Originally indicted in late 2015, the owner of a Utah-based wholesale drug distribution company pled guilty to selling more than $100 million in black market prescription drugs. Randy Crowell, the owner and operator of Green Valley Medical Distributors LLC (Green Valley), faces up to 10 years in federal prison for his role in the scheme. Crowell has already agreed to forfeit $13 million in illegal profits.
As described in the indictment filed in the U.S. District Court for the Southern District of New York, Crowell, along with up to 50 others involved in the nationwide scheme, defrauded private insurers as well as Medicaid and other government programs out of hundreds of millions of dollars by purchasing contraband drugs and reselling them to pharmacies across the country as legally-sourced pharmaceuticals.
The scheme operated by cutting into and displacing the legitimate flow of pharmaceuticals from manufacturer to pharmacy. Crowell and his co-conspirators, rather than purchasing medications from manufacturers or legitimate distributors at market prices, acquired drugs via an underground, and lucrative, black market in prescription drugs.
Scheme participants targeted both the cheapest possible source of supply for these drugs and some of the most expensive medications, particularly drugs for the treatment of HIV and AIDS-related diseases, in order to maximize profits. According to the indictment, Crowell targeted “Medicaid patients and other individuals who received…prescription drugs on a monthly basis for little or no cost, and who were then willing to sell their medicines rather than taking them as prescribed.” The patients sold their drugs to scheme “Collectors,” who worked street corners and bodegas and paid in cash. Collectors then sold the second-hand drugs (often after “cleaning” off the labels with lighter fluid and other hazardous chemicals) to scheme “Aggregators” who “bought dozens, and sometimes hundreds, of bottles at a time from multiple collectors before selling them to higher-level scheme participants with direct access to legitimate distribution channels, including corrupt wholesale companies” like Green Valley.
Between 2010, when Crowell opened Green Valley, and July 2012, Green Valley had no legitimate sources of supply—all of the drugs ultimately distributed to pharmacies were “sourced” by Aggregators from the black market. Per the indictment, the drugs often arrived at Green Valley packaged in unsealed, unsecure cardboard boxes. “On some occasions, bottles of medication arrived at [Green Valley] with the initial patient labels still affixed to them. On other occasions, bottles arrived having already been opened, or containing what appeared to be the wrong medication.”
After repackaging, the black market drugs were then sold back to pharmacies across the United States, with their true provenance concealed through fraudulent records.
Crowell’s sentencing is scheduled for May 11, 2017. Though Crowell’s sentencing memorandum has asked for leniency and less than five years in prison, federal prosecutors are pushing for a “substantial sentence,” citing Crowell’s leadership role, the dangerous nature of the activity for those on the receiving end of the black market drugs, and the lengthy sentences already handed down to other co-conspirators.
The FisherBroyles Pharmacy and Health Care Law team is pleased to keep you updated on events of interest to those in the healthcare and pharmaceutical industries. Questions may be directed to any of the following attorneys:
Brian E. Dickerson
Nicole Hughes Waid