

or Portland,

further

himself

of

the

telephone

in exchange for a further

conspiracy

calls,

emails,

that
and

the

co-

in-person

compensation patients who had been corruptly

referred for goods and services in exchange for kickbacks.
m.

It

was

a

further

of

conspiracy

co-

telephones and email, in order to coordinate the referral of patients

12

for goods and services, knowing that such referrals were predicated on

13

unlawful per-patient kickback payments.
n.

15

conspirators

16

fraudulent scheme,

17

and mailing prescription pharmaceuticals and DME to patients.
o.

utilized

the

part

of

mails

the

as

an

conspiracy

cellular

14

18

further

including

the

11

a

facilities,

that

conspirators

was

interstate

the

lO

It

utilized

part

essential

that
part

the
of

co-

their

including by mailing bills to insurance carriers,

It was a further part of the conspiracy that co-conspirators

19 billed, and caused insurers to bill, for services provided to patients
20
21

that the co-conspirators had procured by paying bribes and kickbacks.
p.

It was

a

further

part

of

the

conspiracy that

defendants

22

concealed from insurers and patients the material fact of the kickback

23

arrangements,

24

led to the referrals.

25

q.

which were in violation of California state law,

Using

the

manners

and

means

described

above,

that

defendants

26

submitted and caused to be submitted claims of over $27 million for

27

pharmaceut i cal

28

prescriptions p r oc ured through the payment of bribes and kickbacks.

presc r iptions

and

8

ove r

$7.6

million

in

DME

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ç ±º îð

OVERT ACTS

1

2

17.

3 objects

In furtherance of the conspiracy and in order to effect the
thereof,

the defendants and others committed or caused the

4

commission of

5

California and elsewhere:

6

7

a.

the following overt acts

On or

offered to pay a

about August

9,

2012,

in the Southern District of

in a

telephone

call,

PICARD

marketer $125 per compound cream prescription the

8 marketer could get a doctor to prescribe,

which would be filled by

9 MELAMED and fraudulently billed to an insurance carrier.
10

b.

On

or

about

August

20,

2012,

PICARD

offered

to

pay

a

11 marketer a •guaranteed [$]200 per script" if the marketer could find
12

doctors who would prescribe compound creams to workers'

compensation

13 patients, which would be filled by MELAMED and fraudulently billed to
14
15

an insurance carrier.
c.

On or about December 12, 2012,

PICARD offered a marketer a

16

25 percent kickback of the proceeds on any creams that the marketer

17

could get doctors to prescribe, which would be filled by MELAMED and

18

fraudulently billed to an insurance carrier.

19

d.

In or about March 2013, PICARD explained to a marketer that

20

the compound creams cost around $20 to produce, but that they could

21

bill the insurance company $3,000 for a "five-pack" of pharmaceuticals

22

that were formulated to contain the highest-priced medications.

23

e.

In or about March 2013,

PICARD suggested that a marketer

24

offer to pay the prescribing doctor between $100 and $150 to prescribe

25

a "five-pack" of prescriptions offered by MELAMED's pharmacy.

26
27

f.

In or about March 2013,

PICARD directed a marketer to fax

compound cream prescriptions to a fax number f or New Age.

28
9

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ï𠱺 îð

1

g.

On or about

March 26,

patients

had

call,

PICARD

3

result of a bribe, so that New Age could bill the Department of Labor

4

for prescription pharmaceuticals for those patients.
On or about March 27,

that

telephone

requested

h.

about

in a

2

5

information

2013,

been procured

as

a

MELAMED caused $4,497.77 to be

2013,

6 billed to the U.S. Department of Labor's workers' compensation program
7
8

for pharmaceuticals that MELAMED had bribed a doctor to prescribe.
i.

On or about March 28,

MELAMED caused $2,613.60 to be

2013,

9 billed to the U.S. Department of Labor's workers' compensation program
10
11

for pharmaceuticals that he had bribed a doctor to prescribe.
j.

