Third Superseding Indictment
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
UNITED STATES OF AMERICA,
Plaintiff,
v.
1. CHRISTOPHER WILLIAM SMITH,
a/k/a "Robert Jonson,"
a/k/a "Chris Jonson,"
a/k/a "Bruce Jonson,"
a/k/a "Tony Spitalie,"
3. BRUCE JORDAN LIEBERMAN,
4. DANIEL SPIVEY ADKINS, and
5. DARRELL ARDEN GRIEPP,
a/k/a "Darrell Green,"
Defendants.
THIRD SUPERSEDING INDICTMENT
THE UNITED STATES GRAND JURY CHARGES THAT:
INTRODUCTION
At all times material to this Third Superseding Indictment:
1. Defendant Christopher William Smith was the owner and operator of Online Payment Solutions, Inc., a Minnesota corporation which also operated under various other names, including the name Xpress Pharmacy Direct (hereinafter, "Xpress Pharmacy Direct").
2. Defendant Smith, through Xpress Pharmacy Direct and otherwise, marketed and sold various drugs which, by law, require a prescription. Namely, pursuant to the Food, Drug and Cosmetic Act, various drugs, due to theirtoxicity and other potentiality
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for harmful effect, are not safe for use except under the supervision of a practitioner licensed by law to administer such drugs (hereinafter, "prescription drugs").
3. Philip Mach was a physician with an active license to practice medicine issued by the State of New Jersey and an inactive license issued by the State of Pennsylvania. Mach practiced out of East Brunswick, New Jersey, and practiced in the areas of internal medicine and pulmonary disease. Starting in or about July 2004, Mach contracted with Xpress Pharmacy Direct to provide purported prescriptions to customers of Xpress Pharmacy Direct.
4. Defendant Bruce Jordan Lieberman was an accountant. Starting in or about September 2004, Defendant Lieberman was retained by Defendant Smith and Xpress Pharmacy Direct to apply for and manage merchant bank accounts to process credit card orders placed by customers seeking to purchase prescription drugs from Xpress Pharmacy Direct. Starting in or about January 2005, Defendant Lieberman was retained by Defendant Smith and Xpress Pharmacy Direct to perform accounting-related tasks pertaining to corporate books and records.for Xpress Pharmacy Direct.
5. Defendant Daniel Spivey Adkins was an attorney with a criminal defense practice who was licensed to practice law in the State of Minnesota. Starting in or about December 2004, Defendant Adkins was retained as counsel for Defendant Smith and Xpress
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Pharmacy Direct. In or about March 2005, Defendant Adkins became general counsel for and a principal in Xpress Pharmacy Direct, and he worked full time at the offices of Xpress Pharmacy Direct.
6. Defendant Darrell Arden Griepp was an employee of Xpress Pharmacy Direct. Starting in or about November 2004, Defendant Griepp worked as a telemarketing sales agent and was responsible for calling potential customers of Xpress Pharmacy Direct to market and sell prescription drugs. Starting in or about January 2005, Griepp was promoted to a pharmacy coordinator position. As such, Griepp was responsible for recruiting new pharmacies and later, new physicians, to work for Xpress Pharmacy Direct.
7. The United States Food and Drug Administration ("FDA") was the agency of the United States charged with enforcing the provisions of the Food, Drug and Cosmetic Act to protect the health and safety of the American public. FDA's responsibilities included enforcing those provisions of the Food, Drug and Cosmetic Act that require prescription drugs, including certain controlled substances, to be administered only pursuant to a prescription issued by a practitioner licensed by law to administer such drugs.
8. The United States Drug Enforcement Agency (IDEA") was the agency of the United States charged with enforcing the Controlled Substances Act and other laws pertaining to the manufacture and distribution of controlled substances. The Controlled Substances
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Act and its implementing regulations set forth which drugs and other substances are defined by law as "controlled substances," and those controlled substances were then assigned to one of five schedules, Schedule I, II, III, IV, or V, depending on their potential for abuse and likelihood of physical or psychological dependency. The DEA's responsibilities included enforcing Title
21, United States Code, Section 841(a)(1),of the Controlled Substances Act, which made it unlawful "for any person knowingly or intentionally - to manufacture, distribute, or dispense . . . a controlled substance" unless, among other limited exceptions, the controlled substance was distributed or dispensed by way of a valid prescription. The DEA's responsibilities further included enforcing Title 21 of the Code of Federal Regulations, Section 1306.04 (a), which provided that "[a] prescription for a controlled substance to be effective must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice," and which further provided that "[a]n order purporting to be a prescription issued not in the usual course of professional treatment . . . is not a prescription within the meaning and intent of . . . [the Controlled Substances Act] and the person knowingly filling such a purported prescription, as well as the person issuing it, shall be subject to the penalties
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provided for violations of the provisions of law relating to controlled substances."
9. Pursuant to the Controlled Substances Act and its implementing regulations, hydrocodone, the name for an addictive prescription painkiller, was classified as a Schedule III controlled substance. Hydrocodone was sold under a variety of brand names, including Vicodin, Lortab, and Norco. When hydrocodone is legally prescribed for a legitimate medical purpose, it is typically used to combat acute, severe pain. Accordingly, a prescription issued for hydrocodone is usually for a modest number of pills to be taken over a short period of time.
