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A former medical sales representative agreed Tuesday to give up two bank accounts and his sprawling Alexander home as part of his repayment of $743,775 that he admitted pocketing through a scheme to defraud the U.S. military's health insurer, Tricare, in 2015.

Derek Paul Clifton, 38, who had previously been a high school basketball coach in Baxter County, pleaded guilty to a charge of violating the federal Anti-Kickback Statute, for which he will face up to five years in prison and a fine of up to $250,000 when sentenced.

During a video-teleconference hearing in which he participated from jail, Clifton agreed that he was an organizer of a scheme carried out in the Eastern District of Arkansas to generate fake prescriptions for expensive compounded drugs in return for a share of a compounding pharmacy's sales incentives. He admitted to U.S. District Judge Kristine Baker that he promoted products to medical professionals and recruited phony patients, all to generate sales for the out-of-state pharmacy, which isn't accused of being part of the scheme.

Assistant U.S. Attorney Alex Morgan said Clifton had worked in the medical-sales industry since 2010 and had received compliance training on the statute

An indictment handed up in January against Clifton and Alexander physician Joe David May, also known as Jay May, alleged that they -- and others later added to the indictment -- were part of a conspiracy to recruit patients, sometimes by paying them, to receive expensive drugs including non-narcotic pain creams, scar creams and supplements that they didn't need.

May has pleaded innocent.

Prosecutors say the ringleader of the scheme was Albert Glenn Hudson, a friend of Clifton's and also a medical sales representative, who admitted during his June 24 guilty plea that he would then send the prescriptions, rubber-stamped by May, who is accused of also authorizing the maximum number of refills despite never having seen the patients, to the pharmacy. The pharmacy had an exclusive contract with Tricare, which paid the drugs' high costs.

Hudson admitted he pocketed $1.5 million as the organizer of the fraud network, which defrauded the insurer of more than $12 million in just a few months.

It was one of many schemes across the country involving Tricare and the compounded drugs, and federal authorities began investigating the onslaught of claims in mid-2015, leading to indictments across the country.

In approaching Clifton to participate in the scheme, Hudson told him that the drugs were free to Tricare beneficiaries, and that anyone could use the drugs because they treated everyday conditions, such as wrinkles, Morgan said. Hudson also told Clifton that the beneficiaries could live anywhere because the pharmacy was licensed in every state and shipped refills automatically, according to court documents.

Morgan said Clifton recruited friends, neighbors and former basketball players to receive the drugs, often emphasizing to them that the drugs were free and non-narcotic. Clifton even told his former players that they could be paid for receiving the drugs, Morgan said. The prosecutor said Clifton also paid other people to find more Tricare beneficiaries to receive the drugs, and provided a "talk track" for those recruiters to use to solicit beneficiaries.

May is accused of rubber-stamping prescriptions he received from Clifton that included patient insurance information and often, refill quantities already filled in. Morgan said May would then email Clifton the signed prescriptions, sent as PDFs, and Clifton emailed them to Hudson, who directed them to the pharmacy.

If Clifton or one of his recruiters found the beneficiary, Hudson paid Clifton 20% of Tricare's payout, according to court documents. If Hudson provided the beneficiary and Clifton merely supplied May's signature, Hudson gave Clifton a flat fee, often $1,000, which was intended for May, the documents say. They note that Clifton typically paid his recruiters 10% of Tricare's payout.

Hudson, who operated as Major Healing, paid Clifton, who operated as JC Custom, monthly, Morgan said. He said Clifton instructed his recruiters to return 10% of their payout to him, for payment to May. Clifton would give the cash to May when they met for early morning basketball games, usually by handing him several thousand dollars worth of cash stuffed inside a bank envelope, according to a synopsis that Morgan gave the court and that Clifton agreed was correct.

In his plea agreement, Clifton admitted that he also conspired to obstruct an FBI investigation into the fraud by helping May fabricate medical records to provide in response to a subpoena.

Clifton, represented by attorneys Nicki Nicolo and Sergio Cia, asked for a chance to speak directly to the judge on Tuesday. He then told Baker that he accepted "full responsibility" and said, "Because of my actions, I've lost the thing that means the most to me, and that's my family."

He said he wanted to "move forward, and not ever see the inside of a courtroom again."

The bank accounts Clifton forfeited to the government as part of his restitution contain $14,611.65 and more than $51,400. The property he agreed to surrender is his home at 9064 Stone Canyon Drive in Alexander, which according to the real-estate app Zillow, is worth about $438,000. The 3,127-square-foot home was built in 2016.

Clifton, whose sentencing won't occur for at least three months, asked that he be allowed to spend the holidays with his family. Baker said he would remain jailed for the time being, though Nicolo could file a petition that she would consider.

In late July, Keith Benson of North Little Rock pleaded guilty in the case before another judge, admitting he took $727,679.30 for recruiting patients for the scheme, and agreed to repay that amount. Also in July, a mother and daughter -- nurse practitioner Donna Crowder and daughter Jennifer Crowder, also known as Jennifer Bracy, pleaded guilty. They admitted that Crowder approved fraudulent prescriptions in return for payments of more than $89,000 to her daughter.

Still facing trial alongside May is the most recent defendant, Kenneth Myers Jr., who was added Sept. 11 to a superseding indictment. A jury trial has been tentatively set for January in Baker's court, though all jury trials are currently on hold in the Eastern District of Arkansas in response to concerns about the coronavirus pandemic.

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