On or about March 30,

caused

13

payment of kickbacks and bribes to be mailed to a

14

Diego.
k.

pharmaceuticals

MELAMED and PICARD and others

12

15

prescription

2013,

On or about April 41

were

prescribed

2013 1 MELAMED and

caused

17

payment of kickbacks and bribes to be mailed to a

18

Diego.
1.

pharmaceuticals

On or about April 111

payment of kickbacks and bribes to be mailed to a

22

Diego.
or

about

prescription

May

2,

2013 1

pharmaceuticals

that

were

MELAMED

were

due

to

location in San

PICARD and others

25

payment of kickbacks and bribes to be mailed to a

26

Diego.

10

that

and

caused

28

to

location in San

prescribed

24

27

due

MELAMED and PICARD and others

21

On

to

location in San

prescribed

caused

m.

pharmaceuticals

I

were

20

23

prescription

2013

that

due

PICARD and others

16

19

prescription

that

prescribed

due

to

location in San

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ïï ±º îð

1

n.

On or about May 9,

2013,

MELAMED caused $10,740.28 to be

2 billed to the U.S. Department of Labor's workers' compensation program
3

4

for pharmaceuticals that he had bribed a doctor to prescribe.
o.

On or about July 23,

caused

6

payment of kickbacks and bribes to be mailed to a

7

Diego.

9

10
11

p.

pharmaceuticals

MELAMED and PICARD and others

5

8

prescription

2013,

that

were

prescribed

due

location in San

On or about October 17, 2013, MELAMED caused $1,476.00 to be

billed to the U.S. Department of Labor's workers' compensation program
for pharmaceuticals that he had bribed a doctor to prescribe.
q.

On or about November 26,
U.s.

Department

13

program for pharmaceuticals that he had bribed a doctor to prescribe.
On or about June 24,

of

MELAMED caused $1,476.00 to

be billed to

r.

the

2013,

12

14

to

2014,

Labor's

workers'

compensation

PENA gave a doctor gift cards

15

totaling $1,050 in value, in payment for 42 MRI scans that the doctor

16

had referred to Company A.

17

s.

On or about August 1, 2014, PENA gave a doctor a gift card

18

for $725, in payment for 29 MRI scans that the doctor had referred to

19

Company A.
On

about

or

April

1 5,

2014,

and

PANGELINAN

caused

20

t.

21

Company No.

1

22

Michael w.,

that

23

kickbacks and bribes, to be sent to an insurance company in San Di ego .

24

u.

to

send a
was

On or about

claim for

TRAN

$1,375.31

referred to Company No.

August

21,

2014,

TRAN

for

DME

1 due

and

for

patient

to payment o f

PANGELINAN caused

25

Company No. 1 to send a claim for $1 ,375.31 for DME for patient Maria

26

H., that was referred to Company No. 1 due to payment of kickbacks and

27

bribes, to be sent to an insurance company in San Diego.

28
11

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ïî ±º îð

1

v.

2

Company

3

Francisco C. ,

4

kickbacks and bribes, to be sent to an insurance company in San Diego.

5

On or

w.

No.

1

about
to

August

send

a

14,

claim

and

$1,375.31

prescription pharmaceuticals (for patient Edgar M.).

10

send

On or about

to

an

San

Diego

December 13,

insurer

in

San

Diego

a

MELAMED

7

9

in

2014,

1

send

x.

insurer

29,

claim

2014,
a

DME

for

caused
patient

due to payment of

caused New Age

for

MELAMED

claim

PANGELINAN

for

6

8

an

for

TRAN

that was referred to Company No.

On or about November

to

2014,

reimbursement

to
for

caused New Age

for

reimbursement

to
for

prescription pharmaceuticals (for patient Clara S.).

11

y.

