Georgetown Resident Ordered To Halt Medical Devices Scheme

WILLIAMSON COUNTY, TX — The Texas State Securities Board entered an order finding a Georgetown resident engaged in an illegal and fraudulent offering of investments tied to medical devices, regulators announced on Monday.

The order also found Randall “Randy” Johnson, engaged in a scheme to obstruct the investigation of the Enforcement Division and its effort to protect the investing public, according to an advisory from the regulatory agency. The order was entered after the case was litigated at the State Office of Administrative Hearings, officials added.

The order names Johnson and his businesses, Recovery Management International and Advanced Wellness Services, LLC, DBA WellnessTech HealthTM. Advanced Wellness was billed as the “exclusive distributor” of medical devices referred to as WellnessTech Systems, officials said. Advanced Wellness and Johnson touted WellnessTech Systems by claiming they are “the most advanced early screening system for use by Primary Care physicians,” according to the advisory.

The WellnessTech Systems purportedly permitted physicians to test patients of critical risk factors in a “10-minute, non-invasive test,” officials noted. Johnson claimed physicians would test patients for these critical risk factors during annual appointments, according to the advisory.

Regulators said Advanced Wellness and Johnson began offering investments in the WellnessTech Systems to Texas residents who were afforded the opportunity to invest $50,000 in the scheme. Regulators said Johnson claimed to investors the WellnessTech Systems would be placed with physicians, who would be trained to use the products to test their patients. Regulators noted their investors were passive and not responsible for managing or servicing the WellnessTech Systems, or billing for their use.

"The pitch was lucrative," regulators noted. "Johnson promised investors a return of 20 percent of their investment per year over a term of two years, paid on a monthly basis. He also promised Advanced Wellness would pay $5.00 to investors whenever a physician used the WellnessTech System to test a patient, and predicted the aggregate payment of these returns could yield an additional profit of $15,000 to $18,000 per year over a term of five years."

The Enforcement Division began investigating the scheme and determined that Advanced Wellness and Johnson were engaging in an illegal securities offering, regulators said, adding Enforcement Division officials directed Johnson to cease and desist offering the investment. Johnson thereafter promised to cease and desist offering the investments, according to officials.

"His promise was a sham," regulators said. "On the same day Respondent Johnson met with the Enforcement Division, Advanced Wellness and Johnson again illegally offered investments in the WellnessTech System." That's when Commissioner Travis J. Iles then entered an emergency cease and desist order to stop the scheme.

"Johnson concealed significant information from potential investors, including information relating to the considerable risks associated with the WellnessTech Systems and the ability of Respondent Advanced Wellness to actually satisfy its promised payment of returns," regulators said. Division Director Joe Rotunda and attorney Jeramy Heintz represented the Enforcement Division.