A Pulaski County man described by a federal prosecutor as the "top of the pyramid" in a scheme to defraud the military insurer Tricare was sentenced to three years in prison Wednesday for his part in the conspiracy that is estimated to have resulted in total losses of about $10 million.
Brad Duke, 46, of Little Rock, entered the courtroom Wednesday accompanied by about two dozen supporters who held an impromptu prayer session in the hallway outside the courtroom before the hearing.
Duke was accused by federal authorities of conspiring over a six-month period in 2015 to defraud Tricare by recruiting beneficiaries of the military insurance program to sign up for prescriptions of various high-cost compounded drugs. After waiving indictment on the charge, he pleaded guilty by information Oct. 3, 2018, to one count of violating the federal anti-kickback statute before U.S. District Judge Brian Miller.
According to federal authorities, Duke, who worked as a medical sales representative in Little Rock, promoted prescription pain cream, scar cream and supplements for a Mississippi-based compounding pharmacy, earning a share of whatever the pharmacy was paid on prescriptions issued by affiliated doctors. After learning Tricare would pay tens of thousands of dollars per month per patient for compounded drugs, Duke focused on generating prescriptions for those with Tricare insurance.
Duke paid patient recruiters to find Tricare beneficiaries to receive prescriptions, telling them a doctor would sign the prescriptions without consulting patients. Patient recruiters forwarded beneficiary insurance information to Duke, which he then routed to a local medical assistant Duke paid to file the prescriptions under the name of the doctor for whom she worked.
In less than one year, the scheme generated more than $10 million in compound prescriptions for more than 100 Tricare beneficiaries hailing from as far west as Chula Vista, Calif., to as far east as Foxborough, Mass.
Under federal sentencing statutes, Duke faced a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release. Under federal sentencing guidelines Duke was recommended for a sentence ranging between 57 months to 71 months in prison. However, because the statutory maximum sentence for his offense was five years, the effective guideline range was reduced to 57 to 60 months.
Duke's defense attorney, Danny Crabtree of Little Rock, asked Miller to consider a downward variance in Duke's sentence to one year and one day in prison, noting that his client had no prior criminal record and was highly unlikely to re-offend.
"This court has heard it all," Crabtree said. "I'm sure every lawyer that has come in here for every client has said that my client is a great person, a great human being, and no one has ever come before the court and said my client is a terrible person so please give him the max sentence."
Crabtree said his position before the court was unusual in that Duke was not only his client but a longtime friend as well. Noting the large number of supporters in the courtroom, Crabtree described Duke as "a great father" to his 14-year-old daughter, as well as "a great husband, a great son, a great brother."
Crabtree said Duke had been law-abiding and had "played by the rules" during his 20-year career in medical sales, marred only by a six-month period during which he headed the conspiracy that defrauded Tricare of an estimated $10 million.
"He had six months of -- and I'm not going to call it a mistake -- he had six months of poor decisions, poor judgment," Crabtree said. "And he committed a crime."
The attorney said, however, that Duke had acknowledged his crime and worked to "right that wrong, fix that mistake more than six years ago."
"If you look at the spectrum of Brad Duke's life," Crabtree said, "he had 42 years of doing things right and six months of bad decision-making."
Crabtree said Duke had repaid the money he benefited from in the fraud scheme and in addition had paid more than $400,000 over and above that amount.
"He's not looking for an excuse," Crabtree said. "He's asking for mercy."
Assistant U.S. Attorney Alex Morgan asked Miller for a 42-month sentence, saying despite Duke's lack of criminal history, the fact remained that the offense he was charged with was serious and he was the top person in the conspiracy. He said Duke's background is typical of other offenders in health care-related crimes with 87% of defendants having no criminal history.
"Mr. Duke spent decades in the industry earning six figures," Morgan said. "You don't get the privilege of operating in that industry if you're not presentable, respectable, educated and free of a criminal background. I think if you look at all the people who have appeared before you so far, the one with the most checkered criminal past -- if you want to call it that -- was someone who had a DUI."
What set Duke apart from other defendants in the conspiracy, Morgan said, was his role.
"He was at the top of the pyramid," he said. "Every last prescription, every last dollar, flowed through his hands."
Morgan then named off a number of individuals tied to the conspiracy who have been sentenced over the past two years and said all of those defendants were involved at Duke's behest.
"Only Brad Duke orchestrated this entire scheme," he said. "Brad Duke is not responsible for the fact that in 2014 Tricare saw fit to pay money hand over fist for prescriptions, but you can bet your bottom dollar that the minute he found out they were, he did everything in his power to generate as many prescriptions as quickly as possible."
Reading from a prepared statement, Duke apologized for his actions, saying he was remorseful and ashamed.
"I made a terrible decision to pay kickbacks to health care professionals to process these prescriptions," he said. "There's no excuse for my conduct."
His voice breaking at times, Duke told Miller he took full responsibility for his actions and said he would spend the rest of his life making amends to those he had let down.
"To everyone I hurt, to everyone I disappointed, I cannot apologize enough," he said.
Before announcing the sentence, Miller explained to Duke and his supporters how the guideline sentence range was arrived at and what happened to prompt Morgan to agree to a downward variance to 42 months.
Then, Miller said he would shave six months off the agreed 42 months and sentence Duke to 36 months in prison and one year supervised release. He assured Duke that once his time is served, he would be able to emerge from prison and rebuild his life.
"A sentence is not condemnation to hell," Miller said. "It's a punishment for the crime that was committed."
Miller allowed Duke to remain free on pre-trial release until July 12, at which time he ordered him to self-report to his Bureau of Prisons assignment.