A federal investigation that culminated Tuesday morning with the raids of several East Tennessee pain clinics has turned into what could possibly be the area's most lucrative pill mill operation that authorities say netted its mastermind almost $17.5 million during the past four years.
At the center of the investigation is Sylvia Hofstetter, who is facing federal charges that she ran at least four area pain clinics at various times from April 2011 through last week.
Authorities raided her latest one Tuesday – East Knoxville Healthcare Services on Lovell Road – and another – Knoxville Pain Care on West Park Boulevard – that her partners operated.
In addition, authorities converged on Hofstetter's Falcon Pointe Drive home in West Knox County Tuesday where they seized a number of items.
She faces nine charges: drug trafficking conspiracy – specifically distributing the pain killer oxycodone – and conspiracy to commit money laundering; and seven money laundering charges that range from a $5,000 deposit into her bank account to a $101,700 payment used to help purchase her West Knox County house.
The federal indictment unsealed late Tuesday also says she spent money made from the pill mill operations on a $30,000 Lexus, which officials seized along with her Falcon Point Drive home, and $45,100 "for the purpose of gambling" at Harrah's Cherokee Casino in North Carolina.
A second federal indictment alleges that Stephanie Puckett, Shannon Hill, Patricia Newman, Michael Puckett, Christ Hill, and at least two others whose names have been redacted, made as much as $6 million from the Knoxville Pain Care operation from November 2012 through March 4 this year.
They also face drug trafficking and money laundering conspiracy charges.
If convicted as charged, each defendant faces up to 20 years in prison and a fine of up to $1M on the drug trafficking charge and up to another 20 years and a fine of up to $500,000 on the money laundering charges.
Hofstetter, and her partners appeared in U.S. District Court Tuesday where the charges against them were read.
Assistant U.S. Attorney Tracy Stone told WBIR 10News on Wednesday that he plans to unseal more documents, including a 117-page affidavit that's dedicated to an overall "drug problem" that impacts East Tennessee.
He said a number of the indictments are still sealed because authorities have not yet rounded up some suspects.
In the meantime, Hofstetter remainslocked up in the Blount County Jail until at least Friday when she goes before U.S. Magistrate Clifford Shirley for a detention hearing.
The others are also behind bars at the Knox County Jail, as well as the Blount County Jail, and also have bond hearings set for Friday.
More indictments are expected to be unsealed later this week.
A jury trial for Hofstetter was set Tuesday for May 19, but that will more than likely be rescheduled.
A release from the office of U.S. Attorney William Killian announced that the indictment is a result of an FBI High Intensity Drug Trafficking Area investigation.
