Two top leaders from San Francisco digital health startup Done Global were arrested and charged by federal authorities in connection with an alleged $100 million fraud scheme to illegally distribute Adderall and other stimulants over the internet.
Authorities arrested Ruthia He, the company’s founder and chief executive, as well as David Brody, its clinical president, on charges including conspiracy to distribute controlled substances, distribution of controlled substances, conspiracy to commit health care fraud, and obstruction of justice.
Their scheme allegedly helped lead to the overdose deaths of multiple Done customers. If convicted of the two drug distribution charges, each executive faces a maximum penalty of 20 years in prison.
“As alleged, these defendants exploited the Covid-19 pandemic to develop and carry out a $100 million scheme to defraud taxpayers and provide easy access to Adderall and other stimulants for no legitimate medical purpose,” Attorney General Merrick B. Garland said in a statement.
According to the indictment filed Wednesday, federal prosecutors allege that He and Brody devised a scheme where, for a monthly subscription fee, customers were given access to Adderall, Vynase and Ritalin, among other stimulants. With limited guardrails to prevent improper prescriptions, prosecutors allege that Done provided access to 40 million pills this way.
He and Brody are charged with conspiracy to distribute controlled substances, distribution of controlled substances, conspiracy to commit health care fraud, and obstruction of justice.
Prosecutors say He and Brody limited information about patients to Done prescribers, instructed them to prescribe stimulants even if members didn’t qualify, and mandated that initial encounters with members be kept under 30 minutes.
In some cases, prescribers wrote prescriptions without any video or audio communication with members, and were paid solely based on the volume of patients they prescribed medication to, according to the federal indictment.
“Prescribers were able to obtain lucrative pay for minimal work, sometimes hundreds of thousands of dollars a year in exchange for writing prescriptions for Adderall and other stimulants without much, if any, in-person or audio-visual telemedicine consultation with the Done members,” prosecutors wrote.
Officials say that the duo took advantage of Covid-era rules that allowed for the prescription of medication via telemedicine without an in-person medical evaluation.
To maximize profits, prosecutors say the executives launched an auto-refill feature and limited payments to medical professionals for follow-up care to discourage further visits.
Even after being made aware that Done members had overdosed and died from the use of stimulants, federal officials allege that He and Brody continued with their illegal activity.
Prosecutors also charged the two executives with improperly billing Medicare, Medicaid and commercial insurers more than $14 million and obstructing justice by deleting documents and communications and using encrypted messaging programs to limit scrutiny of their actions.
He and Brody are accused of spending tens of millions on “deceptive social media practices” and making false claims that Done was able to diagnose ADHD more quickly than other clinics because it was able to screen out those unlikely to have ADHD.
Done was founded in 2019 with the stated goal of providing easy-to-access treatment of ADHD via telehealth. The startup’s investors include Craft Ventures, where David Sacks is co-founder and partner, former Facebook executive Dave Morin’s Offline Ventures, and F7 Ventures, according to Pitchbook. All three did not immediately respond to requests for comment.
The company’s website says it offers “professional mental health care made easy,” with an initial online assessment and an appointment with a licensed clinician the same or the next day. It says patients can receive 24/7 care and “worry-free refills.”
“These charges are the Justice Department’s first criminal drug distribution prosecutions related to telemedicine prescribing through a digital health company. As these charges make clear, corporate executives who put profit over the health and safety of patients—including by using technological innovation—will be held to account,” principal deputy assistant Attorney General Nicole Argentieri, said in a statement.