April 23 (UPI) -- Federal prosecutors have indicted a wholesale drug distributor and two former executives on criminal conspiracy and fraud charges, in the first federal case related to the U.S. opioid crisis.
The U.S. Attorney of Southern District of New York said a grand jury indicted Rochester Drug Co-Operative, former CEO Laurence Doud III and former compliance chief William Pietruszewski on charges of narcotics conspiracy and conspiracy to defraud the United States. The company also faces a civil charge of failure to file suspicious order reports.
The company supplied large amounts of opioids to patients without a medical need, and company officials knew drugs including oxycodone and fetanyl were being sold and used illicitly, prosecutors said. Doud is accused of distributing tens of millions of oxycodone, fentanyl, and other opioid tablets without a legitimate need for them, its compliance department found.
U.S. Attorney Geoffrey S. Berman said RDC had admitted misconduct and that Doud is in custody. He was set to appear in court later Tuesday afternoon. Pietruszewski pleaded guilty to charges last Friday.
"As Doud is aware, this country is in the midst of prescription overdoes epidemic," Berman said. "This epidemic has been driven by greed."
"This prosecution is the first of its kind: Executives of a pharmaceutical distributor and the distributor itself have been charged with drug trafficking, trafficking the same drugs that are fueling the opioid epidemic that is ravaging this country," he added. "Our Office will do everything in its power to combat this epidemic, from street-level dealers to the executives who illegally distribute drugs from their boardrooms."
Berman said the company agreed to accept responsibility, pay a $20 million penalty, reform its compliance program and submit to supervision. Prosecutors said RDC is one of the 10 largest pharmaceutical distributors in the United States and has more than 1,300 pharmacy clients.
Between 2012 and 2016, opioid distribution increased dramatically despite thousands of "red flags," as "RDC prioritized sales over compliance," Berman said, adding that RDC got away with crimes by lying and failing to report suspicious orders.
"Why did they do it? The answer is greed," he said, noting that company drug sales grew to $1.2 billion.
Drug Enforcement Administration Special Agent in Charge Ray Donovan said the indictment is "a pivotal moment" in the fight against the opioid crisis.
"Today's charges should send shock waves throughout the pharmaceutical industry reminding them of their role as gatekeepers of prescription medication," he said.