PORTLAND, Ore.—A Southern California man who owned and operated two local compounding pharmacies was sentenced to federal prison today for evading the payment of approximately $5.5 million in personal income taxes and submitting false reimbursement claims to CVS Caremark, a national pharmacy benefit manager.

Matthew Hogan Peters, 38, was sentenced to three years in federal prison and three years’ supervised release. Peters was also ordered to pay more than $3,441,263 million in restitution to the IRS, in addition to back taxes Peters has already paid.

According to court documents, the U.S. Department of Health and Human Services’ Office of Inspector General, the Oregon Department of Justice’s Medicaid Fraud Unit, and other agencies pursued a multi-year investigation into alleged illegal kickback arrangements at compounding pharmacies owned by Peters and members of his family in several states. Two such pharmacies, Professional Center Pharmacy and Professional Center 205 Pharmacy, were located in Southeast Portland.

The investigation ultimately revealed that Peters had devised various indirect means of incentivizing healthcare providers to write prescriptions for compounded drugs—custom-mixed medications that generate outsized reimbursements from Medicare, Medicaid, and other healthcare-benefit programs—and to direct those prescriptions to his pharmacies for dispensing. These arrangements proved enormously profitable for Peters’ pharmacies.

This case was investigated by the FBI, IRS Criminal Investigation, the Offices of Inspectors General for the U.S. Postal Service and the U.S. Departments of Labor and Health and Human Services, the U.S. Postal Inspection Service, and the Defense Criminal Investigative Service. It was prosecuted by Assistant U.S. Attorneys Ryan W. Bounds and Seth D. Uram and Special Assistant U.S. Attorney Elizabeth Ballard Colgrove, for the District of Oregon.

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