Posted On Tuesday, September 26, 2017
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What Happened?
Yesterday, a pharmacy manager from North Carolina pled guilty to a two-count information alleging conspiracy to commit wire fraud and money laundering in a scheme to divert prescription drugs – intended to fill patient prescriptions – which were resold at higher prices to unauthorized drug wholesalers. The information, filed in federal court in the Western District of North Carolina, alleged that, between 2011 and 2014, Karen Turner used her pharmacy businesses to purchase prescription drugs purportedly for her pharmacies but that were instead sold at a markup through her wholesale businesses.
The Rundown
Turner used her relationship with Managed Health Care Associates, Inc. (MHCA), a group purchasing organization that negotiated discount prices for prescription drugs on behalf of MHCA’s members. Ms. Turner purchased drugs from MHCA between 2011 and 2014 including “shortage drugs” that were in scarce supply. Turner maintained her pharmacies’ memberships with MHCA so that she could buy prescription drugs at low contract prices available strictly for MHCA members. To maintain her membership with MHCA, she falsely represented that the prescription drugs would be dispensed at the pharmacy. However, in reality, Turner transferred the purchased drugs to her wholesale businesses, North, Inc. and Liberty Wholesale, LLC, to be distributed at higher prices. The United States further alleged that the profits from the fraudulent scheme were laundered through a series of bank accounts controlled by Turner.
In her plea agreement, the United States and Ms. Turner stipulated that the loss under §2B1.1 of the Guidelines was more than $550,000 but less than $1.5 million. The parties also stipulated to a 14 level increase based on the loss amount and a 1 level increase under §2S1.1(2)(A) for money laundering. Ms. Turner also agreed to forfeit significant property associated with the scheme, including over $400,000 in various bank accounts, a note with a face value of $192,000, and real property.
What Happens Next?
Ms. Turner’s sentencing hearing has not yet been scheduled.
Posted On Thursday, September 14, 2017
What Happened?
U.S. District Court Judge Kiyo Matsumoto (E.D.N.Y.) granted the United States’ motion to revoke the bond of Martin Shkreli, who was awaiting sentencing after a jury found him guilty on two counts of securities fraud and one count of conspiracy to commit securities fraud.
The Rundown
After he was found guilty, Shkreli remained out of custody, as the Court continued the conditions of release to which he had been subject since his initial appearance. However, not five weeks after the trial concluded, Shkreli offered, via his Facebook page, $5000 to anybody who could “grab a hair” of Hillary Clinton’s during her book tour. Based on this posting and prior social media musings in which he objectified journalist, Lauren Duca, and political pundit, Anna Kasperian, the government moved to revoke Shkreli’s bond. Shkreli’s response included a terse, personally signed letter in which he apologized to the Court and claimed that he “never intended to cause alarm or promote any act of violence whatsoever. . . . It never occurred to me that my awkward attempt at humor or satire would cause Mrs. Clinton or the Secret Service any distress.”
The Court rejected Shkreli’s explanation, noting that he could have unambiguously retracted the offer once the government flagged it. Instead, he commented: “$5,000 but the hair has to include a follicle. Do not assault anyone for any reason ever (LOLIBERALS).” The Court found that Shkreli’s statements amounted to “solicitation of assault in exchange for money,” a criminal act that warranted revocation of his bond under the Bail Reform Act.
The Take-Home
Shkreli will remain in custody until his sentencing. What remains to be seen is how the bond revocation will affect the punishment he receives. Certainly, the bounty he offered for Mrs. Clinton’s hair and his prior incendiary statements towards women could support a prosecutorial argument that he is an unrepentant offender who poses a danger to the community and should be subject a harsher sentence than the Court would otherwise impose.
However, the impending time in custody also presents an opportunity for Shkreli. Not only will he be locked up for the next few months, but he will be detained in an unaccommodating detention center and not the minimum security camp to which he will likely be designated, assuming he is sentenced to imprisonment. If he can use the time to positive effect and demonstrate to the Court that incarceration has humbled him, he could argue persuasively for a lesser sentence based on the revocation.
What Happens Next?
Shkreli’s sentencing is presently set for January 16, 2018.