10. The American Medical Association ("AMA") was the largest association of medical doctors in the United States. Its purpose was to advance the interests of physicians, to promote better public health, to lobby for medical legislation, and to raise money for medical education. Since at least 1999, the AMA publicly announced its position that a physician who offers a prescription to a patient solely on the basis of an online questionnaire without having ever examined the patient has generally not met the appropriate medical standards of care.
11. The Federation of State Medical Boards of the United States, Inc., ("FSMB") was a national organization comprised of the 70 medical boards of the United States, the District of Columbia,
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Puerto Rico, Guam, and the U.S. Virgin Islands. On behalf of its membership, FSMB's mission was to improve the quality, safety, and integrity of health care through the development and promotion of high standards for physician licensure and practice. Since at least 2000, the FSMB has recognized that Internet web sites permitting customers to obtain controlled substances and other prescription drugs without an adequate evaluation by a physician pose an immediate threat to public health and safety. As a result, FSMB has publicly announced its position that the prescribing of medications by physicians based solely on an online questionnaire fails to meet an acceptable standard of care and is outside the bounds of professional conduct.
12. Consistent with the aforementioned position of the FSMB, as well as the aforementioned position of the AMA, a number of state medical boards and state pharmacy boards, along with the National Association of Boards of Pharmacy, adopted the position that online questionnaires do not form the basis for a valid prescription and/or a legitimate doctor/patient relationship. State legislatures have enacted legislation in a number of states adopting a similar position. A number of states explicitly required a face-to-face meeting between the physician and the patient before prescription drugs, including controlled substances, may be lawfully prescribed.
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(Conspiracy To Distribute and Dispense Controlled Substances)
13. The Grand Jury realleges paragraphs 1 through 12 of the Third Superseding Indictment as if set forth in full herein.
14. Beginning in or about January 2004, the exact date being unknown to the Grand Jury, and continuing until at least June 24, 2005, in the State and District of Minnesota and elsewhere, the defendants, CHRISTOPHER WILLIAM SMITH, a/k/a "Robert Jonson," a/k/a "Chris Jonson," a/k/a "Bruce Janson," a/k/a "Tony Spitalie," BRUCE JORDAN LIEBERMAN, DANIEL SPIVEY ADKINS, and DARRELL ARDEN GRIEPP, a/k/a "Darrell Green," knowingly and intentionally conspired and agreed together, and with others known and unknown to the Grand Jury, to distribute and dispense prescription drugs that are controlled substances, other than for a legitimate medical purpose and not in the usual course of professional practice, in violation of Title 21, United States Code, Sections 846, 841 (a)(1), and 841 (b)(1)(D) , and Title 21, Code of Federal Regulations, Section 1306.04.
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OBJECT OF THE CONSPIRACY
15. It was the object of the conspiracy for the defendants and others to obtain substantial revenues and profits by illegally offering for sale and selling prescription drugs that are controlled substances by means that were outside of the usual course of professional medical practice and without a legitimate medical purpose.
MANNER AND MEANS OF THE CONSPIRACY
The manner and means, among others, of this conspiracy were as follows:
16. Starting in or about January 2004, Defendant Smith and others began illegally distributing and dispensing prescription drugs, including controlled substances, without valid prescriptions.
17. From in or about January 2004, through in or about July 2004, Defendant Smith and others arranged for the controlled substances and other prescription drugs to be imported from a foreign country and dispensed and distributed to customers without any sort of prescription and without any involvement of any physician.
18. Beginning in or about July 2004, Defendant Smith and others arranged to have Philip Mach issue purported prescriptions for the controlled substances and other prescription drug sales.
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Also beginning in or about July 2004, Defendant Smith and others recruited small, independent U.S.-based pharmacies to fill the controlled substances and other prescription drug orders.
19. The orders for the controlled substances and other prescription drugs were obtained through Internet web sites, telemarketing calls placed by telemarketing "call centers," or by "spam" emails, that is, the unauthorized and unsolicited transmission of multiple commercial email messages.
20. The Internet web site addresses through which the defendants marketed and sold controlled substances and other prescription drugs included www.xpress-rx.com, www.rxorderfill. com, www.netmeds.com, and www.supremeproductsltd.com.
21. The telemarketing call centers through which the defendants marketed and sold various controlled substances and other prescription drugs were in various locations, including the Philippines; the Dominican Republic; Burnsville,Minnesota; and Montreal, Canada. The telemarketing call centers employed telemarketing sales agents who were paid a commission on all controlled substances and other prescription drug sales they made, thus encouraging the sales agents to make as many sales of controlled substances and other prescription drugs as possible.
22. The defendants did not require customers to provide any form of prescription before receiving the controlled substances and
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other prescription drugs. Instead, the defendants requested customers to fill out, or to provide information to telemarketing sales agents for the purpose of filling out, a questionnaire part of the questionnaire, customers unilaterally chose the type and quantity of controlled substances and other prescription drugs they wished to purchase, and customers outlined their purported and unverified medical conditions.
