# May 26, 2003

## **Former convicts try a safer venture: Pharmaceuticals**

*Sun-Sentinel: May 26, 2003; by Sally Kestin and Bob LaMendola*\
\
Men convicted of marijuana smuggling, bribery, armed robbery, burglary
and theft have abandoned those endeavors in favor of a safer, richer
business: Wholesaling pharmaceutical drugs in South Florida.\
\
Lax state regulation and mild penalties have allowed at least eight
convicted criminals to set up wholesale drug companies and obtain
Florida permits to peddle the medicines Americans take daily.\
\
The criminal element in the business has formed a network of companies
trading hundreds of millions of dollars in medications, some of it
phony, diluted, expired, relabeled or improperly handled, according to
documents and state and federal officials investigating the industry.\
\
These outfits also have built connections to supply other local
wholesalers who sell to the nation\'s largest pharmaceutical
distributors, turning South Florida into a major source of counterfeit
and adulterated medications tainting the mainstream drug supply.\
\
How lucrative can it be? Three wholesalers the state is investigating
live in million-dollar homes in Weston\'s Windmill Ranch Estates
neighborhood.\
\
The state has licensed 422 Florida companies as drug wholesalers \--
most of them tiny operations, from Miami to West Palm Beach \-- plus 978
more who trade here from out of state.\
\
The industry contends that small wholesalers play a legitimate role,
holding down drug costs by snapping up overbuys and manufacturer
specials at discounts, and reselling them to three huge nationwide firms
that distribute about half of the country\'s drugs.\
\
But investigators say the process has been subverted. Agents have traced
deals in which unscrupulous wholesalers paid pennies on the dollar for
bogus drugs or for bona fide medicines sold illegally by doctors,
pharmacists and patients. The drugs were sold and resold among as many
as 10 small wholesalers, each marking up the shipment to make a profit.\
\
A special team of state and federal agents, for more than a year, has
been investigating and presenting to a grand jury evidence of illicit
trading in prescription drugs in South Florida.\
\
Here are some of the wholesalers who are under investigation or have
been arrested:\
\
**Michael Allyn Carlow\
\
**Carlow, 50, has emerged as a major wholesaler selling millions of
dollars worth of questionable medications out of his \$1.3 million home
in Weston, investigators said in documents. He buys and sells using at
least a dozen firms run by him or associates in seven states.\
\
Carlow surfaced in the business in 1994, opening Quest Healthcare in
Davie. Florida law forbids giving a wholesale license to a felon, but
Carlow never mentioned that he had a felony conviction, and regulators
never checked.\
\
In June 2000, Carlow and an aide were arrested for buying 83 boxes of a
costly, injectable cancer and AIDS drug, Neupogen, from witnesses
working with investigators.\
\
Carlow, his partner and the witnesses met on a Miami street corner.
Carlow turned over \$93,000 and loaded the medicine from the witnesses\'
trunk into his van. To remain potent, Neupogen is supposed to be
refrigerated.\
\
The state sentenced Carlow to 18 months probation and revoked his
wholesale license. But he was able to stay in business, according to
records.\
\
Barely a month after his arrest, the girlfriend of his longtime
associate started a wholesale firm under the name Med RX in Fort
Lauderdale. On the day state inspectors visited Med RX, they found
Carlow and his friend, Mark Novosel. Investigators say both help to
operate the company.\
\
Novosel had been arrested in 1980 as the planner and driver in a
burglary that ended in the stabbing death of his elderly Ohio neighbor.
His confession to his role was thrown out and the case was dropped, the
prosecutor said. In 1998, Novosel was convicted of taking kickbacks and
bribing a judge to send patients to substance abuse centers Novosel
ran.\
\
Another Carlow associate, David Ebanks, was arrested in Miami in April
