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VOL. 7 | NO. 34 | Saturday, August 16, 2014

FedEx Indicted on New Charges Over Drug Shipments

By Amos Maki

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Federal prosecutors say several addicts died after receiving shipments of illegal prescription drugs delivered by FedEx.

Those deaths were included in a new indictment returned against the Memphis-based company late Thursday, Aug. 14, by a federal grand jury in San Francisco.

Aug. 14 indictment against FedEx

Meanwhile, FedEx officials said they have asked federal officials for a list of all internet pharmacies engaged in illegal activity to end shipping for those companies immediately.

"We have asked for a list, and they have sent us indictments," FedEx Senior Vice President Patrick Fitzgerald said in a written statement issued by the company Friday.

FedEx is facing additional charges in the ongoing federal case that accuses the company of knowingly delivering drugs for illegal online pharmacies. FedEx denies any wrongdoing.

(Daily News File/Kyle Kurlick)

"FedEx is innocent of these and all of the charges filed in this matter," Fitzgerald said specifically of the new allegations. "We will plead not guilty. We will continue to defend against this attack on the integrity of FedEx."

The indictment against FedEx also added money laundering to a list of 15 existing charges the company is facing over allegations it knowingly and systematically shipped prescription drugs from illegal online pharmacies.

According to the new indictment, FedEx is not being charged with the deaths but is facing fresh charges that it was involved in money laundering because it received payments from illegal online pharmacies.

The indictment alleges that between 2002 and 2010 FedEx conspired with online pharmacy operators to keep the flow of illegal drugs and cash going, saying the shipping giant knew that the drugs – and the proceeds from the drugs – were illegal but created systems to allow the trade to continue anyway.

Fitzgerald's rebuttal specifically addressed the payments for the services that are the basis for the new charges.

"FedEx, of course, requires customers to pay for our services," he said. "The collect on delivery service referenced in the indictment is available to all of our millions of FedEx Express customers."

If convicted of the new money laundering charges, FedEx could have to forfeit property, such as trucks or planes, used in connection with the delivery of the drugs, according to the indictment.

The new indictment claims high-ranking FedEx executives were aware that recipients of the drugs shipped by FedEx died or caused the death of others. From August 2002 to March 2009, prosecutors say five people died as a result of the drug shipments.

“Many online pharmacy customers have been closed by the federal government due to fraud and illegal sales of controlled pharmaceutical products,” FedEx’s senior manager of revenue operations wrote in a memo to the company’s vice president of worldwide revenue operations. “In a recent case, a teenager died after being illegally supplied with a controlled drug that was delivered by FedEx.”

In the original indictment handed down in July, prosecutors alleged FedEx knew for a decade that illegal Web-based pharmacies used its services and allowed shipments to continue, despite warnings from law enforcement agencies and lawmakers.

The charges against FedEx involve deliveries between 2000 and 2010 from pharmacies that required their customers only to fill out an online form, without any need for a doctor’s examination or prescription. 

Fitzgerald said the company is ready to work toward a solution with law enforcement, "but the responsibility to monitor, regulate or police the activities of doctors and pharmacists lies with licensing, regulatory and law enforcement authorities, not shipping companies."

The allegations against FedEx highlight the government’s long-running efforts to crack down on the flow of illegal prescription drugs.

The indictment against FedEx was the result of a multi-year investigation by the DEA and prosecutors in Northern California into the black market for prescription medications.

Last year, UPS reached an agreement with the U.S. Justice Department to forfeit $40 million in sales for serving online pharmacies. In 2011, Google Inc. agreed to pay $500 million to settle allegations by the Justice Department that it profited from ads purchased by online pharmacies that the search company knew were improperly selling prescription drugs.

FedEx, which denies wrongdoing and has vowed to fight the charges, could face a fine of up to $1.6 billion, double the amount prosecutors allege the company earned from shipping the medications.

Reporter Bill Dries contributed to this article.

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