300,000 masks. 21,850 gloves. MS Coast businessman pleads guilty to COVID-19 price gouging
An Ocean Springs developer pleaded guilty Tuesday to a state charge of price gouging personal protective gear he sold to a Jackson-based veteran’s administration center during a state of emergency caused by the COVID-19 pandemic.
The Attorney General’s Office prosecuted the case against Kenneth Ritchey, records indicate.
According to the charging document, Ritchey inflated the prices generally charged for comparable PPE gear, such as face masks, gloves and goggles, when he sold them to the GV Sonny Montgomery Veterans Hospital in Jackson at a cost of nearly $20,000.
Ritchey waived an indictment in the case and pleaded guilty before Judge Robert Krebs. The judge sentenced him to five years in prison, suspending the prison sentence and ordering him to serve three years under post-release supervision for the felony offense.
In addition, the judge ordered Ritchey to pay $54,910 in restitution to the veterans hospital in Jackson and fined Ritchey $5,000.
The sentence also calls for the forfeiture of all of the PPE gear seized during an FBI raid at the business in April.
“Mr. Ritchey is glad to have it behind him,” his attorney Tim Holleman said. “He will immediately make full restitution and pay his full fine.”
He expected to have everything paid in full by Wednesday.
Ritchey agreed to pay a total of over $50,000 to the VA center, though a portion of that money — around $30,000 — is what he paid up front for the PPE gear before he sold it to the Jackson VA center, his attorney said.
“We agreed to pay the entire restitution so effectively they (the Jackson VA hospital) got their product free, too,” Holleman said.
Ritchey is a former business partner of the late Clark Levi, owner of Lovelace Drugs in Ocean Springs and an unindicted co-conspirator in a multi-million dollar healthcare fraud scheme involving prescription compound creams.
The felony charge against Ritchey comes eight months after an April 17 FBI raid at Gulf Coast Pharmaceuticals Plus LLC on North Halstead Road, a business owned by Ritchey and his wife, Debra Ritchey.
A federal judge signed off on a warrant to search the property.
The warrant gave authorities permission to search three buildings on the property, including a search of any items that belonged to Ritchey, his wife and any other current or former owner or representative of the company.
Hoarding PPE gear?
The federal warrant indicated the items were allegedly being held in violation of a federal law that prohibits hoarding of scarce personal protective equipment needed in healthcare settings to prevent the spread of COVID-19.
There is no indication of a federal charge pending in the case, and the state charge involves strictly allegations of inflated pricing on PPE gear during a state of emergency.
When FBI agents raided the property, they seized over 300,000 items, all of which Ritchey had to agree to forfeit to the government as part of his plea.
Here’s a list of the items seized::
- 6,535 N-95 masks
- 8,950 KN-95 masks
- 281,479 surgical and miscellaneous masks
- 22,400 shoe covers
- 21,850 gloves
- 4,295 gowns
- 170 lab coats and coveralls
- 166 face shield goggles
Donating COVID-19 supplies
The Sun Herald reached out to another of Ritchey’s attorneys, Erich Nichols, on Monday but he could not be immediately reached for comment.
However, Nichols talked to the Sun Herald about the raid earlier this year, saying he did no believe his client had broken the law at the time.
Ritchey has been in business as a wholesale distributor of pharmaceuticals, medical supplies and other equipment for over 20 years.
At the time of the raid, Nichols said, some of the PPE stock had just come in but was set to go out to customers when the raid happened.
“I think the government will see he was not violating this regulation,” Nichols said then. “Even locally, he has donated hundreds, if not thousands, of PPE to Singing River (Health System) and Memorial (Hospital at Gulfport) to help out with the local medical matters.”
Other federal investigations
Ritchey has ties with other FBI raids in the last few years in South Mississippi.
In October 2019, federal authorities raided Lovelace Drugs as part of an ongoing investigation into the sale of prescription compound creams.
Ritchey had worked with Levi for years through another business, Alvix Laboratories, LLC, in Ocean Springs. also later known as Gardens Pharmacy.
Since then, Dempsey Bryan Levi, and Jeffrey Wayne Rollins, have been charged and pleaded guilty to conspiracy to commit over $8 million in healthcare fraud involving compound pharmaceuticals.
That investigation is ongoing, and other charges are expected.
Ritchey had also sued Clark Levi for $10 million after Levi bought out his partners at Alvix Laboratories, which included Ritchey.
This story was originally published December 8, 2020 at 5:50 AM.