and found with fake driver licenses with his photos on them. The
licenses were in the names of people who had agreed to set up wholesale
firms on his behalf in Miami and Texas, allowing him to pose as them,
state investigators said.\
\
Carlow had a family member open a Kissimmee company called BTC Wholesale
that was little more than an empty office. Carlow actually ran BTC from
his house, with a second relative doing the books from her Lake Worth
home, documents show.\
\
In January 2002, thieves stole \$250,000 of injectable blood medications
from Miami wholesaler Biomed Plus. Three days later, Carlow offered the
same drugs to the Stone Group, a Boca Raton wholesaler, documents show.\
\
Stone Group sent an employee to fetch the vials at Carlow\'s house on a
Sunday and the next day put them out for sale over the Internet and via
mass-issue faxes. Stone Group sold the drugs \-- back to Biomed.\
\
It was a sting. Biomed had called the authorities, who were waiting for
the delivery. Stone Group employees later told investigators they had
picked up \$2.2 million of questionable drugs at Carlow\'s house over
three months.\
\
When inspectors checked Stone Group\'s records, they found receipts for
at least \$700,000 in medications bought from a Utah firm but delivered
from Novosel\'s house in Fort Lauderdale. Agents said he and his
girlfriend ran the Utah company, Optia Medical. Optia also was accused
in a 2002 lawsuit of selling part of \$8.5 million in a relabeled,
counterfeit blood booster called Epogen found at AmerisourceBergen
Corp., a huge national distributor.\
\
An Oct. 1 shipment illustrated Carlow\'s operation.\
\
State agents seized 131 boxes of the anemia drug Procrit, used to treat
cancer and HIV/AIDS patients, worth \$226,000 in a Miami sting. Tests
showed it was 5 percent strength relabled as full strength. They traced
it back.\
\
A Carlow associate had obtained or relabeled the drugs and sold them to
a Carlow dummy company in Odenton, Md., which shipped them to a Carlow
associate in Indiana who was licensed to sell into Florida. The Indiana
firm shipped them back to Carlow to be resold again when the package was
intercepted, officials said in a search warrant.\
\
\"It\'s classic money-laundering technique,\" said William Avery, a
Medicaid fraud investigator for the state attorney general. \"The more
layers you put between the good guy and the bad guy, the more protection
there is for the bad guy.\"\
\
Carlow\'s attorney, Craig Brand, declined to discuss specific
allegations, but said Carlow was filing a lawsuit accusing the state of
unfairly persecuting him.\
\
\"It\'s easy to throw stones,\" Brand said. \"I look forward to seeing
their proof. They haven\'t done anything, have they? The end of the day
is going to be interesting.\"\
\
**José Antonio Benitez\
\
**Benitez failed as a marijuana trafficker \-- he got busted and spent
five years in federal prison. Later, he lost his job at a trucking
company, then went to jail for trying to defraud his former employer.\
\
But Benitez, 45, made millions as a pharmaceutical wholesaler in North
Miami. Even after the state of Florida caught up with him, he set up
shop in North Carolina and continued selling into Florida.\
\
When he got his wholesaler license from Florida in July 1999, Benitez
had just pleaded guilty to wire fraud in a Mississippi federal court and
had recently completed probation from a 1991 conviction for smuggling
pot into Key West. Like Carlow, he did not disclose his convictions and
no one checked.\
\
Benitez and two partners built their company, Triple J Trading, into a
wholesale force, documents show. After 18 months, the state learned of
his convictions and revoked his license. But within weeks, his wife,
Solange, opened a new Miami company, Brazil-U.S. Trading. Within months,
his brother and a Pembroke Pines wholesaler started A&J Trading in Mint
Hill, N.C.\
\
\"Anyone with a warehouse, an alarm, air conditioning and a refrigerator
can get a license,\" said Robert Penezic, a Florida assistant attorney
general overseeing a grand jury investigating the wholesale drug
business.\
\
In January 2002, state health inspectors watched a Brazil-U.S. driver
