Indictments handed down for $393M prescription drug diversion scheme

Over 30 people face criminal charges and indictments for their alleged roles in a massive prescription drug diversion scheme that the Justice Department claims involved racketeering, bank fraud, money laundering, and murder-for-hire. The announcement came after indictments were handed down in in the Southern District of Ohio and various arrests were made in the Northern District of California.

According to the indictment, through a complex scheme lasting from 2007-2014, David Miller and his company, Minnesota Independent Cooperative (MIC), paid Artur Stepanyan and Mihran Stepanyan over $160 million for prescription drugs from illegal, unlicensed sources. The defendants used a variety of companies to illegally obtain the drugs, including Panda Capital Group, Red Rock Capital Group, Trans Atlantic Capital Group and GC National Wholesale. MIC then resold the drugs to various wholesalers and retail pharmacies throughout the country. As part of the alleged scheme, MIC and Miller resold $393 million worth of prescription drugs. The defendants were indicted on various counts, including for conspiracy to engage in wholesale distribution of prescription drugs without a license,( 21 U.S.C. §§ 331(t); 353(e)(2)(A); 333(b)(1)(D)); 18 U.S.C. § 371; and for making false statements to the FDA (18 U.S.C.§ 1001).

In order to hide the sources of the illegally obtained prescription drugs, Miller and MIC allegedly falsified various drug pedigrees documents, which are required to show the source of prescription drugs. Miller and MIC then falsely listed a company in Puerto Rico, B & Y Wholesale, as the source of the drugs and claimed that the company was an authorized drug distributor. In exchange for using its name, B & Y Wholesale received a commission from Miller and MIC. The co-owner of B & Y Wholesale, Yusef Yassin Gomez, and other illegal drug suppliers previously pleaded guild to conspiracy to commit mail and wire fraud for their participation in the scheme.

According to Principal Deputy Assistant Attorney General Benjamin C. Mizer, “Prescription drug diversion schemes like the one charged in this indictment undermine that supply chain and increase the risk that counterfeit, adulterated, misbranded, sub-potent or expired drugs will be sold to patients and consumers.”

Miller and the Stepanyans also face charges in Northern California, according to another announcement from the Justice Department. They are charged with federal racketeering, identity theft conspiracy, access device fraud conspiracy, mail, wire, and bank fraud conspiracy, money laundering conspiracy, as well as conspiracy to distribute prescription drugs without a wholesale license. Additionally, 32 people were also arrested and charged with various crimes including racketeering, conspiracy to use a facility of interstate commerce to commit murder-for-hire and conspiracy to distribute unlicensed wholesale drugs.

According to the Justice Department, another key figure involved in the scheme was Ara Karapedyan, who was also indicted and is alleged to have supplied the Stepanyans with the illegally prescription drugs. Karapedyan is also charged with fraudulently distributing unlicensed drugs such as Abilify®, Liboderm®, Cymbalta® and Namenda®, and the HIV drugs, Atripla®, Truvada® and Isentress®, and Gleevec®, which is a cancer drug. Karapedyan and other defendants are alleged to have also engaged in bank, check fraud, and money laundering. He is also charged along with another defendant for a murder-for-hire conspiracy.

Another defendant, Alexander Soliman, is alleged to have been another principal customer in the scheme. Soliman is charged with having his companies, Apex Pharmaceuticals and Maroon Pharma, purchase illegally obtained over $20 million in prescription drugs and resell them.