On or about December 13,

send

13

prescription pharmaceuticals (for patient Fidel V) .
z.

an

insurer

On or

about
for

October
390

Diego

28,

a

claim

2015,

compound

for

MELAMED

creams

paid a
331

for

marketer

prescribed in September 2015 by doctors recruited by the marketer or

17

those working with him.

as his share of the kickback paid by MELAMED,

20

Terocin patches that PANGELINAN's doctors prescribed.
bb.

On

or

about

November

4,

2015,

for 237 creams and 237

TRAN

22

kickback money to a separate marketing company,

23

want the money going directly to him.

24

cc.

patches

PANGELINAN accepted $20,130.50

19

21

Terocin

a

16

On or about October 29, 2015,

and

reimbursement

to

total

aa.

$75,810

San

caused New Age

15

18

of

in

MELAMED

12

14

to

2014,

asked

PENA

to

send

because TRAN did not

On or about November 4, 2015, TRAN asked PENA to send him a

25

text message that used the code "Let's meet at one

26

would pay $100 per compound cream prescription,

27

PENA would pay $200.

28
12

[o'clock]" if PENA

or "two [o'clock]"

if

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ïí ±º îð

1

dd.

In November 2015

1

TRAN and PANGELINAN discussed a

bribe

2 payment of over $100 per cream prescribed.
3

ee.

4 or

On or about November 16, 2015, PANGELINAN delivered to TRAN

TRAN's

representative

5 Enterprise,"

a

check

for

$10,000

made

out

to

"Team

in payment for 50 IF Units referred by TRAN to Company

6 No. 1.
7
8

ff.

On or about November 19, 2015, PANGELINAN accepted a check

for $11,565.06 in payment for the DME referrals he had caused doctors

9 to make to Company No. 1 in October 2015.
10
11

gg.
total

On or about November 20

of

$7 5, 900

for

12 prescribed by doctors
13

compound

2015,

MELAMED paid a marketer a

creams

and

339

Terocin patches

recruited by that marketer and those working

with him in October 2015.
On or about November 24,

hh.

14
15

3 87

1

2015,

PANGELINAN suggested a new

kickback deal with TRAN, to pay TRAN over $100 for each compound cream

16 prescription that TRAN prescribed to MELAMED'S Pharmacies.
17
18

ii.

On or about November 24,

doctors that he worked with,

19 staff,

that

they

should

2015,

PANGELINAN offered to tell

including Dr.

conceal

the

f a ct

F and Dr.
that

the

Y,

and their

doctors

were

20

supposed to prescribe a certain amount of DME for the monthly payments

21

received from Company No. 1.
j j .

22

On

or

about

November

as

his

share of

2015,

PANGELINAN

$17 03 7. 50

24

creams and 252 Terocin patches that PANGELINAN's doctors prescribed.

25

kk.

kickback paid by MELAMED,

accepted

23

I

the

24,

Somet ime before December 201 5 ,

for

TRAN and PANGELI NAN agreed

26

that TRAN would receive $10 000 per month {disguised as payment

27

"marketing" services)

28

to Company No. 1 .

I

254

for

in e xchange for re f erring 50 IF Units p er mon t h

13

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ïì ±º îð

On or about December 8,

11.

1

2015,

TRAN said that he would be

2

sending many more DME referrals

3

Company No.

4

he

5

$10,000 monthly payment from Company No. 1.

only

6

1,

to "catch up" on payments due him,

1

have

mm.

to Company No.

to

refer

40

IF

Units

On or about December 8,

per

month

2015,

and in order for

TRAN suggested that
in

exchange

for

the

TRAN and PANGELINAN agreed

7

that TRAN would be paid $125 per compound cream that he prescribed and

8

sent to PANGELINAN, to be filled by a pharmacy designated by MELAMED.
nn.

9

on or about December 15, 2015, PANGELINAN delivered to TRAN

10

or

TRAN' s

11

Enterprise,"

12

No. 1.

13

oo.

representative

a

check

in payment for

for

$10,000

made

out

to

"Team

50 IF Units referred by TRAN to Company

On or about December 17, 2015,

PANGELINAN accepted a check

14

for $7,506.34 in payment for the DME referrals he had caused doctors

15

to make to Company No. 1 in November 2015.

