Inspections, Compliance, Enforcement, and Criminal Investigations
March 18, 2010: Three Indicted for Diversion of Prescription Drugs
Jeffrey H. Sloman, United States Attorney for the Southern District of Florida, and David W. Bourne, Special Agent in Charge, U.S. Food and Drug Administration, Office of Criminal Investigations, Miami Field Office, announced today that defendants Jose Castillo, of Ft. Lauderdale, Federico M. Fermin, of Miami Beach, and Terri L. DeCubas, of Pembroke Pines, were indicted on charges of mail fraud, distribution of prescription drugs without a license, money laundering, and conspiracy to commit those offenses. In addition, Ms. DeCubas was charged with making a false statement to an agent of the Food and Drug Administration.
According to the Indictment, the fraud involved diversion of prescription drugs through street purchases. Such diversion occurs when a beneficiary of a public or private health insurance plan obtains a prescription for a drug that the beneficiary does not need or is willing to forego. The beneficiary fills the prescription and the plan pays for some or all of the cost of the drug. The beneficiary then sells the drug to diverters for less than the drug's wholesale price. The diverters alter the drug packaging as dispensed so that the drugs appear to have been purchased from persons or entities licensed to distribute them wholesale. The diverters then sell the drugs to pharmacies or to wholesale licensed distributors of prescription drugs, who in turn sell the drugs to pharmacies. The pharmacies then sell the drugs to individuals as if the drugs were new.
From 2002 through 2005, the defendants, operating from Broward and Miami-Dade Counties, solicited and accepted wholesale prescription drug orders from pharmacies. The defendants then purchased prescription drugs from unlicensed sources; at least some of the drugs were obtained through street diversion. The defendants, who did not have a license to distribute prescription drugs from Florida, shipped the drugs from Florida to a licensed wholesale distributor in Texas. The Texas distributor re-shipped the drugs to the defendants’ customers, as if the drugs were new and had traveled exclusively through licensed channels. During the course of this operation, the defendants grossed more than $13 million.
If convicted, the defendants face maximum sentences of twenty (20) years’ imprisonment on the charges of mail fraud, money laundering, and conspiracy to commit those offenses; ten (10) years’ imprisonment on the charge of unlicensed distribution of prescription drugs; and five (5) years’ imprisonment on the charge of conspiracy to distribute prescription drugs without a license. In addition, Ms. DeCubas faces a maximum sentence of five (5) years’ imprisonment on the charge of making a false statement to a Federal agent.
Mr. Sloman commended the investigative efforts of the Food and Drug Administration. This case is being prosecuted by Assistant U.S. Attorney Marc Osborne.
An Indictment is merely an accusation and a defendant is presumed innocent unless and until proven guilty.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.