Judge Puzzled by Prosecution of FedEx

SAN FRANCISCO (CN) - Puzzled by the government's prosecution of FedEx for "promotional money laundering" and drug distribution, a federal judge Thursday ordered prosecutors to identify any similar cases in the past 10 years.

The United States filed criminal charges against FedEx and its subsidiaries in 2014, charging the global courier with conspiring with Internet pharmacies to deliver illicit prescription drugs.

It also charged FedEx with conspiracy to launder money, for demanding and accepting payment to ship drugs for dozens of online pharmacies and their customers, including known drug addicts.

FedEx's attorneys say the transactions do not meet the requirements under the law, as FedEx is merely the transfer agent between buyers and sellers. FedEx attorney Raphael Goldman said FedEx couldn't take the money drug buyers paid to the pharmacies and use it for its own purposes.

At a Wednesday hearing on FedEx's motion to dismiss, U.S. District Judge Charles Breyer asked whether prosecutors had ever brought simultaneous charges of promotional money laundering and drug distribution.

"Have you ever charged that before? I mean, this prosecution has a number of unusual what I guess I would call novel or first time advancement of legal theories," Breyer told Assistant U.S. Attorney Kristen Ault. "I've seen so many drug transactions in which people have sold drugs, received money, because that's generally what happens in a drug transaction, and then done something with the money, if they haven't been caught immediately. And generally what they do is they turn it over to the person who gave them the drugs in the first place, or some third party. Have you ever charged money promotional money laundering in any of those cases, or is this the first one?"

Ault said she didn't know.

Breyer continued: "Well, it's the first one I've ever seen. It may very well be the definition of promotional money laundering, but I've never seen it. It's contrary to my instinct."

In his Thursday order, Breyer said the government must file a submission noting the number of cases it has prosecuted in the past 10 years "that charged a defendant with both promotional money laundering and drug distribution in a situation where, as the government alleges here, the defendant simply transported drugs and sent payment for the drugs back to the defendant's co-conspirators."

The government has until April 29 to do so.

Follow @MariaDinzeo

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