23. Philip Mach, whose only active license to practice medicine was issued by the State of New Jersey, was the sole physician who issued purported prescriptions for Xpress Pharmacy Direct customers located throughout the United States.
24. In virtually all instances, other than through the questionnaire that customers completed or that was completed for them, Mach had no contact with Xpress Pharmacy Direct customers, whether face-to-face, telephone, or through the Internet, and Mach had no contact with the customers' primary care physicians. In particular, the prescription drugs, including controlled substances, were distributed and dispensed without verifying the customer's medical complaint, obtaining an adequate patient medical history, performing a mental or physical examination, using appropriate diagnostic or laboratory testing, or providing a means to monitor the customer's response to the medication. Mach obtained no medical records from the customers or their primary
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care physicians, apart from the limited online questionnaire that was completed in whole or in part by customers, and retained no records of his purported "consultations."
25. Mach approved hundreds of prescriptions per day for Xpress Pharmacy Direct. Mach logged onto an Internet web site that permitted him to readily approve multiple controlled substances and other prescription drug orders all at one time. In general, Mach made no changes to the information already provided by the customer regarding the controlled substances and other prescription. drugs being ordered, such as the type, quantity, and dosage before he approved the controlled substances and other prescription drug orders.
26. Over time, Mach approved approximately 99 percent of all Xpress Pharmacy Direct orders presented to him. After Mach approved the orders, purported prescriptions were then issued using an electronic, facsimile signature for Mach. From in or about July 2004, through in or about May 2005, Mach issued approximately 72,000 prescriptions for Xpress Pharmacy Direct.
27. Because Xpress Pharmacy Direct did not have a license issued by the DEA or any federal or state authority for the distribution of controlled substances or other prescription drugs, it was necessary for Xpress Pharmacy Direct to contract with one or more licensed pharmacies to fill the drug orders.
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28. To recruit and retain pharmacies, Defendants Smith, Griepp, and Adkins, through language in the pharmacy contracts that was approved by Defendant Adkins and otherwise, made
misrepresentations about Xpress Pharmacy Direct's business. For example, language in Xpress Pharmacy Direct's pharmacy contracts stated that Xpress Pharmacy Direct had U.S. physicians located in each of the 50 states, when in fact, the sole physician was Mach.
29. When the defendants attempted to enlist the services of pharmacies, many declined, in a number of instances stating their concerns about the illegality of the Xpress Pharmacy Direct business. The defendants were thus able to enlist the services of no more than a few pharmacies.
30. From approximately July 2004 until approximately February 2005, virtually all controlled substances and other prescription drug orders were filled for Xpress Pharmacy Direct by only one of two pharmacies, either Astoria (Owl) Pharmacy, in Astoria, Oregon, or Fallbrook Pharmacy, in Fallbrook, California. Thereafter, beginning in or about February 2005, Xpress Pharmacy Direct contracted with two additional pharmacies, Yociss Pharmacy, in East St. Louis, Illinois, and College Discount Drug/Hudson Discount Drug, in Rutherford College, North Carolina. Beginning in or about April 2005, Xpress Pharmacy Direct contracted with Seymour Drugs, in Seymour, Wisconsin, and in or about May 2005, Xpress Pharmacy
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Direct contracted with Sunshine RX, LLC, in Tampa, Florida. The defendants contracted with all of these pharmacies to accomplish the defendants' objective of assisting and being assisted by the pharmacies in distributing and dispensing the controlled substances and other prescription drug orders.
31. The defendants arranged for the controlled substances and other prescription drugs to be distributed and dispensed to the customers by commercial carrier, such as Federal Express. Those controlled substances and other prescription drugs that had been returned by customers or which had otherwise not been delivered were stockpiled at Xpress Pharmacy Direct's Burnsville, Minnesota, location. As the defendants and others knew, Xpress Pharmacy Direct was not licensed by any authority to handle controlled substances and other prescription drugs and therefore any such handling by Xpress Pharmacy Direct was in violation of the law. Nonetheless, various employees of Xpress Pharmacy Direct, including Defendant Adkins, handled such returned controlled substances and other prescription drugs without making arrangements to dispose of the drugs in a proper manner.
32. In addition to employing multiple web site addresses, the defendants adopted and employed various business names, including, but not limited to, Discount Pharmacy Direct, Xpress Healthcare Ltd., and Rxorderfill.com, Inc. In addition, Defendant Smith and
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others at Xpress Pharmacy Direct used various aliases, such as when interacting with pharmacies. Defendant Smith's aliases included "Robert Janson," "Chris Jonson," "Bruce Jonson," and "Tony Spitalie," among others. Defendant Griepp's alias was "Darrell Green." The purpose for employing these different aliases, different business names, and different web site addresses was at least in part to conceal and disguise from third parties, including law enforcement and others, the nature, the location, the source, the ownership, and the control of the defendants' controlled substances and prescription drug operation.