16
17

pp.

In or around December 2015,

TRAN started a

new marketing

company so that he could receive kickback payments.

qq.

18

In or about December 2015,

MELAMED agreed to pay $175 per

19

compound cream prescription to a marketer so that TRAN, in turn, could

20

be paid $125 per prescription for prescribing compound creams to be

21

filled by a pharmacy designated by MELAMED.

22

rr.

23

total

24

prescribed

25

those working with him.

26

of

On or about December 14,

ss.

$77, 900
in

for

412

November

compound

2015

On

or

about

as

his

share

by

2015,
creams

doctors

December

MELAMED paid a marketer a
and

314

recruited

16,

2015,

Terocin

by

the

PANGELINAN

patches

marker

accepted

27

$18,462.50

28

creams and 256 Terocin patches that PANGELINAN's doctors prescribed.

of

the

kickback

14

paid

by

MELAMED,

or

for

256

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ïë ±º îð

tt .

1

On or about January 29,

of

$64, 150

total

3

prescribed in December 2015 by doctors recruited by the marketer or

4

those working with him.
uu.

335

compound

MELAMED pai d a market er a

2

5

for

2016,

creams

On or about January 14, 2016,

and

278

Terocin

patches

PANGELINAN accept ed a check

6

for $8,610.86 in payment for the DME referrals he had caused doctors

7

to make to Company No . 1 in December 2015.
vv.

8
9

or

On or about January 14, 2016, PANGELINAN de l ivered to TRAN

TRAN's

representative

10

Enterprise,"

11

Company No. 1.

ww.

12

a

check

for

$10 , 000

made

out

to

"Team

in payment for 40 or 50 IF Units referred by TRAN t o

On or about February 18, 20 16, PANGELINAN accepted a check

13

for $12,981.27 in payment for the DME referrals he had caused doctors

14

to make to Company No . 1 in January 20 1 6.
xx.

15

insurer

in

san

Diego

a

MELAMED caused New Age to

send

17

prescription pharmaceuticals (for patient Edgar M.).
yy.

an

2016,

16

18

to

On or about February 29,

claim

for

r eimbursement

for

On or about March 1, 2016, MELAMED paid a marketer a total

19 of $54 ,900 f or 273 compound cre ams and 278 Terocin patches pres cribed
20

in January 2016 by doctors recruited by the marketer or those working

21

with him ..

22

zz .

on or about March 3,

2016,

PANGELINAN accepted $12 ,768 . 75

23

as his share of the kickback paid by MELAMED,

24

Terocin patches that PANGELINAN's doc t o r s prescribed.

25

aaa.

for 234 creams and 23 4

On o r a bout March 16, 2 016, PANGELINAN accepted a check for

26

$9,469.34 in payment for t h e DME referrals he had caused doctors to

27

make t o Company No. 1 in Februa ry 201 6.

28
15

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ïê ±º îð

1

bbb.

In or about April 2016,

over telephone conversations and

2

telephone communications, MELAMED agreed to pay a total of $74,300 for

3

412

4

recruited by a marketer or those working with him in March 2016.

5
6

compound

ccc.

creams

and

250

Terocin patches

prescribed by doctors

On or about April 18, 2016, PANGELINAN accepted a check for

$10, 786.03 in payment for the DME referrals he had caused doctors to

7 make to Company No. 1 in March 2016.

a

ddd.

On or about April 22, 2016,

9 his

share

of

10

the

kickback

paid

by

PANGELINAN accepted $4,050 as
MELAMED,

for

162

creams

that

PANGELINAN's doctors prescribed.

11

eee.

On or

about

April

22,

2016,

PANGELINAN delivered

to

a

12

doctor a check for $12,400 in payment for 124 compound creams referred

13

by that doctor to be filled by MELAMED.

14
15

fff.

