Dewmar International BMC Inc (DEWM)

[Det_Robert_Thorne]

MaloneBailey didn't quit because of control deficiencies.

In an earlier post, you wrote that ManloneBailey quit as DEWM's PCAOB auditer because Dewmar didn't have sufficient internal controls in place, but that's wrong. MB quit because, as the 8-K disclosed in the paragraphs that followed, it was concerned about a forfeiture complaint against a former customer of Dewmar' [emphasis added by me]:

Prior to its resignation, on April 5, 2017, MB stated that it had become aware of a complaint for forfeiture filed against a former customer of the Company. The Company terminated business with the customer in 2015. The complaint filed in February 2017, alleges a number of civil infractions committed by the former customer.

Despite the Company’s indication that it does not appear in any capacity in the complaint (nor does the Company have assets listed as property being sought for forfeiture in the complaint), MB indicated that it believes that if the complaint were further investigated, the information may have caused MB to be unwilling to be associated with the financial statements of the Company. Due to MB’s resignation, MB did not conduct such further investigation.

The Company believes that the civil complaint does not implicate the Company in any way, that further investigation into the complaint would not change this determination, and therefore would not have any impact on the financial statements of the Company, as previously prepared for the fiscal year ending December 31, 2014.

https://www.sec.gov/Archives/edgar/data/1269879/000139390517000123/dewm_8k.htm

We discussed this in May of 2017:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=131255683

A month later, when DEWM issued its combined annual report for 2014 - 2016, I noted that the customer who paid DEWM was Medworx, and that the Federal government had begun civil forfeiture actions against that company, and that was why MB quit:

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=132134820

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=132135396

DEWM wasn't mentioned in the filings, and so most here stopped following it, but it wasn't over, as on July 13, 2017, the U.S. Justice Department brought charges against 412 individuals regarding fraudulent billing schemes that took $1.3B from Medicare, Medicaid and TRICARE, and the press release mentioned the following:

In the Southern Louisiana Strike Force, operating in the Middle and Eastern Districts of Louisiana as well as the Southern District of Mississippi, seven defendants were charged in connection with health care fraud, wire fraud, and kickback schemes involving more than $207 million in fraudulent billing. One case involved a pharmacist who was charged with submitting and causing the submission of $192 million in false and fraudulent claims to TRICARE and other health care benefit programs for dispensing compounded medications that were not medically necessary and often based on prescriptions induced by illegal kickback payments.

https://www.justice.gov/opa/pr/national-health-care-fraud-takedown-results-charges-against-over-412-individuals-responsible

A little more research found the following article regarding criminal indictments in Mississippi against Jason May and Gerald Schaar. The artile went on to mention four key names, including Tommy Spell of Ridgeland, MS (the Medworx checks shown in the DEWM filing have a Ridgeland, MS address):

“Barrett, Walters, Hope Thomley, and Spell were all the central architects of one of the comprehensive health care fraud, kickback, and money laundering scheme that threated the solvency of some health care benefit programs and operated between Jan. 2012 and Dec. 2015,” according to the federal documents. “Others also participated in and benefited from the frauds.”

Thomas E. “Tommy” Spell, Jr. (“Spell”), is a resident of Ridgeland, Mississippi. Spell is a pharmacist licensed by the state of Mississippi. Beginning in or about July 2014, Spell became a managing member of Medworx.

http://www.wsmv.com/story/35880218/2-criminally-charged-in-2016-pharmacy-raids

I don't recall this story and criminal case being mentioned on this board, and I've been waiting to see if Spell and Moran would be charged, especially now that Moran has revealed that he was a partner in Medworx, which is why I thought it was amusing that he stated this in the lawsuit he recently filed.

Maybe Moran hasn't been indicted yet because he and Spell have been "flipped" and are working for the Justice Dept.