33. In particular, Defendant Smith and Defendant Lieberman established at least one corporate entity, Rxorderfill.com, Inc., incorporated by Defendant Lieberman in the State of New York, in order to conceal and disguise from third parties, such as credit card companies, the true nature of the controlled substances and other prescription drug operation, including its ownership by Defendant Smith and its affiliation with the Minnesota-based Xpress Pharmacy Direct. In addition, Defendant Smith and Defendant Lieberman, aided and abetted by others, established a fake web site, Rxorderfill.com, for the purpose.of misleading others about the true nature of the controlled substances and other. prescription drug operation.
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34. Defendant Smith, Defendant Lieberman, Defendant Adkins, Defendant Griepp, and others became aware of online pharmacy operators and related parties who had been the subject of criminal investigations and who had been charged and convicted of crimes in federal court. Even after learning of these matters, the defendants did not materially change the manner in which Xpress Pharmacy Direct did business.
35. Defendant Smith, Defendant Lieberman, Defendant Adkins, Defendant Griepp, and others became aware of certain state laws that explicitly required a. face-to-face meeting between the physician and the patient before prescription drugs, including controlled substances, may be lawfully prescribed. Even after learning of these laws, the defendants did not materially change the manner in which Xpress Pharmacy Direct did business.
36. Beginning in or about March 2005, the defendants learned that Defendant Smith and his business operation were under investigation by the federal government. Even after learning about this investigation, the defendants did not materially change the manner in which Xpress Pharmacy Direct did business. Moreover, in this same time frame, Defendant Smith, with the knowledge of Defendant Adkins and others, made arrangements to hide assets, including cash and luxury vehicles, that were derived from the
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illegal sales of controlled substances and other prescription drugs.
37. In or about March 2005, Defendant Smith, Defendant Adkins, Defendant Griepp, and others became aware that the DEA had recently issued a directive to pharmacies throughout the United States warning pharmacies about getting involved with online pharmacy operations and about the potential criminal implications of such operations (hereinafter, the "DEA Directive"). The DEA Directive, which began with a headline, "Warning! Warning! Warning! Warning! Warning! Warning!," expressly stated that [a] patient completing a questionnaire that is then reviewed by a physician, hired by or working on behalf of an Internet pharmacy, does not establish a doctor/patient relationship. A consumer can more easily provide false information in a questionnaire than in a face-to-face meeting with the physician. It is illegal to receive a prescription for a controlled substance without the establishment of a legitimate doctor/patient relationship, and it is unlikely for such a relationship to be formed through Internet correspondence alone.
38. In or about March 2005, Defendant Smith, Defendant Adkins, Defendant Griepp, and others became aware that certain pharmacies with which Xpress Pharmacy. Direct had contracted had concerns about whether Xpress Pharmacy Direct was a legal operation. A number of pharmacies sent Xpress Pharmacy Direct a copy of the DEA Directive and indicated, in some instances, that as
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a result of their review of the DEA Directive, they would cease filling controlled substances and other prescription drug orders for Xpress Pharmacy Direct, unless assured that Xpress Pharmacy Direct's operation was legal.
39. Thereafter, in or about March 2005, Defendant Smith, Defendant Adkins, and Defendant Griepp, knowing that Xpress Pharmacy Direct's business would come to a halt if the pharmacies ceased filling controlled substances and other prescription drug orders, determined that a letter should be prepared and sent in Mach's name to the pharmacies to make it appear that Xpress Pharmacy Direct dispensed and distributed controlled substances based on a legitimate doctor/patient relationship and thus was not operating an illegal online pharmacy as described by the DEA Directive. Defendant Adkins, aided and abetted by Defendant Griepp, prepared the letter (hereinafter, the "Mach letter"). The Mach letter was then approved and signed by Mach. The purpose of the Mach letter was to appease the concerns of the pharmacies and to keep them filling and shipping controlled substances and prescription drug orders for Xpress Pharmacy Direct.
40. Thereafter, in or about April 2005, with the knowledge and approval of Defendants Smith, Adkins, and Griepp, the Mach letter was faxed directly by Mach in New Jersey, as well as by Xpress Pharmacy Direct in Minnesota, to pharmacies that had
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requested information in response to the DEA Directive. The Mach letter included the following statements:
in each and every transaction, we verify that a physical examination is on file with the purchaser's primary care physician and had been completed no more than one calendar year prior to the date of purchase. Further, I work jointly with this primary care physician to ensure that the four factors necessary to any pharmaceutical purchase-and which factors are enumerated repeatedly by the DEA in its publications-are present in each and every sale:
1) every patient seeking to purchase pharmaceutical products must have a valid medical complaint;
2) that patient must have been the subject of a full medical history;
3) a full physical examination of the patient must have been performed; and
4) the medical complaint and physical history must bear a logical connection to the pharmaceutical product to be prescribed.
These statements were materially false. As the defendants knew, no one associated with Xpress Pharmacy made any effort to contact any customer's primary care physician, much less did so for "each and every transaction." Customers were not even required to provide the name of their primary care physicians to Xpress Pharmacy Direct, and most did not. Further, as the defendants well knew, no one associated with Xpress Pharmacy Direct made any effort to gather any additional medical information on the customers beyond the limited and unverified purported information that customers decided to provide to Xpress Pharmacy Direct. Thus, no one associated with Xpress Pharmacy Direct undertook to ensure that any
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of the customers had a valid medical complaint or had been the subject of a full medical history, and no efforts were made to verify that any of the customers had received a physical examination at any time, much less within one calendar year prior to the date of purchase.
