FedEx Indicted on Charges of Conspiring to Illegaly Ship Prescription Drugs

FedEx Corp. was indicted by a federal grand jury in San Francisco today on charges of conspiring to deliver unauthorized prescription drugs for illegal online pharmacies.

Memphis-based FedEx, a global courier and delivery company, was charged with a total of 14 counts. It was summoned to send representatives to appear before a federal magistrate in San Francisco on July 29.

The charges include two counts of conspiring to distribute controlled substances, one count of conspiring to distribute misbranded drugs and 11 counts of distributing controlled substance.

Two FedEx subsidiaries, FedEx Express Inc. and FedEx Corporate Services Inc., were also charged in each of the counts.

The indictment alleges that FedEx worked with two illegal online pharmacy operations between 2002 and 2010. One was allegedly run by Vincent Chhabra and then by Robert Smoley after Chhabra was arrested in 2003, according to the indictment. The other was Superior Drugs, a fulfillment pharmacy that filled orders for illegal online companies, the indictment said.

FedEx strenuously denied the charges.

“FedEx is innocent of the charges brought today by the Department of Justice. We will plead not guilty. We will defend against this attack on the integrity and good name of FedEx and its employees,” Senior Vice President Patrick Fitzgerald said in a statement.

“We want to be clear what’s at stake here: the government is suggesting that FedEx assume criminal responsibility for the legality of the contents of the millions of packages that we pick up and deliver every day.

“We are a transportation company — we are not law enforcement,” Fitzgerald said.

The indictment alleges that FedEx knew the two operations were illegally dispensing drugs on the basis of online questionnaires filled out by buyers instead of valid prescriptions based on physical examinations or face-to-face meetings with doctors. The drugs included Ambien, Alprazolam and Diazepam, among others, according to the indictment.

The indictment alleges that FedEx’s and the pharmacies’ gross profits from the alleged crimes were at least $820 million.

If convicted, FedEx could be sentenced to a fine of up to twice that amount and five years of probation, said U.S. Attorney Melinda Haag of San Francisco.

Haag said in a statement, “This indictment highlights the importance of holding corporations that knowingly enable illegal activity responsible for their role in aiding criminal behavior.”

Last year, Atlanta-based United Parcel Service Inc. agreed to a $40 million settlement with Haag’s office to avoid prosecution on similar charges.

The company agreed to forfeit $40 million and acknowledged that despite being on notice that illegally operating Internet pharmacies were using its services, it failed to close those pharmacies’ accounts between 2003 and 2010.

Julia Cheever, Bay City News

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