On or about May 13, 2016,

PANGELINAN accepted a check for

$9,140.29 in payment for the DME referrals he had caused doctors to

16 make to Company No . 1 in April 2016.
17

ggg .

On or about June 3,

share

of

18

his

19

PANGELINAN's doctors prescribed.

20

the

kickback

2016,

paid

by

PANGELINAN accepted $10, 050 as
MELAMED,

for

124

creams

All in violation of Title 18, United States Code, Section 371.

21

Counts 2 - 12

22

HONEST SERVICES MAIL FRAUD, 18 U.S.C. §§ 1341, 1346 AND 2

23
24
25

that

18.

Paragraphs 1 through 12 of this Indictment are realleged and

incorporated by reference.
19.

Beginning on a date unknown and continuing through at least

26

June 2016,

within the Southern District of California and elsewhere ,

27

defendants HOOTAN MELAMED,

28

PHONG HUNG TRAN and others, knowingly and with the intent to defraud,

JEAN FRANCOIS PICARD,

16

JOHN PANGELINAN and

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ïé ±º îð

1

devised a material scheme to defraud,

2

their intangible right to doctors' honest servi ces.

3

20.

4

incorporated

5

defraud.
21.

6

Paragraphs 15 and 16 of
by

reference

as

that is,

this

more

to deprive patients of

Indictment a r e

fully

describing

realleged a n d
the

scheme

to

For the purpose of executing the scheme and attempting to do

7

so,

within

the

Southern

District

of

Californi a,

the

following

8

defendants knowingly caused to be delivered by U.S. Mail according to

9

the direction thereon the following mail matter:

10
11

12
13
14
15
16
17
18
19
20
21

22

23
24
25
26

Prescription pharmaceuticals
prescribed due to payment of
k i ckbacks
MELAMED and PICARD
MELAMED,
Prescri ption p harmaceuticals
3
4/4/2013
prescribed due to payment of
PICARD
kickbacks
MELAMED and PICARD
Prescription pharmaceuticals
MELAMED,
4
4/11/2013
prescribed due to payment of
PICARD
kickbacks
MELAMED and PICARD
MELAMED
,
Prescription
pharmaceut icals
5
5/2/2013
PICARD
prescribed due to payment of
kickbacks
MELAMED and PICARD
Pr e s cript ion pharmac eutical s
MELAMED,
6
7/2 3 /2013
prescribed due to payment of
PICARD
kickbacks
MELAMED and PICARD
Claim of $1375.31 for DME (for
PANGELINAN,
7
4 / 15/2014
patient Michael W.) pres cribed b y
TRAN
TRAN , for which TRAN and
PANGELINAN received kickbacks from
No. 1
PANGELINAN,
Clai m of $1375.31 for DME ( for
8
8/21/ 2 014
TRAN
patient Maria H.) prescribed by
TRAN, for which TRAN and
PANGELI NAN received kickbacks from
No. 1
~------------------------------------ --------~~~---------------------- ------------- - 4
9
11 / 29 / 2014
MELAMED
Claim for prescription
1
pharmaceuticals (for patient Edgar i
'------------- --------- - -- ---------------- --- ____________ _ fi.:)._~e~_!:__~y_!;[ e_~ Age__t~_an .2!:1_~~~~!_____!

27

28
17

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ïè ±º îð

Ct.

1

2

10

Date

Defendants
MELAMED

12/13/2014

Item{s) Mailed
Claim for prescription
pharmaceuticals (for patient Clara
S.) sent by New Age to an insurer --,--l:
Claim for prescription
.
pharmaceuticals (for patient Fidel j
V.) sent by New Age to an insurer ;
Claim of $1375.31 for DME (for-·------·1
patient Francisco C.) prescribed
by TRAN, for which TRAN and
PANGELINAN received kickbacks from

f

j

3

r---------·-·----"'

! 11

12/13/2014

MELAMED

8/14/2015

PANGELINAN,
TRAN

l

4

I

r--~-·-

5

1

12

6

- ·--·----·-·---------·------_s::ompany ~o . _]:____·--- -----~----------·------·---··· --···· !