41. In addition to the Mach letter, in or about March 2005, Defendant Adkins prepared an additional letter, which he signed and sent to pharmacies in response to the DEA Directive (hereinafter, the "Adkins letter."). The Adkins letter, which was prepared on Defendant Adkins' attorney letterhead and which identified the Defendant Adkins as an attorney for "Express [sic] Pharmacy Direct and its subsidiaries," stated that Xpress Pharmacy Direct's operation "is both legal and authorized by federal and state statutes.'` The Adkins letter further stated that, "[w]ith respect to the doctor/patient relationship so carefully described in the DEA's letter, in each and every instance of an Express [sic] Pharmacy Direct retail sale, such a relationship always exists, and a formal prescription completely precedes the provision of a controlled substance to any purchaser." The Adkins letter was false in that, as the defendants well knew, in no instance did the appropriate doctor/patient relationship described in the DEA Directive exist, and, as the defendants knew, the prescriptions that Mach issued were sham prescriptions.
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42. Thereafter, in or about March, April, and May 2005, as a result of receiving the Mach letter and/or the Adkins letter, the pharmacies that had contracted with Xpress Pharmacy Direct continued to fill orders for and ship controlled substances and other prescription drugs to Xpress Pharmacy Direct's customers.
43. From the time period of approximately January 2004, the exact date being unknown to the Grand Jury, until at least approximately May 2005, the defendants distributed and dispensed in excess of approximately 2 million units of hydrocodone-based Schedule III controlled substances.
44. From the time period of approximately January 2004, the exact date being. unknown to the Grand Jury, until at least approximately May 2005, the defendants generated sales of Schedule III controlled substances that totaled approximately $20 million.
45. From in or about May 2005 through June 2005, after government authorities had executed search warrants on the offices of Xpress Pharmacy Direct, the residences of Smith, Mach's medical office, and other locations, and after Xpress Pharmacy Direct had been shut down pursuant to a preliminary injunction, Defendants Smith and Lieberman, aided and abetted by others, took various affirmative steps to establish a new online pharmacy that was, in effect, a continuation of Xpress Pharmacy Direct. The new online
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pharmacy was to be serviced by new web sites and by a telemarketing call center located in the Dominican Republic.
OVERT ACTS
In furtherance of the conspiracy and to effect the objects thereof, the defendants committed the following overt acts, among others, in the State and District of Minnesota and elsewhere:
46. On or about March 31, 2005, the defendants unlawfully distributed and dispensed 90 hydrocodone tablets to "Gregory Wall," an undercover agent who posed as a customer and who had no face-toface, telephone, or electronic mail contact with Mach. The hydrocodone tablets were issued following a telephone order placed, and an online questionnaire completed, by the undercover agent with Xpress Pharmacy Direct. The purported prescription was authorized by and issued in the name of Mach and was filled by Fallbrook Pharmacy.
47. On or about April 29, 2005, the defendants unlawfully distributed and dispensed 80 hydrocodone tablets to "Ken Karlton," an undercover agent who posed as a customer and who had no face-toface, telephone, or electronic mail contact with Mach. The hydrocodone tablets were issued by Xpress Pharmacy Direct pursuant to an order placed, and an online questionnaire completed, by the undercover agent on the web site www.netmeds.com. The purported
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prescription was authorized by and issued in the name of Mach and was filled by Fallbrook Pharmacy.
48. On or about May 6, 2005, the defendants unlawfully distributed and dispensed 80 hydrocodone tablets to "Ken Karlton," an undercover agent who posed as a customer and who had no face-toface, telephone, or electronic mail contact with Mach. The hydrocodone tablets were issued by Xpress Pharmacy Direct pursuant to an order placed, and an online questionnaire completed, by the undercover agent on the web site www.netmeds.com. The purported prescription was authorized by and issued in the name of Mach and was filled by Yociss Pharmacy.
49. On or about March 25, 2005, Defendants Smith, Adkins, and Griepp, caused the Adkins letter to be faxed and mailed to Yociss Pharmacy in East St. Louis, Illinois, knowing that the Adkins letter falsely claimed, among other things, that an appropriate doctor/patient relationship existed in all of Xpress Pharmacy Direct's sales of controlled substances and other prescription drugs.
50. On or about March 25, 2005, Defendants Smith, Adkins, and Griepp, caused the Adkins letter to be faxed and mailed from to Owl Pharmacy in Astoria, Oregon, knowing that the Adkins letter falsely claimed, among other things, that an appropriate doctor/patient
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relationship existed in all of Xpress Pharmacy Direct's sales of controlled substances and other prescription drugs.
51. On or about April 11, 2005, Defendants Smith, Adkins, and Griepp, caused the Mach letter to be faxed to Owl Pharmacy in Astoria, Oregon, knowing that the Mach letter falsely claimed, among other things, that Xpress Pharmacy Direct dispensed and distributed controlled substances based on a legitimate doctor/patient relationship and thus was not operating an illegal online pharmacy as described by the DEA Directive.
