Feds Bust 18 For Running Allegedly Illegal Online Drug Network

A 313-count indictment shows that the alleged fraudsters sold drugs to people without prescriptions and sometimes without any need for them.

Sharon Gaudin, Contributor

August 3, 2007

3 Min Read

Eighteen people, including three physicians and two pharmacists, were indicted on racketeering and related charges for allegedly running an illegal online drug distribution network.

The business, named Affpower, generated more than $126 million in gross revenue from the illegal sale of prescription pharmaceuticals, according to a release from the U.S. Attorney's Office in the Southern District of California. The 313-count indictment, which was returned by a federal grand jury in San Diego on July 27 and unsealed Thursday, charged that the 18 ran their operation in the United States and abroad.

"The fraudulent and illegal sale of prescription drugs over the Internet poses a serious threat to the health of Americans who turn to the Internet in their need for pharmaceuticals," said Assistant Attorney General Alice S. Fisher of the Criminal Division, in a written statement. "The defendants allegedly exploited that need and provided little or no doctor review while prescribing possibly dangerous drugs, even as they generated millions of dollars in revenues for themselves. Fortunately, U.S. law enforcement agencies cooperated to target Affpower's online operations and the ill-gotten gains they tried to hide."

In a similar case, Christopher William Smith, 27, who ran Xpress Pharmacy, was sentenced in U.S. District Court in Minnesota this week to 30 years in prison for illegally selling medications online. Smith was convicted last November on nine charges of conspiracy, illegal distribution of drugs, money laundering, and operating a "continuing criminal enterprise."

According to the Department of Justice, the defendants in the Affpower case included three physicians, two pharmacists, one pharmacy operator, a credit card processor and eight Web site operators. From August 2004 through June 2006, Affpower allegedly received more than 1 million Internet orders for controlled and non-controlled prescription medications from customers in all 50 states. The business generated in excess of $126 million in gross revenue, the release noted.

The defendants received various charges, including racketeering and conspiracy to commit racketeering; distribution and dispensing of controlled substances and conspiracy to distribute and dispense controlled substances; mail and wire fraud, and conspiracy to commit mail and wire fraud; conspiracy to commit money laundering; and conspiracy to dispense and dispensing of misbranded drugs with the intent to defraud and mislead.

"This case is another example of how some people will prey on an unsuspecting public by illegally and unscrupulously selling medications on the Internet without regard to the health or safety of the public," said director Terry Vermillion of the Food and Drug Administration Office of Criminal Investigations, in a written statement. "By pretending to have an honest medical review of their prescriptions, the public was duped into believing that the defendants had their best interests at heart, when in reality their motivation was money."

According to the indictment, the Affpower enterprise sold controlled and non-controlled prescription drugs through many different Web sites to customers who lacked prescriptions for the drugs. Affpower allegedly paid licensed doctors from different states and Puerto Rico to "haphazardly review" answers to health questionnaires done over the Internet, and issue prescriptions on the basis of those answers. The indictment also alleges that Affpower doctors conducted no physical or mental examinations before issuing prescriptions, had no contact with customers, and had no physician-patient relationship with any customer. In some cases, prosecutors alleged that Affpower doctors issued prescriptions for medications even when a customer's answers to the health questionnaire suggested that the ordered drug could pose a danger to their health.

Prosecutors also reported that in an alleged attempt to evade U.S. law enforcement, Affpower executives located the company's administrative headquarters in Costa Rica, and its computer servers in Cyprus. They also 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.

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