7

8

All in violation of Title 18, United States Code,

9

and 2.
Counts 13 - 14

10

TRAVEL ACT, 18 USC

11

12
13
14

Sections 1341, 1346

22.

Paragraphs

1

§§

1952 AND 2

through 12 are realleged and incorporated by

reference.
23.

Beginning on date unknown and continuing through at least

15

June 2016,

within the Southern District of California and elsewhere,

16

defendants HOOTAN MELAMED and JEAN FRANCOIS PICARD knowingly used and

17

cause to be used facilities in interstate commerce with the intent to

18

promote, manage,

19

facilitate the promotion,

20

distribution of the proceeds of an unlawful activity, that is, bribery

21

in violation of California Penal Code Sections 139.3-32 and California

22

Labor Code Section 3215,

and,

23

perform acts to promote,

manage,

24

proceeds of,

25

carrying

26

activity as follows:

on,

establish, carry on,
management,

distribute the proceeds of, and
establishment,

thereafter,

distribution

establish,

of

27
28
18

the

and

to promote and attempt to

and facilitate the promotion,
and

carrying on,

carry on,

distribute the

management,

establishment,

proceeds

of

such

unlawful

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» ïç ±º îð

1

Ct.

Date

Defendants

13

8/9/2012

MELAMED,
PICARD

Use of Facility
in
Interstate
Commerce
Telephone call by
PICARD offering
to pay $125 per
compound cream
prescription

2

3
4
5

6
7

Acts Performed
Thereafter

PICARD paid a
marketer
$1,053.53 for 3
sets of compound
cream
prescriptions
filled by MELAMED
-~--------··
PICARD paid a
marketer
$1,053.53 for 3
sets of compound
cream
prescriptions
filled by MELAMED 1
.. ___
___ ,i

I

L----------·-·--------------···--·- -----·
i 14
3/26/2013
MELAMED,
Telephone call by

I

PICARD

PICARD to obtain
information to
fill prescription
and bill
insurance carrier

8
9

10

______________

11

_,

12 All in violation of Title 18, United States Code, Sections 1952(a) (1),
13

(a) (2) and 2.

14

FORFEITURE ALLEGATION

Paragraphs 1 through 12 of this Indictment are realleged and

15

24.

16

incorporated

17

alleging forfeiture

pursuant

to

18

Section 981 (a) (1) (C)

and

Title

19

Section 2461(c) .

20

25.

Upon

as

if

fully

conviction

set

of

forth

herein

Title

the

18,

28,

for

United

United

offenses

the

of

purpose

States

of

Code,

States

Code,

Conspiracy,

Honest

21

Services Mail Fraud and Travel Act as alleged in Counts 1 through 14,

22

defendants

23

PHONG HUNG TRAN and JONATHAN PENA shall forfeit to the United States

24

all right, title, and int erest in any propert y, rea l or personal, that

25

constitutes or is deriv ed from proceeds traceable to a violation of

26

such offenses,

27

gross proceeds derived, directly or indirectly, from such offenses.

HOOTAN

MELAMED,

JEAN

FRANCOIS

PICARD,

JOHN

PANGELINAN,

including a sum of money equal to the total amount of

28
19

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ï Ú·´»¼ ðêñïêñïê п¹» î𠱺 îð

If any of

26 .

1

result

3

FRANCOIS PICARD,

4

(a) cannot be located upon the exercise of due diligence;

(b) has been

5

transferred or sold to, or deposited with, a third party;

(c) has been

7

any

act

beyond

or

omission of

JOHN PANGELINAN,

the

defendants

as a

2

6 placed

of

the above described forfeitable property,
HOOTAN MELAMED ,

JEAN

PHONG HUNG TRAN and JONATHAN PENA:

jurisdiction

substantially diminished in value;

of
or

the
(e)

Court;

(d)

has

been

has been commingled with

8 other property which cannot be divided without difficulty;
9
10

it is the intent of the United States,
States

Code,

Section

853(p)

and

pursuant to Title 21,

Title

18,

United

states

Uni ted
Code,

11 Section 982(b), to seek forfeiture of any other property of defendants
12

HOOTAN MELAMED, JEAN FRANCOIS PICARD, JOHN PANGELINAN , PHONG HUNG TRAN

13

and

14

des cribed above.

