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  1. Terrapinzflyer
    $77.6 million to be paid after retail pharmacy admits to unlawfully selling pseudoephedrine to criminals

    OCT 14 -- ( LOS ANGELES) – In an agreement finalized late yesterday, CVS Pharmacy, Inc., the biggest operator of retail pharmacies in the United States, has admitted that it unlawfully sold pseudoephedrine to criminals who made methamphetamine. As part of the agreement with federal prosecutors, CVS has agreed to pay $75 million in civil penalties and to forfeit the $2.6 million in profits the company earned as a result of the illegal conduct.

    CVS Pharmacy, a subsidiary of CVS Caremark Corporation, failed to ensure compliance with laws limiting sales of pseudoephedrine, which allowed criminals to obtain a key ingredient used in the manufacture of methamphetamine from CVS stores located primarily in Los Angeles County; Orange County, California; and Clark County, Nevada. Between September 2007 and November 2008, CVS supplied large amounts of pseudoephedrine to methamphetamine traffickers in Southern California, and the company’s illegal sales led directly to an increase in methamphetamine production in California. CVS eventually changed its sales practices to prevent these illegal sales, but it did so only after it became aware of the government’s investigation.

    The $75 million portion of the settlement represents the largest civil penalty ever paid under the Controlled Substances Act.

    “This historic settlement underscores DEA’s commitment to protect the public’s health and safety against the scourge of methamphetamine,” said Michele M. Leonhart, the Acting Administrator of the Drug Enforcement Administration. “CVS’s flagrant violation of the law resulted in the company becoming a direct link in the methamphetamine supply chain. DEA will continue to work with its state and local counterparts to disrupt the supply of methamphetamine, including inhibiting access to chemicals, such as pseudoephedrine, used to produce methamphetamine.”

    “This case shows what happens when companies fail to follow their ethical and legal responsibilities,” said United States Attorney André Birotte Jr. “CVS knew it had a duty to prevent methamphetamine trafficking, but it failed to take steps to control the sale of a regulated drug used by methamphetamine cooks as an essential ingredient for their poisonous stew.”

    The investigation into CVS uncovered thousands of violations of the Combat Methamphetamine Epidemic Act of 2005, which, among other things, limits the amount of pseudoephedrine that a customer can purchase in one day. In 2007, CVS implemented an automated electronic logbook system to record individual pseudoephedrine sales, but the system did not prevent multiple purchases by an individual customer on the same day. The government learned that violations occurred not only in California and Nevada, but likely also in 23 other states where CVS failed to implement appropriate safeguards. The settlement therefore addresses CVS’s liability in a total of 25 states.

    As part of the agreement, the government has agreed not to pursue criminal charges against CVS, which has accepted responsibility for the illegal conduct and has agreed to implement a compliance and ethics program over the next three years. In addition, CVS has entered into a separate compliance agreement with the Drug Enforcement Administration that has a five-year term.

    In mid-2007, after Mexico banned the sale of pseudoephedrine, Los Angeles County experienced an epidemic in a practice known as “smurfing,” where individuals make multiple purchases of pseudoephedrine in small amounts with the intent to aggregate the purchases for use in the illegal production of methamphetamine.

    Smurfers discovered that CVS, unlike other large chain retail pharmacies, allowed customers to make repeated purchases of pseudoephedrine that exceeded federal daily and monthly sales limits. Smurfers inundated CVS stores in Los Angeles and Orange Counties, and later stores in the Las Vegas area, to purchase cough and cold remedies, sometimes cleaning out store shelves. For more than a year, CVS failed to change its sales practices to prevent criminals from purchasing excessive amounts of pseudoephedrine at its stores.

    Pseudoephedrine, an ingredient found in various cough and cold medicines, is a “precursor chemical” that is used in the illegal manufacture of methamphetamine. Federal law limits the amount of pseudoephedrine that can be bought on a daily and monthly basis.

    CVS has agreed to pay the $75 million civil penalty by tomorrow. The remaining $2.6 million in profits the company has agreed to forfeit to the government is due within 30 days.

    The settlement with CVS was negotiated by the United States Attorney’s Office. The matter was investigated by the Drug Enforcement Administration, Los Angeles Field Division; the DEA’s Office of Chief Counsel; the California Bureau of Narcotic Enforcement; LA IMPACT (the Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force); and Orange County Proactive Methamphetamine Laboratory Investigation Team (the PROACT Task Force). The United States Attorney’s Office for the District of Nevada provided assistance.

