New federal charges detail how Coast businessman ‘exploited’ COVID fears across Southeast
Sweeping federal charges against Ocean Springs businessman Kenneth Bryan Ritchey lay out in detail a conspiracy to snap up personal protective equipment and reap windfall profits during the early months of the COVID-19 pandemic at the expense of hospitals desperate to protect employees from the virus.
The indictment accuses Ritchey of working with 11 unnamed co-conspirators to buy and hoard PPE sold at inflated prices. He is accused of defrauding health care providers, including Veterans Affairs hospitals, of $1.8 million.
The formal charges against Ritchey are one count each of conspiracy to commit wire and mail fraud, conspiracy to defraud the United States, conspiracy to hoard designated scare materials and hoarding of those materials: masks, hospital gowns, gloves, sanitizer and other items health care workers need to protect themselves from the virus.
Ritchey, represented by Tim Holleman of Gulfport, is scheduled to appear Feb. 18 for a pretrial conference before U.S. District Judge Sul Ozerden at the federal courthouse in Gulfport. He is scheduled for trial during the three-week court calendar that begins March 1.
In April, FBI agents raided a warehouse owned by one of Ritchey’s businesses, wholesale distributor Gulf Coast Pharmaceuticals Plus in Ocean Springs. GCPP, the indictment makes clear, was at the heart of the conspiracy.
When health care providers questioned the high prices of PPE sold through Gulf Coast Pharmaceuticals, unnamed co-conspirators sent emails and to dissuade the providers from reporting price gouging.
These co-conspirators attempted to justify the costs they charged “when, in reality, GCPP marked up PPE and other designated materials by as much as 300% over its costs and exploited the fear and desperation of health care providers, including VA health care facilities, to acquire PPE and other designated materials during a declared national emergency.”
Buying from home improvement stores, Amazon, eBay
In addition to GCCP, the indictment says, Ritchey controlled an unnamed entity and retail pharmacy that profited from the scheme that ran from January to April of 2020.
He had a network of 11 unnamed co-conspirators who filled various roles: a warehouse manager and employee in Jackson County, and nine sales representatives with an office in Broward County, Fla., the indictment says.
Ritchey directed all of them to buy PPE and other materials, and signed off on the purchases, the indictment says. He paid the sales representatives 50 cents for each N-95 mask acquired, plus expenses.
In February, they hit up home improvement stores in Mississippi, Louisiana, Texas, Alabama, Florida, Georgia, South Carolina and North Carolina, using military and other available discounts where they could buy up masks in bulk.
“When possible, GCPP employees and sales representatives purchased or attempted to purchase all N-95 masks in stock.”
Some of the home improvement stores listed in the indictment were in Lancaster County, South Carolina, Columbus, Mississippi, Jackson County, Mississippi, and Mobile County, Alabama.
They paid as little as 95 cents each for N-95 masks, which are most commonly used by health care workers in potentially infectious settings.
GCPP also bought masks from online retailers, including Amazon and eBay, before those companies removed or restricted items needed for coronavirus protection over price-gouging concerns, the indictment says.
In all, GCPP snapped up more than 1 million N-95 masks, 550,000 procedural masks and thousands of other PPE and materials. Some of the items were “significantly marked-up purchases” from Ritchey’s pharmaceutical distribution company and retail pharmacy.
GCPP wound up paying an average of $3.49 each for the N-95 masks. Ritchey set a maximum price of $20 each for his salesman to charge health care providers. But on March 13, a GCCP salesman sent a series of instant messages to Ritchey, the indictment says, asking if the $20 limit could be removed for a $25 price. “OK,” Ritchey responded, according to the indictment, “Take it off.”
Salesmen aware of price gouging, indictment says
Aware they were price gouging, the salesmen also communicated about states that had laws against the practice, the indictment says. Three of the conspirators exchanged instant messages quoted in the indictment.
“Are we still not sending mask(s) to Washington?”
“Washington is okay(.)“
“No price gou(g)ing law in Washington.”
“So what do we need to look out for(,) FL(,) CA and NY, NY?”
“Yes please(.)“
“State of Emergencys (sic) kinda get me worried though(.)“
Who was defrauded and what Ritchey would face if convicted
The indictments lists health-care providers defrauded:
- Veterans Affairs health care centers in New Mexico, Rhode Island, South Carolina and Idaho, and the first joint VA-Department of Defense health care center in North Chicago
- Yavapai Regional Medical Center in Arizona
- The nonprofit HealthAlliance Hospital in Ulster County, New York
- Children’s Medical Center Dallas.
If convicted, 57-year-old Ritchey could face spending the rest of his life in prison. He was released from custody on an unsecured bond of $100,000.
Ritchey, who developed The Ritchey Building on Government Street in downtown Ocean Springs and has other business interests, has already pleaded guilty to a state price gouging charge involving the Jackson VA hospital.
In that case, Jackson County Circuit Court Judge Robert Krebs sentenced Ritchey to five years in prison, but suspended the sentence and gave him three years to serve on supervised release. Rrebs also ordered Ritchey to pay the Jackson VA $54,910 in restitution.
In the federal case, Ritchey could be ordered to forfeit any real or personal property gained directly or indirectly from proven offenses.
This story was originally published January 28, 2021 at 5:50 AM.