52. On or about April 14, 2005, Defendants Smith, Adkins, and Griepp, caused the Mach letter to be faxed to Seymour Pharmacy in Seymour, Wisconsin, knowing that the Mach letter falsely claimed, among other things, that Xpress Pharmacy Direct dispensed and distributed controlled substances based on a legitimate doctor/patient relationship and thus was not operating an illegal online pharmacy as described by the DEA Directive.
53. On or about May 23, 2005, Defendant Smith, with the knowledge and participation of Defendant Lieberman, left the United States and traveled to the Dominican Republic and neighboring islands for the purpose of setting up an online pharmacy that was for all intents and purposes a continuation of the business of Xpress Pharmacy Direct.
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54. On or about June 1, 2005, Defendant Lieberman signed and submitted a check card processing agreement to Central Merchant Services, as agents for Central Bancard LLC, to secure credit card processing services for the new online pharmacy that he and Smith were establishing as a continuation of the business of Xpress Pharmacy Direct.
55. During the week of June 20, 2005, Defendant Smith, with the knowledge and participation of Defendant Lieberman, launched two web sites for the purpose of soliciting business for the new online pharmacy: www.allusamedical.com and www.allusapainmeds.com.
All in violation of Title 21, United States Code, Sections 846, 841 (a)(1), and 841 (b)(1)(D) , and Title 21, Code of Federal Regulations, Section 1306.04.
COUNTS 2 - 4
(Unlawful Distribution and Dispensing of Controlled Substances)
56. The Grand Jury realleges paragraphs 1 through 12 and 16 through 55 of the Third Superseding Indictment as if set forth in full herein.
57. On or about the dates below, in the State and District of Minnesota and elsewhere, the defendants, CHRISTOPHER WILLIAM SMITH, a/k/a "Robert Jonson," a/k/a "Chris Jonson," a/k/a "Bruce Jonson," a/k/a "Tony Spitalie,"
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BRUCE JORDAN LIEBERMAN, DANIEL SPIVEY ADKINS, and DARRELL ARDEN GRIEPP, a/k/a "Darrell Green," aiding and abetting each other and others known and unknown to the Grand Jury, knowingly and intentionally distributed and dispensed a quantity of a controlled substance for other than a legitimate medical purpose and not in the usual course of professional practice, as charged in the chart below, each such instance being a separate count of the Third Superseding Indictment:
| COUNT | DATE | CONTROLLED SUBSTANCE DISTRIBUTED AND DISPENSED |
|---|---|---|
| 2 | March 31, 2005 | 90 hydrocodone tablets to "Gregory Wall," an undercover agent posing as a customer, in Downers Grove, Illinois. |
| 3 | April 29, 2005 | 80 hydrocodone tablets to "Ken Karlton," an undercover agent posing as a customer, in St. Paul, Minnesota. |
| 4 | May 6, 2005 | 80 hydrocodone tablets to "Ken Karlton," an undercover agent posing as a customer, in St. Paul, Minnesota. |
All in violation of Title 21, United States Code, Sections 841(a)(1) and 841(b)(1)(D); Title 18, United States Code, Section 2; and Title 21, Code of Federal Regulations, Section 1306.04.
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COUNTS 5 - 7
(Introduction of Misbranded Drugs into Interstate Commerce)
58. The Grand Jury realleges paragraphs 1 through 12 and 16 through 55 of the Third Superseding Indictment as if set forth in full herein.
59. Alprazolam, the name for a prescription drug used to reduce anxiety, was classified as a Schedule IV controlled substance. Alprazolam was sold under a variety of brand names, including Xanax.
60. Zolpidem Tartrate, the name for a prescription drug used to treat insomnia, was classified as a Schedule IV controlled substance. Zolpidem Tartrate was sold under a variety of brand names, including Ambien.
61. On or about the dates below, in the State and District of Minnesota and elsewhere, the defendants, CHRISTOPHER WILLIAM SMITH, a/k/a"RobertJonson," a/k/a"ChrisJonson," a/k/a "Bruce Jonson," a/k/a"Tony Spitalie," BRUCE JORDAN LIEBERMAN, DANIEL SPIVEY ADKINS, and DARRELL ARDEN GRIEPP, a/k/a "Darrell Green," aiding and abetting each other and others known and unknown to the Grand Jury, with intent to defraud and mislead, introduced and delivered for introduction into interstate commerce, and caused to
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be introduced and delivered for introduction into interstate commerce, drugs that were misbranded, in that the defendants distributed and dispensed the following drugs listed in the chart below, each of which is a drug within the meaning of Title 21, United States Code, Section 321(g)(1), and each of which is a prescription drug within the meaning of Title 21, United States Code, Section 353(b)(1), without a valid, written prescription of a practitioner licensed by law to administer such prescription drugs, each such instance being a separate count of the Third Superseding Indictment:
| COUNT | DATE | MISBRANDED DRUG DISTRIBUTED AND DISPENSED |
|---|---|---|
| 5 | March 31, 2005 | 30 10mg tablets of Ambien to "Jocelynn Evans," an undercover agent posing as a customer, in Downers Grove, Illinois. |
| 6 | March 31, 2005 | 30 1mg tablets of Alprazolam to "Jocelynn Evans," an undercover agent posing as a customer, in Downers Grove, Illinois. |
| 7 | April 25, 2005 | 90 1mg tablets of Alprazolam to "Jocelynn Evans," an undercover agent posing as a customer, in Downers Grove, Illinois. |
All in violation of Title 21, United States Code, Sections 331(a), 333(a)(2), 353(b)(1), and Title 18, United States Code, Section 2.
