Five Suspects Indicted for Prescription Drug Scam
By Jim Kouri CPP (07/29/07)
Alvin Woody, a Mooresville, North Carolina pharmacist, and four additional defendants from Vermont, Wisconsin, New York, and California have been indicted on drug distribution and money laundering charges in connection with an alleged unlawful prescription drug operation, according to Gretchen C.F. Shappert, US Attorney for the Western District of North Carolina.
The operation resulted in millions of dosage units of powerful and addictive controlled substances, primarily hydrocodone and alprazolam, being distributed to thousands of customers nationwide based on unlawful and illegitimate prescriptions.
Woody, the owner of two Woody Pharmacy locations in Mooresville and Denver, NC has made initial an appearance before a federal Magistrate Judge in Charlotte today and been released on bond; Kathleen Giacobbe, 44, the owner and operator of Your Online Doctor (YOD) or www.youronlinedoctor.com in Lyndonville, Vt. has also been taken into custody; Porfirio Orta-Rosario, 49, a medical doctor residing in Oshkosh, Wis., has been arrested; Stephen Giacobbe, 34, a member of YOD’s staff who worked from his residence in Bronx, NY, was also arrested Friday morning; and Christopher Otiko, 38, a podiatrist residing in Riverside, Calif., has been arrested.
Joining the US Attorney in the announcement are Nathan T. Gray, Special Agent in Charge of the Federal Bureau of Investigation (FBI) in North Carolina; Charles Hunter, Special Agent in Charge, Internal Revenue Service (IRS) Criminal Investigations in North and South Carolina; and Rodney G. Benson, Special Agent in Charge of Drug Enforcement Administration(DEA), Atlanta Division.
“Medical doctors and pharmacists operate from positions of trust. Rogue doctors and pharmacists who violate the federal Controlled Substance Act decontrol the potential dangerous drugs that must be controlled by law,” said US Attorney Shappert.
“The illicit distribution of controlled substances -- whether street drugs or pharmaceuticals, whether distributed via the Internet or in hand-to-hand drug deals -- constitutes a serious federal crime. The US Attorney’s Office and our law enforcement partners will not permit professionals in medicine or the pharmaceutical field to operate as illicit high-tech drug peddlers. Those persons who disregard their ethical and legal obligations while dispensing pharmaceuticals will be forced to bear the consequences of their actions.”
According to the indictment, from in or about August 2002 to in or about May 2006, the five defendants conspired with each other and others to distribute powerful and addictive prescription painkillers and anxiety medications, all of which were Schedule III or Schedule IV controlled substances, to customers located throughout the United States based on purported prescriptions.
In fact, these “purported prescriptions” were only drug orders for prescription painkillers and anti-anxiety medications which bore a doctor’s photocopied signature, but were issued based on a telephone interview with the customer that was sometimes conducted by a doctor, and most often conducted by individuals with no authority or training to prescribe controlled substances. A doctor was hired by the Web sites merely to lend a legitimate facade to an otherwise illegitimate operation. The drug orders for the controlled substances were then submitted by the Web sites via facsimile to Woody Pharmacy, a pharmacy which the Web sites knew would not question the legitimacy of the “purported prescription.”
Count one charges a conspiracy between the five defendants stemming from the business arrangement between Woody Pharmacy in Mooresville, NC, YOD, and another Web site.
Specifically, in or around August 2002, Alvin Woody began a business arrangement with Kathleen Giacobbe whereby a member of YOD’s staff conducted the telephone consultation for a flat fee, wrote the “purported prescription” for controlled substances, then submitted it via facsimile to Woody Pharmacy where the “purported prescription” was filled and then shipped directly to the customer.
Although YOD customers could choose between Woody Pharmacy and another affiliated pharmacy identified on YOD’s Web site, the customers were not free to take the “purported prescription” to their local pharmacy. Rather, customers were required to have their “purported prescription” filled by one of the affiliated pharmacies which YOD knew would not question the legitimacy of the “purported prescriptions.”
The overwhelming majority of drug orders submitted by YOD – approximately 97 percent – called for the distribution of hydrocodone, alprazolam, diazepam or clonazepam, all of which were Schedule III or IV controlled substances, by Woody Pharmacy. Based on the nearly 65,000 drug orders and associated refills bearing Porfirio Orta-Rosario’s photocopied signature and submitted by YOD to Woody Pharmacy since January 2004, Woody Pharmacy in Mooresville distributed nearly seven million dosage units of hydrocodone to thousands of customers nationwide.
Count two charges that from in or around July 2004 to May 2006, Alvin Woody maintained relationships with Web sites that are similar in operation and purpose to YOD in that they issued “purported prescriptions” for controlled substances, generally hydrocodone and anti-anxiety medications, based on a brief and general telephone consultation which was sometimes conducted by a doctor.
The Web sites required that the “purported prescriptions” be filled at an affiliated pharmacy, such as Woody Pharmacy, which would not question the legitimacy of the “purported prescription.” During the course of this conspiracy, various Web sites submitted via facsimile to Woody Pharmacy in Denver, NC approximately 33,000 “purported prescriptions,” which caused in excess of three million dosage units of hydrocodone to be distributed to thousands of customers nationwide.
The indictment charges 81 additional counts of drug distributions to specific customers and 19 money laundering offenses. The indictment also includes a notice of forfeiture and finding of probable cause that the defendants forfeit to the United States all of the property involved in the offenses charged in the indictment, and all property traceable to such offenses.
Real property listed in the notice of forfeiture includes addresses in Taylorsville and Jonesville, NC; Savannah Lakes Village, McCormick County, SC; Lyndonville and St. Johnsbury, Vt.; and Riverside and Moreno Valley, Calif. According to the indictment, Alvin Woody took in gross profits in excess of approximately $10 million from this illegal operation. The indictment additionally calls for the forfeiture of the entire $15 million of proceeds from this criminal operation.
If convicted, each of the defendants faces a maximum sentence of five years imprisonment on the conspiracy charged in Count One. Each additional drug distribution count also carries a maximum sentence of five years imprisonment. The maximum statutory penalty is 20 years imprisonment for each promotional money laundering count, and 10 years imprisonment for each transactional money laundering count. Each count carries, in addition, a maximum $250,000 fine.
The case was investigated by the FBI, the IRS Criminal Investigation Division, and the Drug Enforcement Administration, and the prosecution is being handled by Assistant United States Attorneys Melissa Rikard and Dana Washington of the Western District of North Carolina.
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