By Robert David Malove, Esquire
Exclusive to the Health Care Fraud Blog
SAN DIEGO (July 15) In San Diego, on the 44th day of a trial highly touted “Affpower enterprise” internet pharmacy prosecution by the Justice Department, seven defendants learned they were convicted of a range of charges including racketeering. Ten minutes later, after the jury was polled, a juror stated she was coerced into her verdict. A mistrial was declared later, the government indicated it would be trying the defendants again and a briefing schedule was set for motions to dismiss indictment.
The indictment alleged that three U.S. physicians and two pharmacists as well as 11 others, including a pharmacy operator, two recruiters, a credit card processor and eight affiliate web site operators participated in the Affpower distribution network. The 313-count indictment alleged the operation handled more than 1 million online orders and grossed approximately $126 million over a two-year period.
In addition to the doctors and the pharmacists, the indictment named Affpower, located in Costa Rica with computer servers in Cyprus . Affpower further relied on foreign-based agencies, including RX Payments Ltd. of Tel-Aviv , Israel , to process credit-card transactions, and used various bank accounts and an accounting firm in Nicosia , Cyprus , to distribute proceeds of the enterprise.
The defendants were charged with various racketeering and conspiracy to commit racketeering counts. The charges also included the distribution and dispensing of controlled substances, mail and wire fraud, conspiracy to commit money laundering and conspiracy to dispense misbranded drugs with the intent to defraud and mislead.
If convicted, the defendants face a maximum 20 years in prison for RICO and RICO conspiracy; 20 years for mail and wire fraud; 20 years for conspiracy to commit mail and wire fraud; five years for conspiracy to distribute and dispense controlled substances; 20 years for money laundering; five years for conspiracy to violate the Federal Food, Drug, and Cosmetic Act (FDCA), and three years for violating the FDCA. The defendants also face millions of dollars in fines.”
The trial was unusual in several respects. This was one of the first trials charging so called “affiliates,” individuals who are freelance internet advertisers for internet pharmacy operations and are not directly associated with the operation. Secondly, Federal prosecutions often work in a bottom up approach. Lower level participants are generally arrested first, plead guilty and assist the government in the prosecution of those higher in the organization. Here, the case proceeded in a top down approach, the leader of the operation was arrested and assisted in recording his associates and then testified against them. Those that went to trial included 2 pharmacists and five affiliates.
The is the second internet pharmacy trial in a year that was mistried after several months. Previously, Southern District of Florida Case U.S. v. Hernandez, et al, resulted in a mistrial after it was learned jurors were doing research on the case and defendants outside the courtroom.
USA v. Heredia et al Southern District of California case number 3:07-cr-02016-IEG-16
DE 758 -Minute Entry for proceedings held before Judge Irma E. Gonzalez: Jury Trial as to Dolores Lovin, Mary Aronson, Richard Edward Koch, Philip James Bidwell, Jeffrey A. Light, Tracy ONeal Tyler, Peter P. Bragansa held on 7/10/2009. Day of Trial 44TH. Jury returned at 11:10 AM. Verdicts were read. Jury was polled. Jury Hung and Court declares mistrial.
DE 764 -Minute Entry for proceedings held before Judge Irma E. Gonzalez: Status Hearing re jury trial as to Dolores Lovin, Mary Aronson, Richard Edward Koch, Philip James Bidwell, Jeffrey A. Light, Tracy ONeal Tyler, Peter P. Bragansa held on 7/15/2009. Government will proceed to trial. Rule 29 Motion Hearing set for 10/15/2009 02:00 PM in Courtroom 01 before Judge Irma E. Gonzalez. Motions due 9/17/2009, Government Response due 10/2/2009. Jury Trial set for 2/2/2010 09:00 AM in Courtroom 01 before Judge Irma E. Gonzalez. Excludable(s) started as to Dolores Lovin, Mary Aronson, Richard Edward Koch, Philip James Bidwell, Jeffrey A. Light, Tracy ONeal Tyler, Peter P. Bragansa: Pursuant 3161(h) Court grants government oral motion to declare the case complex.
By Robert David Malove, Esquire