JONATHAN

PENA

up

to

the

va l ue

of

the

forfeitab l e

p r operty

15 All pursuant to Title 18, United States Code, Section 98l(a) (1) (C) and
16

Title 28, United States Code, Section 246l(c).

17

DATED:

June 16, 2016.

18

~

19
20

Foreperson

21 LAURA E . DUFFY
United States Attorney
22
23

24

By:

~1!\~J\J\

vALERI~"

4

Assistant U.S. Attorney

25
26
27
28
20

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ç Ú·´»¼ ðêñîîñïê п¹» ï ±º î

II

1
2
3
4
5
6

·- -·--- ...-- .- --,

LAURA E DUFFY
United States Attorney
VALERIE H. CHU
Assistant U.S. Attorney
California Bar No.: 241709
Office of the u.s. Attorney
880 Front Street, Room 6293
San Diego, CA 92101
Tel: (619) 546-6750
Fax: (619) 546-0450
Email: Valerie.chu®usdoj.gov

7 Attorneys for the United States
8

UNITED STATES DISTRICT COURT

9

SOUTHERN DISTRICT OF CALIFORNIA

10

Case No.: 16cr1409-H

UNITED STATES OF AMERICA,

MOTION TO UNSEAL

Plaintiff,

11
12

v.

13 HOOTAN MELAMED ( 1)
JEAN FRANCOIS PICARD (2)
14 JOHN PANGELINAN ( 3)
PHONG HUNG TRAN (4)
15 J ONATHAN PENA ( 5)
I

I

I

I

I

16

Defenda nts.

~--------~~~~==~~--------~

17

The

18 counsel,
19 Assistant
20

STATES

OF AMERICA,

by

and

through

Uni t ed

Stat es

Attorney,

hereby

moves

to

unseal

2016,

27
28

the

a federal grand jury in the Southern Di strict

of California re t urned a 14 -count indictment agains t
same day,

t he defendan ts.

the Honorable Ruben B. Brooks grante d a mot ion by t he

United States to s e al the indic tment and issue arrest warrant s.

2 5 Uni t ed State s now moves t o unseal the indic tment for all purposes.
26

its

LAURA E. DUFFY, United States Attorney, and Valerie H. Chu,

On June 16,

23 Tha t
24

UNITED

indictment filed in the above-referenced matter.

21
22

plaintiff,

The

 Ý¿-» íæïêó½®óðïìðçóØ Ü±½«³»²¬ ç Ú·´»¼ ðêñîîñïê п¹» î ±º î

. I

1
2

DATED: June 21, 2016

Respectfully submitted,

3
LAURA E . DUFFY
United States Attorney

4

l~

5
6

VALERIE H. CHU
Assistant United States Attorney

7
8
9
10
11 IT IS SO ORDERED.

12
13
14

Dated:

t,f'J!-1 /1~/b
Hon. Ruben B. Brooks
United States Magistrate Judge

15
16
17
18
19
20
21
22
23
24
25
26
27
28
2

 CM/ECF - casd-History/Documents Query

Page 1 of 1

3:16-cr-01409-H-1 USA v. Melamed et al
Date filed: 06/16/2016
Date of last filing: 06/24/2016

History
Doc.
No.

Dates

Filed:
Entered:
Filed:
2
Entered:
9 Filed & Entered:
10 Filed & Entered:
1

Description
06/16/2016
06/17/2016
06/16/2016
06/17/2016
06/22/2016
06/24/2016

Indictment (Sealed)
Warrant Issued
Order to Unseal Indictment
Set/Reset Duty Hearings

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