    October 14, 2010
    Public Affairs
    Number: 213-621-6827

    http://anonym.to/?http://www.justice.gov/dea/pubs/states/newsrel/2010/la101410.html

Comments

  1. leyesnvideo
    Darn it, you beat me to posting this. I found it interesting in a number of ways. The fine is ~30x the profits that were gained(those have to be disgorged as well). The fact that they compiled all this data, but did nothing with it.....absolutely amazing. Their ineptitude here is jaw-dropping. It does make you wonder about some of the other things CVS may be doing, or not doing.
  2. talltom
    Did CVS Buy Its Way Out of a Meth Indictment?

    Did CVS Buy Its Way Out of a Meth Indictment?

    Drug agents across the land pursue their endless war against methamphetamine with relentless vigor, busting tweakers daily and breathlessly trumpeting the seizure of yet another "meth lab," which these days often consists of no more than a couple of soda pop bottles and a few chemicals available from your general store. Yet in the relentless campaign against meth and its manufacturers, it seems some are more equal than others.

    CVS, the largest operator of pharmacies in the United States, confessed back in October that it knowingly allowed crystal meth manufacturers to illegally buy large amounts of pseudoephedrine (PSE), an active ingredient used in the manufacture of methamphetamine. To avoid criminal prosecution, CVS officials agreed to pay the federal government a $75 million fine for narcotics violations, the largest cash money penalty in the 40-year history of the Controlled Substances Act.

    Although pseudoephedrine is a common ingredient in over the counter cold medications and is legal to purchase from drug stores in Canada and the US, because it can also be used to make methamphetamine, it is illegal for pharmacies to sell a person more than 3 1/2 grams of PSE per day. But DEA and state narcotic officers eventually learned that meth cooks were able to get around the law by employing "smurfs" -- people working with meth cooks who make repeated legal purchases of PSE at numerous different pharmacies.

    As early as 2007, dealers targeted CVS, and according to the DEA, the top CVS officials were warned by employees of the illegal violations. DEA reported that the pharmacy's head honchos ignored the warnings and demanded the workers continue selling the large amounts of PSE in California and Nevada.

    Authorities say CVS in effect assisted meth cookers by failing to provide adequate safeguards to monitor the legal amount of PSE that customers could buy. DEA said the violations occurred not only in California and Nevada, but in Arizona, Georgia, South Carolina and 23 other states currently under investigation. Between September 2007 and November 2008, CVS's illegal practice of overselling PSE products caused the DEA to tag them as the largest suppliers of pseudoephedrine to meth traffickers in Southern California.

    US Assistant Attorney Shana Mintz said, "Rather than choosing to over-comply with the law like their competitors did, they knowingly under-complied with the law."

    Federal agents began investigating CVS in 2008 after pseudoephedrine seized at Southern California meth labs was traced back to the pharmacy chain. News media stories reported that CVS installed an automated system called Meth Tracker to track individual sales but that the mechanism didn't stop multiple same-day purchases.

    Around Los Angeles, smurfs would hit CVS locations and raid the shelves of PSE products and cough and cold medicine tablets. Prosecutors said that in LA County alone over a 10-month period in 2008, sales of pseudoephedrine products such as Contac, Sudafed, Dimetapp and Chlor-Trimeton increased more than 150% over the same period in 2007.

    "CVS knew it had a duty to prevent methamphetamine trafficking, but failed to take steps to control the sale of a regulated drug used by meth traffickers as an essential ingredient for their poisonous stew," said US Attorney Andre Birotte in a statement after the settlement. "This case shows what happens when companies fail to follow their ethical and legal responsibilities," he added.

    "This historic settlement underscores DEA's commitment to protect the public's health and safety against the scourge of methamphetamine," said Michele Leonhart, the acting administrator of the DEA, in a statement. "CVS's flagrant violation of the law resulted in the company becoming a direct link in the meth suppy chain."

    While the feds were busy patting themselves on the back, CVS was busy absolving itself. In a statement, CVS Chairman and CEO Thomas Ryan said, "We have resolved this issue which resulted from a breakdown in CVS/pharmacy's normally high management and oversight standards." The lapse, Ryan said, "was an unacceptable breach of the company's policies and was totally inconsistent with our values."

    Small-time meth cooks are routinely sent to prison for years for "drug manufacturing," and people who help them out by buying small amounts of PSE go up the river for conspiracy, but not corporate criminals like CVS. Did the millions CVS paid the government keep company leaders from being indicted on drug charges?

