Business Headlines

FedEx Depicted by U.S. as Drug Courier in Corporate Disguise

published Jun 13th 2016, 5:22 pm, by Joel Rosenblatt

(Bloomberg) —
FedEx Corp. took advantage of its “legitimate” corporate identity, size and sophistication to engage in criminal behavior by delivering illegal prescriptions from Internet drug stores, federal prosecutors said at a trial.

The government will rely on “dozens and dozens” of internal e-mails to show that FedEx knew for a decade that it was shipping drugs for pharmacies that were “shady, sneaky” and “on the run” from the U.S. Drug Enforcement Administration, Assistant U.S. Attorney John H. Hemann said Monday in his opening statement at the San Francisco trial.

“These are not my words, they are their words at the time,” Hemann told U.S. District Judge Charles R. Breyer, who will decide the case without a jury.

FedEx, which contends it did nothing wrong, is accused of scheming with online pharmacies to ship painkillers, anxiety meds and diet pills obtained without valid prescriptions. To win a guilty verdict on charges of conspiracy and money laundering, carrying fines of as much as $1.6 billion, prosecutors must prove that FedEx knew the sales were illicit and intended for the drugs to be distributed illegally.

Breyer has voiced doubt about the government’s case during the buildup to the trial. While acknowledging that the case is “challenging,” Hemann disputed Breyer’s earlier characterization of it as a “novel prosecution.”

‘Massive Volume’

“This case is unique because it involves a massive volume of illegal drugs,” Hemann said. Though FedEx was able to get away with it because it relied on an “air of legitimacy,” the company should be treated the same as a person coming across the border with illegal drugs, he said.

“This drug courier should be treated in this court just like your honor would treat every other drug courier,” the prosecutor argued.

Cristina Arguedas, a lawyer for the company, mocked the conspiracy claim in her opening statement while displaying a photographic slide showing a FedEx delivery man loading packages onto a dolly from the open, rear doors of a company van.

Under the government’s theory, FedEx and its workers are “the only criminal conspirators in the world wearing a uniform with its name emblazoned on a truck,” she told the judge.

Arguedas said the company only transported packages only from licensed pharmacies registered with the U.S. Drug Enforcement Agency and offered records of meetings between the agency and FedEx to back up her argument.

‘Most Incredible’

“FedEx worked with law enforcement, and you are going to hear all about it, extensively,” she said. FedEx told the DEA about its own customers, often on “granular case-by-case level to help investigate particular pharmacies,” Arguedas said. “Most incredible of all, FedEx helped the DEA investigate the two people we’re charged being conspirators with.”

Breyer continued Monday to question the government’s case. He asked whether FedEx, during any investigation of illegal shipments from online pharmacies, has ever been told by a government agency “not to pick up from a particular spot?”

“The court is putting us on the spot,” Assistant U.S. Attorney Kirstin Ault responded. “I believe the answer to that is no.”

The judge also raised the possibility that if FedEx did open packages to determine whether they are illegal, it might be violating a federal law meant to protect patient privacy.

Arguedas said that while the company is allowed to open parcels to inspect them, it rarely if ever does so without contacting government agents first.

The case is U.S. v. FedEx Corp., 14-cr-00380, U.S. District Court, Northern District of California (San Francisco).

Updates with FedEx lawyer’s argument in eighth paragraph.
To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg
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© 2016 Bloomberg L.P

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Men of Value Contributor

Men of Value Contributor

Articles by various contributors to Men of Value, an online magazine for American men who value our Judeo-Christian values of faith, family, and freedom.

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