Two Former U.S. Marines and Nurse Practitioner Sentenced in $65 Million TRICARE Fraud

SAN DIEGO – Three members of a massive conspiracy to bilk the military’s healthcare program known as TRICARE out of more than $65 million have been sentenced in federal court.

Former U.S. Marines, Daniel Castro and Jeremy Syto, were sentenced to 21 months and 15 months, respectively; Nurse Practitioner Candace Craven was sentenced to serve three months in home confinement. Castro and Syto recruited fellow Marines to receive expensive compounded drugs; Craven and others wrote bogus prescriptions and filled out fraudulent paperwork to process the insurance reimbursements. All told, tens of millions of dollars in false claims were submitted; everyone got kickbacks.

All of the defendants were working for Jimmy and Ashley Collins, a married couple living in Birchwood, Tennessee, who quarterbacked the scheme. Two weeks ago, Jimmy Collins received a 10-year prison sentence; Ashley Collins was sentenced to 18 months in home confinement. To account for all the fraud, the couple was ordered to pay $65,679,512.71 in restitution to Defense Health Agency and TRICARE.

According to plea agreements, the Marines who Castro and Syto recruited agreed to receive the pricey compounded medications in return for a monthly kickback of approximately $300. For young Marines-turned-straw-beneficiaries, this money significantly augmented their monthly paycheck. One defendant noted “it took very little work to sign people up to receive free money.”

For recruiting bogus patients, Castro and Syto were paid a commission—somewhere between 3 to7 percent of the total TRICARE reimbursement paid to the pharmacy for the drugs sent to their recruits. By the time this fraud scheme was in full swing, the average cost for these compounded drugs was more than $13,000 for a 30-day supply, peaking at around $25,000 for certain individual drugs.  Over the course of the conspiracy, the illegal kickbacks amounted to at least $1,013,450.36 for Castro and $264,000 for Syto. 

In total, TRICARE paid at least $11,949,710.15 in insurance reimbursements for compounded medications prescribed to straw beneficiaries directly recruited by Castro. During the same period, TRICARE paid at least $8,620,215.83 for compounded medications prescribed to straw beneficiaries directly recruited by Syto.

Nurse Practitioner Craven admitted that her primary role was to write and process fraudulent prescriptions and fill out other fraudulent paperwork for compounded drugs for the straw beneficiaries.

According to the pleadings, the sharp increase in the number of bogus prescriptions for compounded drugs was the result of multiple fraud schemes, including this one, that popped up around the country. As a result, the TRICARE program faced a $2 billion explosion in liability for compounded prescription drugs.

“This outrageous scheme undermined health services for those who risk their lives to serve our country,” said U.S. Attorney Tara McGrath. “Our military members and taxpayers deserve so much better. This case reflects our dedication to the well-being of our armed forces and our steadfast protection of the U.S. taxpayer.”

During the course of the investigation, authorities seized numerous items and properties purchased by the Collinses and others with the proceeds of the fraud: an 82-foot yacht; multiple luxury vehicles, including two Aston Martins; a multimillion-dollar investment annuity; gold and silver bars; dozens of pieces of farm equipment and tractor-trailer trucks; and three pieces of Tennessee real estate.

This case was prosecuted by Assistant U.S. Attorney Mark W. Pletcher.

DEFENDANTS                                 Case Number: 18-CR-0432-JLS

Daniel Castro                                      Age: 36                       Oak Lawn, IL

Jeremy Syto                                        Age: 30                       Chula Vista, CA

DEFENDANTS                                 Case Number: 18-CR-4209-JLS

Candace Michelle Craven                   Age: 57                       Apison, TN                            

SUMMARY OF CHARGES

Daniel Castro:

Conspiracy, in violation of 18 U.S.C. § 1349, 1347

Maximum penalty: Ten years in prison and $250,000 fine or double loss amount, whichever is greater

An order of restitution requiring defendant to repay at least $11,949,710.15 to DHA/TRICARE

Jeremy Syto:

Conspiracy, in violation of 18 U.S.C. § 1349, 1347

Maximum penalty: Ten years in prison and $250,000 fine or double loss amount, whichever is greater

An order of restitution requiring defendant to repay at least $8,620,215.83 to DHA/TRICARE

Candace Craven:

Conspiracy, in violation of 18 U.S.C. § 1349, 1347

Maximum penalty: Ten years in prison and $250,000 fine or double loss amount, whichever is greater

An order of restitution requiring defendant to repay at least $32,750.00 to DHA/TRICARE

INVESTIGATING AGENCIES

Defense Criminal Investigative Service

Naval Criminal Investigative Service

IRS Criminal Investigation Division, Gulfport, MS

Federal Bureau of Investigation - Jackson, MS Field Office