    During the DEA investigation of the CVS pharmacies, over 50 people were charged with possession with intent to manufacture methamphetamine for purchasing the PSE products they bought illegally from CVS stores. Each defendant faces prison time, while CVS officials who knowingly allowed the illegal purchase of the drugs get off scot free by paying millions that eventually will be recouped.

    The arrest of the CVS smurfs sparked a heated debate about equal justice and disparities in the treatment of small-time smurfs and big-time corporate entities. "It doesn't seem fair to let those like CVS that ignored the law and sold massive amounts of an ingredient to make that poison get away with just a fine. Yes, it's a hefty one, but they'll probably just raise prices to offset it," said Dean Becker, the Houston-based host of KPFT radio.

    "As always, the powers that be are utilizing fear and loathing to continue their eternal war. CVS and all the corporations that are subject to the oversight of the DEA are pawns in the game of fear," said Becker. "Why are people using CVS to make speed?"


    No one is more infuriated with the disparity in treatments of drug offenders, particularly in the CVS case, than California attorney Diane Bass. Based in Laguna Beach, California, Bass represents one of the female defendants charged in federal court with possession with intent to manufacture the PSE drugs purchased from CVS.

    "If this was any other drug case, CVS would be the 'source' of the drugs the government would be most interested in prosecuting, and CVS would receive the longest sentence," she told the Chronicle. "Here, CVS paid a fine of $75 million and walked away without facing criminal prosecution while the small players like my client who are meth addicts trying to earn a few bucks to buy their drugs are facing excessively long prison sentences. This isn't fair. It's outrageous!" Bass said.

    "In my client's case, she needed the money to buy her medication for her illness. She's on SSI and had no money to pay for her medicine," the defense attorney explained. "These are certainly not the people that Congress intended to punish when it promulgated the PSE sentencing guidelines. I believe they intended to punish those who actually manufactured methamphetamine -- those whom my client sold the PSE cold medicine to."

    Bass complained the disparity in treatment in this case is so unfair she will fight tooth-and-nail for her client to show how corporations break the law an only pay a fine, while the small fry goes to prison.

    While corporate behemoths like CVS can buy their way out of trouble, that's not necessarily the case for Ma-and-Pa operations, like that of Oklahoma pharmacist Haskell Lee Evans Jr., 68, a member of the State Board of Health, who was recently indicted for "recklessly" selling pseudoephedrine to make crystal meth -- the same act committed by CVS.

    Evans, the owner of Haskell's Prescription Shop in Lawton, Oklahoma, allegedly sold pseudoephedrine to undercover agents with valid licenses who had not exceeded the limit of purchase. The PSE sales were considered "reckless" on one count because the agents arrived in the same vehicle to do a purchase. Oklahoma Attorney General Drew Edmonson is aiming to convict Evans on all accounts and ask a judge to dump him in prison for up to 43 years. Supporters of Haskell Evans are urging pharmacists to join a Facebook page called Pharmacists and Citizens in support of Haskell Evans.

    Meanwhile, in the midst of the year-end holiday season, attorney Diane Bass reflected on the year ahead as she prepared to battle the federal government. She intends to ask the court to lessen her client's penalty due to the improper dispensing of the PSE drugs by CVS to the defendant.

    "The federal sentencing guidelines in my client's case calls for a sentence around 188 months due to the fact she and her co-defendants purchased several thousand milligrams of pseudoephedrine from CVS," she said. "I have requested that the US attorney recommend a variance or departure based on the fact except for CVS' illegal sales to customers of more than 3.6 grams per day or 9 grams per month, my client never would have been able to purchase the amount she purchased. I believe she should only be sentenced as if she had purchased 9 grams per month which would result in a 60 month variance. Hopefully, since my client suffers from serious medical conditions and has had a tragic life, the court will grant a further down departure in sentencing."

    A poor, sick, drug addicted woman's lawyer fights to get her sentence reduced to only 10 years for buying too much of a legal, over-the-counter medicinal product, while CVS gets off the hook by paying millions and has the opportunity to make millions more by staying in business. Disparate justice isn't just about race in America, it's also about class.

    Clarence Walker,
    Drug War Chronicle
    January 17, 2011

    Clarence Walker is a veteran Houston-based journalist who writes on criminal justice issues and who dearly wishes this piece was called "CVS in the Hood." He wishes all readers a Happy New Year! Walker can be reached at cwalkerinvestigate@gmail.com.

    http://www.alternet.org/story/149565/

    © 2011 Drug War Chronicle All rights reserved.
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