MS Coast businessman faces new charges in conspiracy to price-gouge PPE during COVID
An Ocean Springs businessman is facing more charges related to allegations he bought up personal protective gear and hoarded it for resale at higher prices during the COVID-19 pandemic.
In a superseding indictment handed down in September, Kenneth Bryan Ritchey, 58, is now facing two additional charges, one for conspiracy to commit health care and wire fraud and one count of making false statements.
With the new charges, Ritchey is now indicted on six federal charges that could ultimately send him to prison for life if convicted. The other federal charges unsealed in January charge him with conspiracy to commit wire and mail fraud, conspiracy to defraud the United States, and conspiracy to hoard designated scarce materials.
On Monday, Ritchey showed up for his arraignment on the new charges at he federal courthouse in Gulfport wearing a gray suit and a black mask and accompanied by his attorneys, Arthur J. Madden and J. Scott Gilbert.
Ritchey pleaded not guilty to the new charges before Magistrate Judge Robert Myers on Monday. The judge allowed him to remain free pending trial, tentatively set in November.
When asked for any comment, Ritchey and his attorneys declined any comment.
Hoarding PPE gear for big profits
Ritchey was first indicted on federal charges in January.
The allegations accused the businessman of conspiring to recruit 12 co-conspirators (up one from the 11 co-conspirators in the first indictment) to buy up personal protective equipment for resale at inflated prices during the early months of the COVID-19 pandemic at the expense of hospitals desperate to protect employees from the virus.
The indictment says Ritchey worked with the 12 unnamed co-conspirators to buy and hoard PPE then sell it at higher prices. He is accused of defrauding health care providers, including Veterans Affairs hospitals, of $18 million.
Ritchey first learned he was a target of a federal criminal investigation as early as April 2020, when FBI agents raided his wholesale distribution business, Gulf Coast Pharmaceuticals Plus in Ocean Springs.
According to the indictment, health care providers did ask about the inflated prices for the PPE gear, but the 12 unnamed co-conspirators either sent them messages discouraging them from reporting the business for price gouging or Ritchey created fraudulent receipts to the providers.
The PPE that Ritchey was selling, the indictment says, was marked up as much as 300% over costs, and providers brought them out of fear of being unable to get the equipment during the national emergency due to the COVID-19 pandemic.
Over 300,000 items seized in FBI raid
Federal agents raided the Ocean Springs business and three buildings on the property, resulting in the seizure of over 300,000 items, all of which Ritchey forfeited to the federal government when he pleaded guilty to unrelated state charges for hoarding the gear and selling it for large profit margins.
When agents searched the Ocean Springs business, agents seized the following items:
- 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
In addition to the wholesale distribution business, Ritchey also controlled another unnamed entity and retail pharmacy that profited from the price-gouging scheme.
His co-conspirators, the indictment says , included a warehouse manager and employee in Jackson County, nine sale representatives with an office in Broward County, Florida, and one other unnamed co-conspirator.
To carry out the scheme, Ritchey allegedly directed his employees to buy the gear and paid them, for example, 50 cents for each N-95 mask they acquired, plus expenses.
The staff bought the items at home improvement stores in Mississippi, Louisiana, Texas, Alabama, Florida, Georgia, South Carolina and North Carolina, also using military and other discounts in places they could buy up masks in bulk.
The workers also bought masks and other PPE gear online.
GCPP paid an average of $3.49 each for the N-95 mask, but then sold them for $20 each to health care providers, the indictment says.
Prior to facing federal charges, Ritchey pleaded guilty to a state charge of price-gouging involving the Jackson VA center. A judge sentenced him to five years in prison , but suspended the prison term and ordered him to serve three years under supervision and pay over $54,000 in restitution.
Other powerful business partners
Ritchey is also former business partner of the late Clark Levi in the Ocean Springs-based business, Alvix Laboratories LLC.
Ritchey had sued Levi after Ritchey sold his interest in Alvix to Levi. The suit alleged Levi promised to shared future profits with him and others once the company grew.
Instead, the lawsuit said, Levi allegedly hid those profits by creating shell companies to avoid showing that Alvix Labs was making more money.
That lawsuit has since been settled.
Since then, Levi’s brother, Dempsey “Bryan” Levi, 52, and another business associate, Jeffrey Wayne Rollins, 45, of Ocean Springs, were sentenced to prison for their role in a multi-million dollar scheme to defraud TRICARE, the health care benefit program serving U.S. military, veterans, and their family members, as well as private health care benefit program.