deliver \$5,000 of AIDS pills to a Davie wholesaler. All had sticky
labels, an indication they were relabeled and likely fake, expired or
adulterated, documents show.\
\
Inspectors raided Brazil-U.S. and found Benitez. He claimed he was just
a consultant. The state seized 145 bottles of adulterated AIDS drugs and
cholesterol medications worth \$1 million, all with sticky labels, plus
common chemicals used to remove labels.\
\
Brazil-U.S. records show it had sold \$4 million of drugs to local
wholesale and retail outlets, and had bought \$6.9 million during five
months of 2001 from A&J.\
\
The drugs likely were \"purchased from numerous street sources willing
to sell their prescription drugs for pennies on the dollar,\" state
officials said in a search warrant. \"A&J Trading is a front company and
\... Brazil is using A&J\'s business account to launder proceeds of its
illegal operation.\"\
\
A&J is still open, but Benitez is missing and a fugitive. He violated
his federal probation last year by testing positive for cocaine and not
showing up at a court-ordered program, federal court records show.\
\
Contacted on his cell phone, Benitez said he would consult his attorney,
then said neither he nor his wife would comment.\
\
**Laurence D. and Adam P. Runsdorf\
\
**The father and son from Boca Raton have been a pharmaceutical team for
a decade, and in recent years took in millions as wholesalers. Documents
show they were a conduit for counterfeit drugs reaching the drug
supply.\
\
Laurence Runsdorf, 63, a career executive in the industry, started the
drug manufacturing firm Breckenridge Inc. in 1983 in New Jersey. He
moved it in 1992 to Boca Raton, where he lives in a \$1.3 million home.
His son Adam, 38, was an executive at the company.\
\
Adam Runsdorf got into the wholesale drug trade by opening Stone Group
in the same building as Breckenridge.\
\
Stone Group bought drugs with false paperwork from unlicensed sellers,
including millions worth at Carlow\'s house, documents show. Adam resold
drugs to his father\'s company. Breckenridge was a valuable buyer,
Runsdorf said in an interview, because it had a contract to sell drugs
to giant Amerisource.\
\
State inspectors found 37 invoices from 2001 and 2002 in which Stone
Group sold \$3.8 million of drugs to Breckenridge. The father\'s firm
then resold the shipments to Amerisource subsidiaries in Alabama, Texas
and Kentucky that handle cancer drugs.\
\
At least one of the shipments had a lot number identified as being 5
percent strength but that was relabeled as full-strength.\
\
The shipment\'s paperwork proved phony, concealing the true source of
the drugs. Most likely, officials said, the drugs ultimately went to
patients.\
\
The state has moved to revoke the wholesale licenses of Stone Group and
Breckenridge; the companies are challenging the actions.\
\
Adam Runsdorf said he had no idea he was buying fake drugs, that the
sellers tricked him. \"The company that originated the product was out
to defraud. It was clearly a premeditated course of action. We were
naive and purchased a number of \[tainted\] products,\" he said.\
\
His father got involved in the sales only as a favor to him, Runsdorf
said, because Amerisource did not have an agreement to buy from the
son\'s firm.\
\
**Eddie Mor and Carlos Luis\
\
**In Texas, Mor and Luis operate quiet, little pharmaceutical firms. In
South Florida, where they live, they are under investigation on
suspicion of making and peddling millions of dollars of bogus
medications.\
\
The state identifies Mor, 45, and Luis, 56, as a source of 5 percent
strength Procrit relabeled as full-strength and sold to national,
mainstream distributors. Authorities stumbled onto them by accident.\
\
In April 2002, an undercover agent bought 100 boxes of injectable Epogen
(identical to Procrit) and 17 of growth hormone for \$509,000 from a
Pembroke Pines wholesaler who was under investigation. The Epogen tested
fake, documents show.\
\
The wholesaler\'s records said he got the drugs from Mor\'s Express RX
in Dallas, which got it from Luis\'s Medex International in Houston. But
