MANHATTAN — Rochester Drug Cooperative had policies to report suspicious orders as opioid abuse ravaged the country. Quoting for jurors how the company's CEO complained about the cost of hiring compliance experts, however, the government said the painkiller epidemic was less concerning to Laurence Doud than his bottom line.
“It didn’t matter, in his words, if they were good or bad,” nor that the epidemic was costing people’s lives, Assistant U.S. Attorney Nicolas Roos said during his closing arguments Friday.
“What made Larry Doud ill,” Roos continued, “was losing money to compliance.”
Summations followed eight days of testimony in the trial of the first drug distributor executive to be charged with federal criminal drug trafficking. Prosecutors say Rochester Drug had policies in name only to catch red flags and report suspicious orders to the U.S. Drug Enforcement Administration.
“Plain and simple, RDC was providing false information to the government,” Roos said, referring to Doud's former company, which entered into a nonprosecution agreement when Doud was indicted and the company's former chief compliance officer, William Pietruszewski, pleaded guilty to related charges.
Wholesalers are required by the DEA to look out for red flags that can include one or two doctors writing a significant amount of prescriptions; a pharmacy dispensing higher than normal amounts or proportions of opioids; pharmacy customers paying in cash; and pharmacies dispensing large amounts of high-dose opioids.
When Doud was at the helm of RDC, Roos said, thousands of suspicious orders were allowed to slide, contradicting the compliance procedures that Rochester Drug had provided to authorities. Doud, 78, is accused of telling employees to ignore warning signs that pharmacy customers were working with dirty doctors and moving oxycodone and fentanyl out of the health system and onto the streets.
If Doud is convicted of the narcotics conspiracy count against him, he faces a minimum 10-year prison sentence. The charge of conspiracy to defraud the United States carries a maximum sentence of five years.
Doud's defense meanwhile has focused on the stature of Rochester Drug’s customers: small, independent pharmacies rather than big chains. Former employees who took the stand called it a tenet of the company’s business model to work with customers on compliance, rather than report them to the DEA.
While the government says that practice demonstrates Doud's willful disregard for the law, his defense says it speaks to his good faith.
“What was done here was for business reasons to keep customers,” argued attorney Robert Gottlieb. “It had nothing to do with intending, or wanting, or even thinking of committing any other crime — whether it be diverting or defrauding the United States of America.”
In the early 2010s, as the opioid industry fell overall, Rochester Drug’s opioid business boomed, according to court testimony. Defense attorneys underscored that Doud’s bonuses were not directly tied to opioid sales. Prosecutors, on the other hand, said having lax standards for narcotics sales still boosted the bottom line, since it helped lock in customers who then bought the rest of their medications and pharmacy goods from the full-service wholesale company — Tylenol, Band-Aids and the like.
That was the case for Michael Paulsen, a Staten Island pharmacy owner who said he bought all his supplies from Rochester Drug, and then sold oxycodone, fentanyl and other controlled substances in backdoor drug deals. He later pleaded guilty and was sentenced to six and a half years in prison.
Internal emails showed that, toward the end of 2016, Rochester Drug compliance employees flagged that more than 20% of Paulsen’s patients were paying cash, and he was working with questionable doctors.
Rochester Drug didn’t cut off Paulsen’s supply over those red flags. It wasn’t until after Doud left the company in early 2017 that the compliance team cracked down, and Paulsen began to have to fudge the numbers in order to keep his supply up.
“Paulsen didn’t need to lie or doctor his dispensing reports while the defendant was at the company,” Roos said Monday. “They were just willing to sell him pills no matter what.”
Gottlieb dismissed Paulsen as a “lying, thieving criminal,” and told jurors not to believe a word of his testimony.
The defense attorney went on to sharply criticize the government for eliciting testimony from a woman who testified about her own struggle with addiction, and filled illicit prescriptions at another pharmacy supplied by Doud’s company.
“She had to bare her soul in her questioning and to publicly share for everyone her personal story of addiction and pain,” Gottleib said of witness Barbara Castro, who testified about spending entire nights in a waiting room and paying a dirty doctor in cash to get an oxycodone prescription.
Castro knew nothing about Doud or his company, yet prosecutors put her through “public humiliation,” Gottlieb said.
“The government is hoping that you will somehow use her pained testimony to feel the need to convict, and to hold somebody responsible,” he argued, “despite the absence of any evidence to even justify holding Larry Doud responsible for what has happened to her.”
Employees called to the stand, who said they followed Doud’s direction and allowed shady orders to go through, still denied that they had intended to break the law and divert controlled substances — a point Gottlieb said was critical to understanding their testimony as it relates to the conspiracy charges against his client.
“You cannot join a conspiracy,” he said, “without knowing the specific purpose of a conspiracy.”
Jurors will likely begin deliberating on Tuesday following the government’s rebuttal and jury charge.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.