United States Attorney
Northern District of Texas

1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699

Telephone (214) 659-8600
Fax (214) 767-0978

PHYSICIAN PLEADS NOT GUILTY IN FEDERAL COURT
IN DALLAS TO CONSPIRACY CHARGES

Case is a Spin-off of Rakesh Johar Saran Rogue Internet Pharmacy Case

William Frank McArthur, III, a licensed physician, pled not guilty to federal charges at an arraignment hearing today in U.S. District Court in Dallas, before the Honorable Jerry Buchmeyer, United States Senior District Judge, announced Richard B. Roper, United States Attorney for the Northern District of Texas. Dr. McArthur, a physician licensed in Mississippi and Georgia, who currently practices family medicine in south Georgia, was arrested on November 15, 2006, in Jesup, Georgia, on charges outlined in a federal indictment returned by a federal grand jury in Dallas.

After his arrest last month, Dr. McArthur appeared before a United States Magistrate Judge in Brunswick, Georgia, who released him on a personal recognizance bond. At today’s arraignment hearing in Dallas, Judge Buchmeyer set Dr. McArthur’s trial date for January 8, 2007.

The two-count federal indictment charges Dr. McArthur with one count of conspiracy to distribute controlled substances and one count of conspiracy to commit money laundering. An indictment is an accusation by a federal grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. However, if convicted on both counts, Dr. McArthur faces a maximum statutory sentence of 25 years imprisonment and a $750,000 fine.

According to the indictment, Dr. McArthur operated Managing Associates which employed or contracted the services of several physicians, including Dr. McArthur. These physicians conducted or supervised consultations with Internet customers of www.e-discountrx.com and approved drug orders placed by the Internet customers.

Rakesh Johar Saran, now a convicted felon, operated approximately 23 pharmacies in th Northern District of Texas and his pharmacies filled and shipped drug orders processed by www.e-discountrx.com. Payments for drug orders by Internet customers were processed by www.ediscountrx.com and were deposited into bank accounts in the name of Solandra Group, an Internet Facilitation Center (IFC) in Florida, that used the storefront www.e-discountrx.com and was operated by Sherman Ted Solomon. Solandra Group then wired transferred funds to Managing Associates as payment for the physician-conducted or physician-supervised consultations and the approvals of the Internet customers’ drug orders. Solandra Group also wire transferred funds to Rakesh Johar Saran as payment for filling the drug orders.

The indictment alleges that from spring 2004 to September 20, 2005, Dr. McArthur conspired with others to distribute and possess, with the intent to distribute, outside the scope of professional practice and not for legitimate medical purposes, controlled substances such as hydrocodone (an addictive painkiller), phentermine (an appetite suppressant) and alprazolam (used to treat anxiety, depression, panic disorder and premenstrual syndrome). According to the indictment, during the third week of June 2004, Dr. McArthur caused the distribution of these drugs to more than 200 Internet customers. On June 25, 2004, Dr. McArthur billed the Solandra Group $7,140.00 for 204 consultations and on July 1, 2004, Dr. McArthur and Managing Associates received a wire transfer from the Solandra Group for that amount.

With regard to the money laundering conspiracy charge, the indictment alleges that Dr. McArthur conspired with others to wire transfer $1,136,150.00 in funds from an account at Bank of America in New York, in the name of Solandra Group, to an account in the name of Managing Associates, at the Merchants and Farmers Bank in Kosciusko, Mississippi, which were payments for “consultations” with www.discountrx.com customers and “approvals” of www.discountrx.com customers’ drug orders. The 62 wire transfers were made only after the www.discountrx.com customers’ drug orders were filled and shipped by the associated pharmacy, including the pharmacies in the Northern District of Texas operated by Rakesh Johar Saran.

In the related case, U.S. v. Rakesh Johar Saran et al., Saran, age 44, of Arlington, Texas, the lead defendant in the multi-million dollar rogue internet pharmacy scheme case, pled guilty last month to one count of conspiracy to commit health care fraud and other federal offenses, two counts of mail fraud, and one count of conspiracy to distribute controlled substances. He faces 20 years imprisonment, and as part of his plea agreement, will forfeit assets earned from his illegal activities, including more than $1 million in cash seized at his residence; more than $375,000 located in bank accounts, several vehicles and a custom home under construction in Arlington.

In addition to Saran’s own guilty plea, Saran entered guilty pleas on behalf of twenty corporations he controlled and used in the criminal conspiracy. Sixteen other defendants in U.S. v. Rakesh Johar Saran et al. have pled guilty to charges in the indictment including conspiracy to commit healthcare fraud and conspiracy to distribute controlled substances.

United States Attorney Roper praised the investigative efforts of the Drug Enforcement Administration, the Internal Revenue Service - Criminal Investigation, the Federal Bureau of Investigation and the Food and Drug Administration. The case is being prosecuted by Assistant United States Attorney Candy Heath.

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