KNOXVILLE, Tenn. (WATE) — A Delaware man plead guilty to federal charges after he bought medication from two Tennessee pharmacies and redistributed it wholesale without a license for an increased rate to other healthcare or wholesale agencies, including VA Medical Centers in California and New York.

Jose Torres, 58, of Shelbyville, Delaware plead guilty to the charges of conspiracy to engage in unlicensed wholesale distribution of prescription drugs. Torres appeared in the United States District Court for the Eastern District of Tennessee on August 17, where he entered the plea.

“Today’s guilty plea sends a clear message that criminal conspiracies aimed at enriching
individuals at the expense of VA programs and services will not be tolerated,” said Special
Agent in Charge Kim R. Lampkins with the Department of Veterans Affairs Office of Inspector
General’s Mid-Atlantic Field Office. “The VA OIG thanks its law enforcement partners for their
commitment in helping hold this defendant accountable.”

The charges against Torres state that he worked with multiple conspirators, including two Tennessee pharmacies, located in Etowah and Maryville. The pharmacies were allegedly not licensed as wholesale distributors of prescription medication. The pharmacies in question were recruited in a “Pipe-Line Program” by a company and conspirator, un-named in the charges, out of El Cajon California according to the Department of Justice. The DOJ alleges Torres owned and operated Harford Health Services, a business based in Bel Air, Maryland, which purchased the medications from the pharmacies.

The Pipe-Line Program, according to the DOJ, was “described in marketing materials “as a solution to the scarcity of medications in certain parts of the country.” The real purpose of the program was to get independent retail pharmacies to allow Torres to order the prescription drugs under the guise that the medication would be sold directly to patients through a retail pharmacy. The medications, however, were resold to wholesale distributors for a significantly higher amount than they were purchased.

The pharmacies were offered a 23% commission on the purchase price of the drugs from the California-based company that hosted the Pipe-Line Project for selling the medications to Torres. The DOJ states that in order to receive this commission, the pharmacies would allow Torres, or someone working on his behalf, to use their account information for their authorized distributors, allowing him to purchase the medications.

The DOJ states Torres purchased medication on at least 4 occasions and sold them to other parties for an increased rate through wholesale distributors. The alleged purchases are listed as follows:

  • In April of 2019, Torres purchased Epinephrine for $63 per unit, and resold it to wholesale distributors for $139 per unit.
  • In March of 2020, Torres purchased Amiodarone from a pharmacy for $42 per unit and sold it to a VA Medical Center in California for $165
  • Also in March of 2020, Torres purchased Hydrochloroquine Sulfate Tablets for $178 per unit, and resold them to a VA Medical Center in New York for $442 per unit.
  • In August 2020, Torres purchased Famotidine for $108 per unit, and resold it to a wholesale distributor for $169 per unit.

From these sales, Torres allegedly received $119,350 according to the DOJ.

Torres’ sentencing hearing is scheduled for March 29, 2023. He faces up to five years and federal prison, $250,000 in fines, and three years of supervised release.