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Monday, July 15, 2024 | Back issues
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Pharma exec is first in US to be found guilty of drug conspiracy

An attorney for former CEO Laurence Doud told Courthouse News he's confident the conviction will be overturned.

MANHATTAN (CN) — A jury returned a guilty verdict Wednesday in the first criminal trial of a drug distributor on federal charges of drug trafficking and fraud. 

Masked per the court's Covid-19 safety protocols, the 78-year-old Doud took his place at the defense table after quickly lowering his face covering to kiss his wife, who was present during the two-week trial. 

Jurors deliberated for 11 hours beginning Tuesday before coming to their decision. In addition to finding him guilty of drug trafficking, the top count, the jury found that more than 400 grams of fentanyl was in play.

Doud embraced his lawyers after the verdict was read. Outside the courtroom, defense attorney Robert Gottlieb indicated that his team is preparing to appeal the conviction. “This verdict is a monumental travesty of justice. This battle has just begun,” Gottlieb said. “Ultimately, Mr. Doud will prevail, justice will be done, and this conviction will be overturned.” 

The case hinged on whether Doud committed crimes in directing employees to keep shipping opioids like oxycodone and fentanyl to pharmacies that placed suspicious orders, signaling they were diverting the painkillers from the legitimate health system to the streets. 

Also was the matter of whether he defrauded the U.S. Drug Enforcement Administration by flouting his own in-house compliance rules. 

Doud faces a minimum of 10 years in prison for drug trafficking, while the charge of conspiracy to defraud the United States has a maximum sentence of five years. Sentencing is set for June. 

Prosecutors explained during trial that wholesalers like Doud’s company, Rochester Drug Cooperative, are supposed to report suspicious orders to the DEA for further investigation. 

Red flags suggesting that pharmacies are dealing dirty include dispensing higher than normal amounts, proportions or doses of opioids, or reporting more than roughly 10% of customers paying in cash. 

Emails showed that Rochester's practice with Doud at the helm was to “work with” customers on compliance issues, rather than report them. 

Doud’s attorneys argued that it came down to a business decision. Prosecutors said it was criminal and deceptive, driven by greed, and helped to fuel the deadly opioid epidemic. 

Opioids have contributed to a significant — and increasing — percentage of the nearly 1 million deaths from drug overdoses between 1999 and 2020, according to data from the Centers for Disease Control and Prevention. 

Illustrating the devastating effects opioid addiction can have on people’s lives, prosecutors last week called Barbara Castro, who filled illicit prescriptions at a pharmacy that bought its drugs from Doud’s company. 

The owner of another Rochester Drug customer, Michael Paulsen, testified that he dealt fentanyl and oxycodone out of his Staten Island business, and even sold the medications without a prescription. 

Questionable doctors working with Paulsen, as well as the 20% of his patients paying cashm raised eyebrows among Doud’s compliance team, according to emails uncovered by the prosecution. The pharmacy wasn’t cut off from buying controlled substances, however until after Doud stepped down as CEO. 

Arguing that it was bad actors like Paulsen and the doctors running pill mills that are to blame for the pain and lives lost to the opioid epidemic  — not distributors like Doud — defense attorneys noted that their client hired a compliance team and at times hired former DEA agents to vet his procedures. 

Compliance employees testified, however, that Doud defied policies by telling them to send out suspicious orders. When big pharmacy clients reached the limit of controlled substance they could order, Doud said to increase the cap, and he rushed the process for onboarding new customers, the former compliance agents recalled. 

“I have no idea if this is a good guy or a bad guy, but I do know in this case it is taking too long, no matter what the problem is,” Doud wrote of one pharmacy associate, according to court testimony from William Pietruszewski, Rochester Drug’s compliance officer who pleaded guilty to a narcotics conspiracy and defrauding the government.

The defense ultimately did not prevail with their argument that Doud lacked co-conspirators, since Pietruszewski and others said they didn’t want to commit crimes despite admitting to doing so. 

“You can’t conspire with a ghost, you can’t conspire with air, you can’t conspire with yourself,” Gottlieb said during closing arguments. “Who then, government, are the co-conspirators in this case?” 

The jury’s verdict came after several notes requesting evidence exhibits related to sales, logged orders of interest and the amount of fentanyl sold. Parties were still convened in front of U.S. District Judge George Daniels when jurors sent notice that they had reached a verdict. 

U.S. Attorney for the Southern District of New York Damian Williams pointed later Wednesday to the unprecedented nature of Doud’s criminal charges.

“In a first of its kind prosecution, Laurence Doud was held responsible for contributing to the opioid epidemic in the country by conspiring with others in his company to ship massive amounts of dangerous and highly-addictive oxycodone and fentanyl to pharmacies that he knew were illegally dispensing those controlled substances to drug dealers and addicts,” Williams said in a statement. “The Southern District of New York will continue to bring to justice those responsible for the opioid epidemic – whether they are street level dealers or boardroom executives.”

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Categories / Business, Criminal, Health, Trials

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