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COUNT 8
(Conspiracy To Commit Money Laundering)
62. The Grand Jury realleges paragraphs 1 through 12 and 16 through 55 of the Third Superseding Indictment as if set forth in full herein.
63. Beginning in or about September 2004, the exact date being unknown to the Grand Jury, and continuing until at least on or about June 24, 2005, in the State and District of Minnesota and elsewhere, the defendants, CHRISTOPHER WILLIAM SMITH, a/k/a "Robert Jonson," a/k/a "Chris Jonson," a/k/a "Bruce Jonson," a/k/a "Tony Spitalie," and BRUCE JORDAN LIEBERMAN, knowingly and intentionally conspired and agreed together, and with others known and unknown to the Grand Jury, to commit certain offenses under Title 18, United States Code, Sections 1956 and 1957, as follows:
a. to knowingly conduct and attempt to conduct financial transactions affecting interstate and foreign commerce which involved the proceeds of specified unlawful activity, namely, the unlawful distribution and dispensing of, and conspiracy to distribute and dispense, controlled substances, knowing that the property involved in the financial transactions represented the proceeds of some form of illegal activity, with the intent to promote the carrying on of such specified unlawful activity, in violation of Title 18, United States Code, Section 1956 (a)(1)(A)(I);
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b. to knowingly conduct and attempt to conduct financial transactions affecting interstate and foreign commerce which involved the proceeds of specified unlawful activity, namely, the unlawful distribution and dispensing of, and conspiracy to distribute and dispense, controlled substances, knowing that the property involved in the financial transactions represented the proceeds of some form of illegal activity and knowing that the transactions were designed in whole or in part to conceal and disguise the nature, the location, the source, the ownership and the control of the proceeds of such specified unlawful activity, in violation of Title 18, United States Code, Section 1956(a)(1)(B)(I); and
c. to knowingly engage, attempt to engage and cause and aid and abet others to engage in monetary transactions, by, through, and to a financial institution, affecting interstate and foreign commerce, in criminally derived property of a value greater than $10,000.00, such property having been derived from specified unlawful activity, namely, the unlawful distribution and dispensing of, and conspiracy to distribute and dispense, controlled substances, in violation of Title 18, United States Code, Section 1957.
MANNER AND MEANS OF THE CONSPIRACY
The manner and means, among others, of this conspiracy were as follows:
64. Defendant Lieberman maintained a bank account at Commerce Bank, N.A., with headquarters in New Jersey, in the name of the corporate entity Rxorderfill.com, Inc. This account was used to receive proceeds from sales of illegally distributed and dispensed controlled substances and other prescription drugs by Xpress Pharmacy Direct in Minnesota. Such proceeds, which resulted from
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credit card sales to customers of Xpress Pharmacy Direct, were typically wired to the Rxorderfill.com, Inc., bank account by the merchant bank, Central Bancard LLC, that processed the credit card sales. The bank account in the name of Rxorderfill.com was established in whole or in part to conceal and disguise the nature, the location, the source, the ownership and the control of the illegal proceeds of Xpress Pharmacy Direct's business.
65. Defendant Lieberman arranged to have funds from the Rxorderfill.com, Inc., bank account wired to one. or more bank accounts maintained by Defendant Smith and others at US Bank and Crown Bank in Minnesota. The US Bank account and the Crown Bank account were used to receive proceeds from sales of illegally distributed and dispensed controlled substances and other prescription drugs by Xpress Pharmacy Direct.
66. Funds that had been deposited into the US Bank account and Crown Bank account for Xpress Pharmacy Direct were used to pay the expenses of carrying on the business of Xpress Pharmacy Direct, including payments for employees, Mach, pharmacies, utilities and other expenses associated with the business locations. These payments were made with the intent to further promote the ongoing unlawful operations of Xpress Pharmacy Direct.
67. After money and funds were deposited into bank accounts of various entities and individuals, including the Rxorderfill.com,
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Inc., bank account, the US Bank account, and the Crown Bank account, funds from these accounts were used to engage in monetary transactions of greater than $10,000.00.
All in violation of Title 18, United States Code, Section 1956(h).
COUNT 9
(Continuing Criminal Enterprise)
68. The Grand Jury realleges paragraphs 1 through 12 and 16 through 55 of the Third Superseding Indictment as if set forth in full herein.