Florida officials found those offices inactive, with the firms run from
South Florida.\
\
A few weeks later, a major regional distributor, Bindley Western,
discovered \$1.7 million of fake Procrit in a Texas warehouse. The
paperwork traced the drugs to the Mor and Luis firms.\
\
Florida inspectors began checking. At a Coral Springs wholesaler, T-N-T
Sales, they found Procrit from the phony batch. The owner told them he
had bought and resold \$2.5 million of drugs from Express RX, most of
which he picked up at Mor\'s \$500,000 home in Davie. His paperwork
showed Mor got the drugs from Luis.\
\
Agents searched Mor\'s house and found blood products in his
refrigerator, \$16,000 cash and \$405,000 in uncashed checks.\
\
At Luis\'s warehouse, agents found 30 boxes of a delicate blood
byproduct, Venoglobulin, unrefrigerated in a cardboard box. They found
pills with sticky labels, relabeling chemicals and bags of free samples
from doctors. At Luis\'s house, agents found Procrit in his refrigerator
and about 900 boxes of pills.\
\
Attorneys for Mor and Luis declined to comment.\
\
**José Castillo and Brian Hill\
\
**A red flag went up when state health inspectors made a routine check
at a Miami drugstore in February 2002. Six bottles of AIDS pills had
sticky labels, indicating tampering. The source: Jemco Medical
International.\
\
The next day, according to court documents, agents visited Jemco in a
Pembroke Pines industrial park. Nothing was amiss, but they began
keeping an eye on the president, Castillo, 39, and vice president Hill,
36.\
\
They noticed Jemco workers on forklifts moving boxes from the front of
the warehouse to a rear door. There, they struck illegal gold. In a
separate uncooled warehouse, they found \$3.5 million of mislabeled and
adulterated drugs, including a few items that should have been
refrigerated. Castillo told them he did not know where the drugs came
from.\
\
Unlike other wholesalers who focused on expensive injectable drugs,
Jemco had huge stocks of everyday medications: 100,000 albuterol pills
for asthma, 26,000 albuterol inhalers, more than 120,000 vials of
ipratropium inhalant and 156 bottles of assorted HIV/AIDS pills and
other drugs.\
\
At least 35 shipments had gone to hospitals in Puerto Rico, the state
said.\
\
The state suspended Jemco\'s license, but Castillo and Hill moved to
North Carolina and began shipping drugs to Florida. Castillo went into
business with closed-down wholesaler Benitez, and state agents saw Hill
working at a wholesale firm started by a former Jemco underling.\
\
A Jemco attorney, Ben Metsch of Miami, said the state\'s accusations
were unproven \"bull\" and said the state unfairly seized the company\'s
inventory, forcing Jemco to file for bankruptcy.\
\
**Louis F. Petrillo and Lawrence D. Pinkoff\
\
**Petrillo owned medical clinics. Pinkoff and partners owned pharmacies
and drug wholesalers.\
\
Together, they billed the state Medicaid program for \$11.6 million
worth of Procrit, Neupogen and other medications, then bought the drugs
back at pennies on the dollar from their patients and resold them into
the drug supply, investigators said in documents.\
\
Petrillo, 62, was the former president of Bayshore Bank in Miami who
resigned in 1987 and was convicted for giving a \$2 million loan to a
firm selling arms to Nicaraguan contras.\
\
Petrillo hired doctors to see AIDS patients at County Line Medical
Center in Pembroke Pines and Metro Dade Medical Center in Miami. Every
two weeks, 150 patients showed up for \"pay day,\" when they picked up
their prescriptions and a \$300 check, state documents said.\
\
Patients got their medicine at two pharmacies owned by Pinkoff, 44, of
Hollywood. Runners bought back the drugs for cash or pain pills,
documents said.\
\
\"If they\'re junkies, they don\'t want the medicine, they want the
money to buy crack,\" said Avery, the Medicaid agent.\
\
The runners sold the drugs to Pinkoff\'s wholesale firms in Dania and
Hollywood, the state said. The drugs wound up back in drugstores.\
\
\"Medicaid, we may have bought the same damn drugs twice, three times,\"
Avery said.

