December 5, 2016: Medical Device Saleswoman Sentenced to Three Years in Prison for Charges Relating to the Transport of Stolen Medical Devices and Money Laundering
On December 1, 2016, a medical device saleswoman was sentenced to three years in prison for her involvement in a stolen medical device and money laundering conspiracy.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Justin D. Green, Special Agent in Charge, United States Food and Drug Administration (FDA), Office of Criminal Investigations, Miami Field Office, made the announcement.
Kerri L. Kaley, 50 of Cold Spring Harbor, New York, was sentenced in Miami on eight felony counts in a criminal case arising out of a Miami-based FDA investigation that has led to convictions in over twenty-five cases of medical device theft and has resulted in forfeitures, fines, and restitution totaling over $5 million. U.S. District Court Judge Darrin P. Gayles presided over a trial of seven of Kaley’s charges of conviction in September, for her role in a conspiracy to transport and sell in interstate commerce various stolen prescription medical devices, the actual transport and sale of stolen medical devices, and money laundering associated with that activity. In November 2014, Kaley was tried and convicted on charges of obstructing justice in connection with the same activity. At sentencing, Kaley was ordered to serve a term of thirty-six months in prison, to be followed by a similar term of supervised release. In connection with the criminal trial, Kaley agreed to, and was ordered to forfeit $500,000 to the United States, with the possibility of a further money judgment to be resolved at a later ring.
According to court records and testimony at trial, from approximately 1995 through February 2005, Kaley participated in a conspiracy with a group of individuals based in Long Island, New York. The entire group, including Kaley, were medical device sales representatives for subsidiaries of Johnson & Johnson. While based in Miami, Kaley solicited sales representatives and other employees of medical device manufacturers, seeking to purchase medical devices for re-sale. As part of the conspiracy, Kaley and others working with her would secure possession of significant quantities of prescription medical devices from hospitals they serviced for their employer, which were then forwarded to a conspirator in Delray Beach, Florida. These devices were often state-of-the-art equipment used for minimally invasive surgeries and suture materials used by hospitals. The devices were acquired by theft and fraud from customer medical facilities, New York non-profit hospitals. During the course of the illicit activity Kaley laundered over $2.2 million in payments through two sham construction corporations and used the funds to pay the co-conspirators, their home mortgages, home-renovations, and child care expenses.
Charges remain pending against co-conspirator Brian K. Kaley, but no trial date has been set. An indictment is merely an accusation and a defendant is presumed innocent unless and until proven guilty in a court of law.
Mr. Ferrer commended the investigative efforts of the U.S. Food and Drug Administration in this matter. The current case is being prosecuted by Assistant United States Attorneys Thomas Watts-FitzGerald, Brooke Watson, and Alison Lehr.