Holbrook Company Owner Sentenced To Prison In Drug Refund Scheme

HOLBROOK, NY – The owner of a Hobrook company has been sentenced to five years behind bars for his role in a scheme to steal money from clients who relied on his business to return unused pharmaceutical products.

Dean Volkes, 55, was the sole owner of the reverse pharmaceutical distributor Guaranteed Returns, federal prosecutors in Philadelphia said in a news release Tuesday. The company handled returned pharmaceutical products for healthcare providers such as hospitals, pharmacies, and long-term care facilities, as well as Defense Department facilities. The company handled returns for unused and expired drugs that pharmaceutical manufacturers allow to be returned for a refund. Volkes' company charged a fee based on the share of the return value.

From 1999 through 2014, the company promised to hold drugs until they expired and then return them for a fee. But instead, prosecutors said Volkes had the company steal the unexpired drugs, return them to the manufacturers and pocket the refund money. Volkes and the company managed to steal more than $100 million from more than 13,000 clients, prosecutors said. That includes more than $20 million from medical treatment facilities operated by the Defense Department and other government agencies.

Volkes, his younger sister Donna Fallon, the company's top financial officer, and the company were convicted in March 2017 of mail fraud, wire fraud, stealing government property, money laundering conspiracy, obstruction of justice, and false statements.

For her role, Fallon was sentenced to one year and one day in prison.

Volkes and Guaranteed Returns were each ordered to forfeit more than $114 million and pay restitution of about $95 million. Fallon, meanwhile, was ordered to pay more than $500,000 in restitution

“The defendants and their company took advantage of their own clients, stealing millions of dollars, and then committed further crimes by attempting to cover up the fraud,” said U.S. Attorney McSwain. “This kind of fraud netted the defendants exactly what they deserve – a trip to prison."

Michael Harpster, special agent in charge of the FBI’s Philadelphia division, said the defendants' guiding principle was "greed."

“For years, they ripped off clients – among them, the U.S. government – to the tune of millions of dollars," he said. "They’re now being held accountable for their scheme, and for their brazen attempts to cover it up by obstructing justice. The FBI and our federal partners won’t stand for criminals stealing from the government and the taxpayers who fund it.”