In the pharmaceutical case, Petrillo pleaded guilty to organized fraud
and is in federal prison for violating parole on the loan conviction.
Pinkoff pleaded guilty to racketeering and was sentenced to two years of
house arrest.

Petrillo\'s lawyer, Ruben Oliva, said Pinkoff lured Petrillo into the
scheme. Pinkoff\'s lawyer, Bernard Cassidy, said Petrillo was the head
man.

**June 11, 2003**

**Guilty pleas in Miami case of fake drug Procrit**

MIAMI, June 11 (Reuters) - Three people pleaded guilty on Wednesday to
charges they sold fake versions of Procrit, the prescription drug used
to help cancer and HIV patients increase red blood cell counts,
prosecutors said.\
\
Eddy Gorrin, William Chavez and Duviel Gonzalez will be sentenced in
late August on charges of unlawful sale and distribution of counterfeit
drugs. Each faces up to 10 years in prison and a \$250,000 fine.\
\
Prosecutors said undercover agents bought the fake Procrit during an
investigation and found it was simply a clear liquid that contained no
traces of real medication for treatment of cancer or HIV.\
\
\"The counterfeit Procrit contained only bacteria-tainted water, thereby
posing a risk of infection in already seriously weakened patients,\" the
Miami U.S. Attorney\'s Office said in a written statement.\
\
Heavily advertised Procrit is a anemia drug sold by Johnson & Johnson
under a licensing agreement with Amgen Inc.\
\
The U.S. Food and Drug Administration in March issued a warning to
health officials and consumers to be on the lookout for bacteria-tainted
fakes of Procrit, calling them a \"significant potential hazard to
consumers.\" (END)

**June 12, 2003**

**Guilty plea filed in counterfeit Procrit investigation**

*Reuters Health: June 12, 2003; by Alicia Ault*

WASHINGTON (Reuters Health) - Three Miami area men pled guilty Wednesday
to the illegal sale and distribution of a counterfeit version of Amgen
Inc.\'s anemia drug epoetin alfa (Procrit).

The U.S. Attorney\'s Office for the Southern District of Florida made
the announcement in conjunction with the U.S. Food and Drug
Administration\'s (FDA\'s) Office of Criminal Investigation, the U.S.
Department of Health and Human Services, and the Miami-Dade Police
Department.

All the agencies took part in an investigation that led to the guilty
pleas by the three defendants: Eddy Gorrin, William Chavez and Duviel
Gonzalez. They will be sentenced in late August and face up to 10 years
in prison and a \$250,000 fine.

The investigation started in April 2002, when two informants notified
Amgen that they knew that Chavez was distributing counterfeit Procrit
and other drugs. Amgen manufactures Procrit, which is used to boost red
blood cell levels in cancer and AIDS patients. Johnson & Johnson is
licensed to sell the drug in the U.S.

Last June, and again in March this year, the two companies and the FDA
warned physicians that counterfeit lots of Procrit had been found.

Special agents from the FDA contacted the three defendants and bought
products from them in January and February. On January 20, Chavez sold
20 boxes of suspected counterfeit Procrit to an undercover agent at a
shopping mall in Miami. FDA officials then met with J&J subsidiary Ortho
Biotech and determined the drugs were counterfeit.

Chavez went on to sell more counterfeit Procrit to undercover agents,
who were using surveillance to capture the illegal transactions. He was
subsequently arrested and agreed to cooperate, naming Gorrin as a
partner. Gorrin was arrested trying to make a sale to the undercover
agents.