69. Beginning in or about January 2004, the exact date being unknown to the Grand Jury, and continuing until at least on or about June 24, 2005, in the State and District of Minnesota and elsewhere, the defendant, CHRISTOPHER WILLIAM SMITH, a/k/a "Robert Jonson," a/k/a "Chris Jonson," a/k/a "Bruce Jonson," a/k/a "Tony Spitalie," did unlawfully, knowingly, and intentionally engage in a continuing criminal enterprise in that the defendant did unlawfully, knowingly and intentionally violate Title 21, United States Code, Sections 841 and 846, such violation including, but not limited to those violations alleged in this Second Superseding Indictment, and did commit other violations of the Controlled Substances Act, Title 21, United States Code, Section 801, et. seq., undertaken by the
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defendant, and such violations being a part of a continuing series of violations, which were undertaken in concert with at least five other persons with respect to whom the defendant occupied the position of organizer, a supervisor, and other management position, and from which continuing series of violations the defendant obtained substantial income and resources.
All in. violation of Title 21, United States Code, Section 848(a) and (c).
FORFEITURE ALLEGATIONS
70. Counts 1 through 4 and 9 of this Third Superseding Indictment are hereby realleged and incorporated as if fully set forth herein by reference, for the purpose of alleging forfeitures pursuant to Title 21, United States Code, Section 853(a)(1) and (2).
71. As a result of the offenses alleged in Counts 1 through 4 and 9 of this Third Superseding Indictment, the defendants, CHRISTOPHER WILLIAM SMITH, a/k/a"Robert Jonson," a/k/a"Chris Jonson," a/k/a"Bruce Jonson," a/k/a"Tony Spitalie," BRUCE JORDAN LIEBERMAN, DANIEL SPIVEY ADKINS, and DARRELL ARDEN GRIEPP, a/k/a "Darrell Green,"
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shall forfeit to the United States pursuant to Title 21, United States Code, Section 853(a)(1) and (2), any and all property constituting or derived from any proceeds the said defendants obtained directly or indirectly as a result of the said violations and any and all property used or intended to be used in any manner or part to commit and to facilitate the commission of the violations alleged in Counts 1 through 4 and 9 of this Third Superseding Indictment including the following property:
a. $89,335.00 in U.S. Currency surrendered to the Internal Revenue Service, Criminal Investigation Division, on February 3, 2006;
b. $198,120.00 in U.S. Currency surrendered to the Internal Revenue Service, Criminal Investigation Division, on February 3, 2006;
c. $1,850.00 in U.S. Currency surrendered to the Internal Revenue Service, Criminal Investigation Division, on February 3, 2006;
d. $13,757.96 in net proceeds from the sale of a 2005 Mercedes Benz, C55AMG, VIN WDBRF76J95F612084;
e. $139,720.00 in U.S. Currency surrendered to the Internal Revenue Service, Criminal Investigation Division, on March 24, 2006.
f. $50,000.00 in U.S. Currency surrendered to the Internal Revenue Service, Criminal Investigation Division, on March 31, 2006;
g. $90,000.00 in U.S. Currency surrendered to the Federal Bureau of Investigation, on April 10, 2006;
h. the real property located in Prior Lake, Minnesota, and legally described as Lot 11, Block 3, Cedarwood
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Estates, Scott County, Minnesota, together with its buildings, fixtures, improvements, and appurtenances; two Rolex watches purchased on or about December 22, from Osterman Jewelers, including a Rolex watch with serial number R7917441RB7824; and
i. any and all remaining funds in accounts held by the court appointed Receiver in connection with United States v. Christopher William Smith et al., Civil No. 05-SC-895 (MJD/FLN).
72. Count 8 of this Third Superseding Indictment is hereby realleged and incorporated as if fully set forth herein by reference, for the purpose of alleging forfeitures pursuant to Title 18, United States Code, Section
982(a)(1).
73. As a result of the offense alleged in Count 8 of the Third Superseding Indictment, the defendants, CHRISTOPHER WILLIAM SMITH, a/k/a "Robert Jonson," a/k/a "Chris Jonson," a/k/a "Bruce Jonson," a/k/a "Tony Spitalie," and BRUCE JORDAN LIEBERMAN, shall forfeit to the United States pursuant to Title 18, United States Code, Section 982 (a)(1), all property, real and personal, involved in the violation alleged in Count 8 of the Third Superseding Indictment and all property traceable to such property.
74. If any of the above-described forfeitable property, as a result of any act or omission of the defendants:
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a. cannot be located upon the exercise of due diligence;
b. has been transferred or sold to, or deposited with, a third person;
c. has been placed beyond the jurisdiction of the Court;
d. has been substantially diminished in value; or
e. has been commingled with other property which cannot be subdivided without difficulty;
it is the intent of the United States, pursuant to Title 21, United States Code, Section 853(p), and as incorporated by Title 18, United States Code, Section 982(b)(1), and by Title 28, United States Code, Section 2461(c), to seek forfeiture of all the defendants' right, title, and interest in any other property of said defendants up to the value of the above forfeitable property.
All in violation of Title 18, United States Code, Sections 2, 981(a)(1)(C), 982(a)(1), 982(b)(1), and 1956(h); Title 21, United States Code, Sections 841(a)(1), 841(b)(1)(D), 846, 848, and 853(a)(1) and (2); Title 21, Code of Federal Regulations, Section 1306.04; and Title 28, United States Code, Section 2461(c).
A TRUE BILL
UNITED STATES ATTORNEY
FOREPERSON
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