Free Phone Sign-Ups Fed a $51 Million HIV Drug Billing Scheme, Prosecutors Say: Jacksonville Nonprofit Head Faces a 31-Count Federal Indictment

JACKSONVILLE, Fla. - Federal prosecutors say people who stopped at sign-up tables at Jacksonville grocery stores to sign up for a free government cellphone ended up as "patients" in a scheme that billed Medicare, Medicaid and private insurers for about $51 million in HIV medication they never asked for. A 31-count federal indictment dated Oct. 29 charges Charlie Bernard Griffin III, president of the Jacksonville nonprofit First Coast Community Development Inc., and accountant Ethelbert Chinenye Nwanegbo, according to the Florida Times-Union. The charges are accusations, and both men are presumed innocent unless proven guilty in court.

The case drew new attention this week as local reporting laid out how the alleged scheme reached residents through community outreach. News4JAX reported Nov. 5 that the group used outreach events, including missions serving people in need, to collect personal information. Two other people tied to the case have already pleaded guilty, court records cited by the Times-Union show.

How prosecutors say it worked

Marketers set up at grocery stores and other high-traffic spots and advertised free government cellphone service, collecting personal and insurance information from the people who signed up, according to the Times-Union's account of the court filings. Prescriptions for HIV prevention drugs were then written in those people's names. The pharmacy at First Coast Community Development billed Medicare and Medicaid on more than 20,000 claims, the paper reported.

The indictment says the nonprofit received $51,125,806 in reimbursements from Medicare, Medicaid and private insurers, the Times-Union reported. Plea documents state that the people listed as patients were not seeking HIV medicine. "They were basically victims of a fraud for which they had no benefit," former federal prosecutor Curtis Fallgatter, who is not involved in the case, told News4JAX.

Who is charged, and who has pleaded guilty

Griffin faces 21 counts tied to financial transactions ranging from $25,000 to $3.5 million and is accused of receiving about $14.2 million from the prescription proceeds, the Times-Union reported. His attorney, David Barksdale, declined to comment to the paper. Prosecutors are seeking forfeiture of 15 bank accounts, the nonprofit's headquarters at 525 N. Newnan St. downtown, and houses in Arlington and North Jacksonville, according to the report.

What the guilty pleas describe

When Gholston's plea was announced in March, the U.S. Attorney's Office for the Middle District of Florida said his marketing company set up tents and tables in low-income Jacksonville neighborhoods and offered free government phones in exchange for personal and insurance information, according to MedBound Times' account of the announcement. The pharmacy paid his company $200 for each person referred, but only when Medicare or Medicaid paid the claim, and the company in turn paid its street marketers about $50 per paid referral. Each approved "patient" generated about $4,000 a month in reimbursements, the office said.

Gholston admitted conspiring to receive illegal kickbacks, a charge that carries up to five years in federal prison, and agreed to forfeit about $2.27 million, the report said. His plea covered about 20,316 claims and roughly $24.2 million in losses, $11.68 million to Medicare and $12.54 million to Medicaid. Jones, the nurse, admitted writing prescriptions for people she never examined or met, the Times-Union reported, and she received about $422,000. The FBI and the U.S. Department of Health and Human Services Office of Inspector General investigated, according to the March announcement.

The nonprofit was licensed as a pharmacy until November 2025, according to the Times-Union. No trial date was listed in the reporting reviewed by Jax Times. Gholston's lawyer has asked to delay his sentencing until his cooperation in the related case is complete, the paper reported.

The real free phone program, and how to protect yourself

There is a legitimate federal phone discount, which is part of what makes this kind of pitch believable. The Lifeline program, run by the Universal Service Administrative Co. under the Federal Communications Commission, takes up to $9.25 a month off phone or internet service for households that qualify by income or through programs such as SNAP or Medicaid. Applications go through LifelineSupport.org or a participating phone company, and the program's help line is 800-234-9473.

Medicare advises beneficiaries to share their Medicare number or Social Security number only with their doctors and others who need it, and never to accept gifts in exchange for free medical care. It also recommends comparing each Medicare statement against your own calendar and setting up a Medicare.gov account to see claims sooner. If a prescription you never received shows up, that is a warning sign worth reporting.

• Medicare fraud: 1-800-MEDICARE (1-800-633-4227), or online through the HHS Office of Inspector General at oig.hhs.gov.
• Medicare drug plan or Advantage plan fraud: the I-MEDIC line, 1-877-772-3379.
• Florida Medicaid fraud: the Agency for Health Care Administration, 888-419-3456.
• Identity theft: IdentityTheft.gov.