Late Coast pharmacist ‘cooked books’ to avoid paying millions to investors, lawsuit says
Two brothers of late Ocean Springs businessman and pharmacist Clark Levi, and one of his former business partners, are suing his estate for money they say he owed them from one of his businesses, Alvix Laboratories.
Clark Levi’s siblings, Dempsey Bryan Levi and Kelly Levi, and former business partner Jeffrey Wayne Rollins, allege that Clark Levi and others committed fraud by “cooking the books” at Alvix to avoid paying what he owed his investors in accordance with a settlement agreement.
The suit is filed against Clark Levi’s estate in Jackson County Chancery Court. Other named defendants include Hugh Ferry and Crystal Penney, who both worked for Clark Levi, and one of his former business partners, Glenn Doyle Beach Jr.
Beach is among the doctors, pharmacists and businessmen convicted of taking part in multi-million healthcare fraud scheme involving compound medications that bilked military insurer TRICARE and other private insurance companies out of millions of dollars. Clark Levi also faced indictment but died before any charge were filed.
After their lawsuit was filed, Dempsey Bryan Levi and Jeffrey Rollins also were arrested on federal charges of conspiring to commit $18 million in TRICARE healthcare fraud involving compound cream medications.
Both have pleaded not guilty.
According to the Alvix settlement agreement with investors, Clark Levi was supposed to pay a lump sum to buy them out, plus a share of future Alvix profits.
Clark Levi was still the sole owner of Alvix when he and his wife, Amy, died in a car crash in October 2019.
Prior to his death, another former Alvix business partner, pharmaceutical wholesaler Ken Ritchey, filed a similar suit in federal court in Gulfport against Levi. That case resulted in an undisclosed settlement, the terms of which are still being worked out.
According to the new lawsuit filed by Ocean Springs attorney David Krauss, Clark Levi had agreed to pay Dempsey Bryan Levi and Jeffrey Rollins a total of $5,062.500 for their share in Alvix, plus interest, and Kelly Levi agreed to accept $1,350,000, plus interest, for his share in the company.
In addition, each was set to receive more money based on future profits of the company.
The three are asking to recoup the money still owed to them from the initial lump-sum payments, plus any interest and punitive damages.
Since the agreement was made, the three say they are still owed the following lump sum amounts:
- Dempsey Bryan Levi — $1,888,596
- Jeffrey Rollins — $1,888,596
- Kelly Levi — $300,000
Fraud and theft
Ritchey, who was also supposed to receive future profits from Alvix, claimed Clark Levi created shell companies to hide the earnings.
Ritchey had expected to receive a minimum of $3.3 million and a maximum of nearly $10 million once he gave up ownership interest in Alvix, but he said he didn’t receive the money.
In the latest suit, Levi’s brothers and Rollins accuse Clark Levi of “improperly, fraudulently, negligently and/or unlawfully” withholding, depleting or diminishing the profits from Alvix to avoid paying what they were owed.
Under the agreement, the investors expected to make as much as three times the original settlement amount based on profits.
The investors became suspicious when Clark Levi refused to follow the settlement agreement and provide to investors full access to Alvix’s books, records and other information that would have ensured a full accounting of any profits or other earnings.
Hiding the money
Rollins was still working with Clark Levi in other business ventures, including as a consultant at Philight Pharma LLC, when he starting reviewing that company’s records for Levi.
It was then that Rollins said he discovered Clark Levi had been diverting a large percentage of Alvix profits to Phlight Pharma, a company owned by Levi.
Rollins allegedly confronted Clark Levi at the time, and told him he could not divert the Alvix profits to the other company because that breached the settlement agreement involving Alvix. In response, the suit alleges, Clark Levis remarked “flippantly” saying, “Yes, I can.”
Rollins then demanded access to all of Alvix’s records, in writing, court papers say, but Clark Levi would only provide a few of the documents, all of which were heavily redacted.
Not long after Levi’s death, Rollins obtained a full accounting of all the records from Alvix.
His review showed that Clark Levi had funneled money from Alvix to other companies, such as Innovative Research & Development LLC, a company owned by Clark Levi and Beach, all allegedly in another effort to hide Alvix profits from the investors
In addition, Clark Levi allegedly diverted some products created and marketed by Alvix to other companies that he owned, operated or controlled.
Any of the action Clark Levi allegedly took, the suit says, was meant to “divert, diminish, deplete, withhold and/or otherwise reduce or eliminate Alvix profits” that would have further funded the settlement agreement for the investors.
The plaintiffs are asking for unspecified damages for breach of contract, fraudulent and negligent misrepresentation and misappropriation of money.
