BANGOR, Maine — A federal judge Wednesday told a former pharmacist for the Penobscot Indian Nation’s defunct mail-order drug business that the defendant’s taking kickbacks for filling prescriptions for narcotics from medical websites was not “qualitatively different” from someone who obtained drugs illegally.
U.S. District Judge John Woodcock sentenced Reginald Gracie Jr., 41, of Bowdoin in federal court to three years and 10 months in prison for taking kickbacks and filing false tax reports.
Gracie also was sentenced to three years of supervised release and ordered to pay more than $40,000 in back taxes to the Internal Revenue Service.
“I want you to know that in my view what you did was not merely illegal, it was morally wrong,” Woodcock told Gracie shortly before imposing the sentence. “I sit here in Bangor and, sometimes, in Portland, where I sentence people to harsh prison terms because they gained access to oxycodone and other prescription medications, then used them or sold them. Their lives have been turned upside down as well as the lives of their families.
“Occasionally, I sentence defendants charged with conspiracy who get a supplier from Florida, Mexico or Canada to provide them with narcotics,” he continued. “When they get caught, they are treated very harshly by the court. I don’t view what you did at PIN Rx as qualitatively different than someone who gained drugs illegally.”
Woodcock outlined the history of the Penobscot Indian Nation’s mail-order pharmacy business — PIN Rx — which was created in March 2005 with help from Gov. John Baldacci’s administration after voters the previous November defeated a referendum that would have allowed the tribe to build a casino. Gracie was hired as the chief operating officer of PIN Rx the following fall, the judge said.
The following year, PIN Rx received more than $5 million in MaineCare funds, most of which came from the U.S. Department of Health and Human Services, according to the U.S. Attorney’s Office. The business plan was for the tribe to fill prescriptions for MaineCare recipients all over the state by mail, according to previous reports.
“PIN Rx was doomed to fail from the start because not enough MaineCare recipients were willing to get mail-order prescriptions,” Woodcock said. “During its first six months, a consultant’s report showed that the company was losing $100,000 a month.”
In an attempt to keep the business afloat, the company began filling prescriptions from medical websites, the judge said. People would fill out a form outlining their medical issues, a doctor who had never examined the patient would write out a prescription and PIN Rx would fill it and mail the drugs to the patient.
Gracie asked for and received between May and November 2006 more than $120,000 in kickbacks from six companies that sold prescription drugs through such websites, Woodcock said. The ex-pharmacist put the money into a corporation intended for real estate transactions that he had set up before going to work for PIN Rx. Woodcock said Gracie used it to hide his kickback income from the IRS.
Between Feb. 1, 2006, and Oct. 23, 2006, PIN Rx filled 190,000 prescriptions, the judge said. Of those, 183,704 were for controlled substances. The powerful narcotic hydrocodone was the most frequently prescribed drug. In November 2006, the firm that supplied drugs to PIN Rx refused to continue doing business with the company because of the high number of narcotics it was selling, Woodcock said.
“The defendant presents himself as the fall guy in what was a sordid part of Maine history,” Woodcock said. “But the defendant is here because he began taking bribes for selling prescriptions.
“This is a highly disturbing and tragic story about a highly trained professional who worked hard to get where he was, then lost his sense of direction and began to abuse his obligation to the public because of his greed,” he concluded.
An emotional Gracie apologized to the court and members of his family, who sat behind him in the courtroom.
“I’m very sorry for the sorrow and and pain I’ve caused my family,” he told Woodcock. “I wish I could explain it but I can’t. I beg the court to have mercy on me a little bit.”
The ex-pharmacist’s sentence might have been shorter if he had not been arrested July 24 after police found 61 marijuana plants growing on his property, Gracie’s defense attorney, Thomas Marjerison of Portland said after the 2 ½-hour long sentencing.
Woodcock on Wednesday denied a motion by Assistant U.S. Attorney James Chapman to increase the defendant’s recommended federal sentencing guideline range but imposed the sentence of three years and 10 months the federal prosecutor recommended. The judge also refused to go outside the guideline of range of between three years and five months and four years and three months, as Marjerison had urged.
Before Gracie’s recent arrest, the defense attorney suggested the defendant be sentenced to a year and four months under house arrest.
Earlier this year, Gracie pleaded guilty to receiving more than $120,000 in kickbacks from six online companies in 2006 in return for making sure that PIN Rx filled the prescriptions of the companies’ customers. He also pleaded guilty to filing false corporate and individual tax returns.
Gracie was arrested July 24 after police found the marijuana plants growing on his property, according to court documents. He agreed on July 27 to be held without bail pending the outcome of his case rather than be subject to a hearing to revoke his personal recognizance bail.
Marijuana cultivation is a Class D crime in Maine punishable by up to a year in state prison and a fine of up to $2,000.
He is scheduled to be arraigned on that charge on Sept. 18 in West Bath District Court. Any sentence imposed most likely would be concurrent with the federal sentence.