A federal judge has sentenced a 56-year-old Florida woman who managed East Tennessee’s largest pill mill operation to more than 33 years in prison for racketeering and ordered to forfeit $3.6 million.
With her in charge, a Florida group dubbed “Italians” prospered in East Tennessee, netting $21 million in profits in four years, putting more than 12 million prescription painkillers into the hands of addicts and leaving a trail of dead patients, court records show.
U.S. District Judge Tom Varlan ordered Sylvia Hofstetter imprisoned for 400 months after a jury earlier this year convicted her in a Racketeer Influenced and Corrupt Organization, or RICO, conspiracy involving pain clinics in Lenoir City and Knoxville and a slew of related money laundering and drug distribution charges.
Hofstetter, court records and testimony showed, worked for Florida businessmen Luca Sartini, Luigi Palma and Benjamin Rodriguez – dubbed “the Italians” in undercover recordings. The trio of businessmen were considered pill-mill kings in South Florida but repeatedly escaped prosecution and, amid a law enforcement crackdown in that state, decided to move their operation to East Tennessee, prosecutors have said.
The men put Hofstetter, who had worked for the trio in South Florida, in charge, testimony showed.
Hofstetter was arrested after a 2015 series of FBI raids of pain and urgent care clinics in Knoxville and Lenoir City. Sartini and Palma fled to Italy after her arrest, authorities said. Sartini has now been extradited to the United States. Palma is awaiting extradition. Both still face trial here. Rodriguez struck a plea deal and testified against Hofstetter in what wound up being a four-month trial in Varlan’s court.
Hofstetter’s attorneys, Charles Burks and Loretta Cravens, argued Hofstetter should not be held responsible for the entirety of the conspiracy and noted Rodriguez – technically one of her bosses in the RICO conspiracy – locked in a 20-year prison term by pleading guilty.
“This case was about these three ‘Italians’ that started this (operation),” Burks said. “She’s culpable. The jury says she’s culpable (but) it’s not all Ms. Hofstetter. Ms. Hofstetter was paid a salary. This (sentencing) guideline is out of line with other defendants in this case.”
Cravens added, “She’s a loving mother, a more loving grandmother. … No matter what this court does today … it will certainly not end the opioid epidemic. It would be a grave injustice for her to be held more responsible (than others higher up the chain).”
Assistant U.S. Attorney Tracy Stone countered Hofstetter was unrepentant about the destruction caused by the opioids the pill mills she operated pushed onto the streets of East Tennessee.
“It’s a continuation of the blame game,” Stone said of Hofstetter’s sentencing argument. “I’m looking for some remorse. I can’t find anytime she showed mercy to the least of these (addicts). There are untold people whose lives will never be the same.”
Varlan denied Hofstetter’s bid for a sentencing break, ruling she “knowingly engaged in and directed” a four-year pill-mill operation.
“The defendant operated pain clinics in East Tennessee and elsewhere,” he said. “She took in significant amounts of money. … She pressured providers to see more and more patients to bring in even more money. … This conduct was not isolated and occurred over a multi-year period. … The court is mindful of the impact on the defendant and the impact on her family, but the court is also mindful of the impact on our community.”
The case began with a tip from the Loudon County Sheriff’s Office in 2012 about a troublesome pain clinic in Lenoir City operated by Hofstetter.
FBI agents enter the Knoxville Pain Care clinic Tuesday, March 10, 2015, at 9303 Park West Boulevard. It is one of several pain clinics raided by Federal agents as part of a pill-mill investigation that yielded 34 indictments will be unsealed in the coming days in the case.
The FBI’s Knoxville division followed up and in three years amassed enough evidence to raid that clinic and two more in Knoxville and round up dozens of “sponsors” – addicts who took an entrepreneurial approach to their addiction by paying other addicts to go to the clinics and trade cash for prescriptions for hundreds of opiates at a time.
The agency also worked up the distribution chain, gathering enough evidence to prosecute medical providers at the Urgent Care & Surgery Center Enterprise – a network of emergency clinics, walk-in clinics and pain clinics – facilities in East Tennessee. The emergency and walk-in clinics would funnel patients to the pain clinics, the indictment stated.
Next came charges against the drug-testing companies and national drug-testing laboratories the enterprise used to launder the millions the clinics were generating and ripping off Medicare and TennCare, to boot.
The prosecutors alleged Clyde Christopher Tipton and Maynard Alvarez set up and used shell companies to hide a kickback scheme, claiming those firms provided “marketing” services for the two laboratories.
Tipton and Alvarez have since admitted providing the labs with a steady flow of unnecessary urine testing for which the labs could bill Medicare and TennCare.
The multiagency investigation included work from the FBI’s Miami Field Office and the Hollywood Police Department.