With each record unsealed, the cash register keeps ringing in
what already is the most lucrative alleged pills-for-cash
operation unmasked in East Tennessee.
A team of federal, state and local authorities on Tuesday
launched a series of raids at pain clinics in Knoxville and
Lenoir City and the U.S. Marshals Service began hauling
defendants into U.S. District Court that afternoon.
On Wednesday, the flow of suspects into court continued in an
alleged pill mill operation that now tops $30 million in revenue
authorities say it generated.
At least 19 defendants made initial appearances Wednesday in
the case, bringing the total charged so far to 35.
Assistant U.S. Attorney Tracy Stone has said there were more
than 34 indictments returned by a grand jury in the case. Many
of those list more than one defendant, and authorities are
expected to continue arresting people in the case for days,
maybe even weeks to come, Stone told U.S. Magistrate Judges
Bruce Guyton and Clifford Shirley.
The alleged leader of the operation was arrested Tuesday.
Sylvia Hofstetter, 51, garnered her own indictment, which
alleges she earned $17.5 million in just four years from
operating pills-for-cash pain clinics in Lenoir City and
Knoxville and is accused of leading the overall conspiracy to
possess and distribute prescription painkillers, inspiring
spinoff ventures in Lenoir City and Knoxville operated by former
employees and paving the way for so-called “sponsors” who fund
addicts’ trips to the pill mills in return for a cut of the
drugs. The sponsors then sell those pills to more addicts.
The spinoff clinics netted those operators $10 million from
late 2012 to last week, when the first round of indictments were
returned in secret.
Guyton and Shirley are tasked with handling the initial
appearances and arraignments of the dozens of defendants being
rounded up. The two magistrate judges set trial dates for each
group of what court records outline as a three-tier operation,
topped by Hofstetter with the spinoff clinic operators beneath
her and the pill mill travel agents on the bottom.
All of those trial dates are expected to be delayed, however,
because the U.S. attorney’s office is introducing a novel
approach to sharing evidence with the defense and defendants.
“I think we are going to be the first in the country to use
it,” Stone told the magistrates.
Instead of handing over to the defense a copy of a hard drive
chocked full of evidence only federal authorities really know
how to decipher with technical help, Stone said he will be
placing all evidence “in the cloud,” so it can be accessed via
the Internet. But, because the venture is so novel and the
evidence in the case so massive, Stone said it will take at
least 100 hours to prepare it for access by defense attorneys.
“If it works, I think all the defendants and attorneys will
benefit greatly,” Stone said.