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Million dollar scam: Johnson City men plead guilty to conspiracy, mail fraud

Matthew Lane • Dec 29, 2017 at 3:24 PM

GREENEVILLE — Two men who ran a million dollar scam on a Johnson City surgical center for more than six years have agreed to plead guilty to federal conspiracy and mail fraud charges.

Donald Kevin Collins and Charles Turner were indicted in U.S. District Court in Greeneville in August. The two were charged with conspiracy to commit mail fraud and 15 counts of mail fraud.

For six years, the pair perpetrated a scam on Mountain Empire Surgery Center in Johnson City. They created a fake company, submitted false invoices and purchase orders, and ultimately tricked the center’s owners in paying them nearly $1.4 million for equipment that was never received.

Turner agreed to plead guilty to the conspiracy charge in October and is scheduled for sentencing on Feb. 7. Collins pleaded guilty to all of the charges earlier this month and has a change of plea hearing set for Jan. 18.

The charges carry a maximum sentence of 20 years in prison and a $250,000 fine.

According to court records, Collins worked at Mountain Empire Surgery Center in Johnson City, first as a supply clerk beginning in May 2000 and then as a material manager in 2003. Collins was responsible for ordering and receiving medical supplies and equipment for MESC.

Prosecutors say in early 2009, Turner was a student at East Tennessee State University. He met Collins through Collins’ wife, who worked in the Office of Financial Aid at ETSU. The plea agreement states Turner was one year short of earning his criminal justice degree when he ran out of money to pay for tuition.

Initially, Collins deceived Turner into believing they were conducting a lawful business operation, but in April 2010, Turner became fully aware he was involved in a criminal conspiracy, court records state.

The conspiracy involved creating a fake medical supply company called Turner Distributors and opening bank accounts at Carter County Bank.

Prosecutors say the two men created and submitted false purchase orders, invoices and packing slips to MESC purporting to show MESC had received medical supplies and equipment from Turner Distributors, knowing the center would never receive the equipment.

United Surgical Partners International — the owner and operator of MESC — would then issue a check to Turner Distributors.

Prosecutors say the two men would then deposit the checks into the accounts with Turner removing the cash, keeping about 35 percent for himself and the balance for Collins.

During the six year conspiracy, Collins created 180 false purchase orders, packing slips and invoices and received more than $1.38 million in payments for equipment that was never delivered.

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