Houston pharmacy owners and a physician sentenced in a $126 million compounding scheme against workers' compensation and TRICARE
On April 13, 2023 nine defendants were sentenced in the Southern District of Texas for a years-long, multi-state scheme to defraud the Department of Labor's workers' compensation program (OWCP) and TRICARE. The Justice Department titled its announcement a "$126M" compounding fraud scheme. The defendants included three pharmacy owners, a physician, two pharmacists and three patient recruiters. John Cruise, a co-owner of Assurance Consolidated Pharmacy in Spring, Texas, received 20 years; his co-owner LaShonia Johnson received 15 years; Kenny Ozoude, owner of Compounding Solutions LLC, received 10 years; and Dr. James Don Jackson received five years.
- Year
- 2023
- Where
- United States
- Outcome
- Sentenced
- Reported loss
- $126.0 million
- Victims
- Not stated in the sources
- Schemes
- Compounded prescription fraud
- Last reviewed
- 2026-11-03
The facts, as recorded
- The nine defendants were sentenced on April 13, 2023, and the Justice Department announced the sentences on April 14, 2023.
- Cruise, 52, of Houston, a co-owner of Assurance Consolidated Pharmacy and an owner of the Injured Federal Workers Advocate Association, was sentenced to 20 years. Johnson, 50, his co-owner and a director at the association, received 15 years.
- Kenny Ozoude, 48, former owner of Compounding Solutions LLC, received 10 years. Dr. James Don Jackson, 63, of Tyler, Texas, and pharmacist Nirvana Hightower, 56, each received five years.
- Keith Hudson, a pharmacist-in-charge at Assurance Consolidated Pharmacy, received three years; Audra Jones received two years and six months; patient recruiters Terrance Aice and Sherod Johnson each received one year and six months.
- The Justice Department said the defendants chose compounds and other drugs based not on patients' medical needs but on the amount of reimbursement, and that the drugs were mailed to patients who often never requested, wanted or needed them.
- Kickbacks were paid to patient recruiters and to physicians to prescribe the drugs.
- Four more defendants, Dr. Jay Bender, Dr. Deepak Chavda, Donathan Kemp and Naresh Jivanji, were scheduled to be sentenced on May 12, 2023.
Why this case matters
It shows the whole chain in one prosecution: the pharmacy owners who billed, the pharmacists who filled, the physician who prescribed and the recruiters who found the patients. The Justice Department says each link was paid to keep the claims coming, and that the drugs were chosen for what they paid, not for what a patient needed.
Two payers, not one
The claims went to two different programs. OWCP is the Labor Department’s workers’ compensation program for injured federal workers; TRICARE is the health program for service members and their families. The announcement describes prescriptions written for “injured federal workers and members of the armed forces.” One of the defendants’ organizations, the Injured Federal Workers Advocate Association, presented itself as an organization that purported to assist injured federal workers.
The sentences
The sentences ran from one year and six months for the two patient recruiters to 20 years for Cruise. The physician, Dr. Jackson, and the pharmacist-in-charge of Compounding Solutions each received five years. The announcement lists a further four defendants, including two physicians, whose sentencing was set for May 12, 2023; this page does not state their sentences because the source does not.
The caveat
All nine defendants named here have been sentenced, so this is a resolved criminal case, not an allegation. The “$126 million” figure is the Justice Department’s own headline for the scheme; the announcement does not break it down by payer, by pharmacy or by defendant, and this page does not either. The announcement does not say how many patients were affected. Sentences are the trial court’s; this page did not research appeals.
Sources
- Nine Defendants Sentenced in $126M Compounding Fraud Scheme. U.S. Department of Justice, Office of Public Affairs (copy hosted by the Department of Labor Office of Inspector General). Accessed 2026-11-03. Supports: All nine defendants' ages, roles and sentences, the OWCP and TRICARE victims, the reimbursement-driven choice of compounds, the kickbacks to recruiters and physicians, the drugs mailed to patients who often never wanted them, and the four defendants awaiting sentencing.