The counterfeit product did not contain any active drug. \"In fact, the
counterfeit Procrit contained only bacteria-tainted water, thereby
posing a risk of infection in already seriously weakened patients,\"
according to the U.S. Attorney\'s statement. (END)

**August 29, 2003**

**Two Florida Men Sentenced for Drug Scam**

By CATHERINE WILSON Associated Press Writer

MIAMI (AP) Two men were sentenced to prison or house arrest Friday for
helping distribute vials of bacteria-tainted water passed off as the
lifesaving medicine Procrit.

William Chavez, 39, was sentenced to three months in prison for
brokering sales of unlicensed drugs to undercover Food and Drug
Administration agents. Duviel Gonzalez, 31, was sentenced to six months
of house arrest for attending one of the sales and storing boxes of the
fake drugs in exchange for \$3,000. Both men pleaded guilty in June.

The investigation began in April 2002, when manufacturer Amgen Inc.
received a tip that a man in Miami named William Chavez was involved in
a counterfeiting ring.

Separately, the agency warned health workers, and a distributor found
some fake Procrit before it reached pharmacies. Procrit is prescribed to
people with HIV and cancer patients with anemia.

Chavez was arrested in February after he tried to sell an FDA agent the
fake drug for \$36,500. An FDA lab had determined after an earlier sale
that the vials contained bacteria-laced tap water. He agreed to
cooperate and led the agents to alleged ringleader Eddy Gorrin. Agents
later arrested Gonzalez.

Gorrin, who is scheduled to be sentenced next week, has admitted making
the counterfeit Procrit, complete with imitation holographic safety
seals, lot numbers and stamps almost identical to those on the real
thing.

Officials said none of the fake drugs ever reached patients.

Chavez must pay \$20,000 the same amount he was to be paid for helping
sell the fake drug and serve three months of house arrest after his
release from prison.

Procrit wholesales for \$1,700 for a box of four vials. The counterfeit
boxes were sold for \$350 to \$800 per box. Investigators say it cost
Gorrin no more than \$1.50 a box to make.

**August 30, 2003**

**Two Florida Men Given Prison Time, House Arrest in Counterfeit Drug
Case**

*South Florida Sun-Sentinel: August 30, 2003, by Bob LaMendola*

Aug. 30\--Two of three South Florida counterfeiters who peddled vials of
tainted water as expensive AIDS and cancer medicine were sentenced to
prison time or house arrest on Friday.

William Chavez, 39, of Miami will spend three months in federal prison,
three months on house arrest and three years on probation and must pay
\$20,000 restitution, federal prosecutors said. An assistant in the
group, Duviel Gonzalez, 31, of Miami will serve six months of house
arrest and three years of probation and pay \$3,000 restitution. Both
men were sentenced in federal court in Miami.

The leader of the counterfeiting ring, Eddy Gorrin, 30, of Pembroke
Pines is to be sentenced on Wednesday.

Chavez received a lighter sentence because he helped build the case
against Gorrin, said Wifredo Ferrer, an assistant U.S. attorney who
handled the case.

All three pleaded guilty in June to illegal sales and distribution of
pharmaceuticals.

The group turned Gorrin\'s home and a Hialeah warehouse into a factory
for bogus Procrit, an expensive injectable drug used to boost red blood
cells of patients with AIDS, cancer and anemia. Instead of the drug, the
vials contained water found to be contaminated with e. coli bacteria.

State and federal investigators think the group sold 333 boxes of fake
Procrit on the market and 120 boxes to undercover agents, each box with
four vials. Officials said they recovered all the fake drugs. (END)

**September 3, 2003**

**Fla. Man Sentenced for Selling Fake Drug**

\- By CATHERINE WILSON= - Associated Press Writer=

MIAMI (AP) - A man who bottled bacteria-tainted water and sold it as the
lifesaving medicine Procrit was sentenced to more than 3 years in prison
Wednesday.

Eddy Gorrin, 30, had admitted to making the counterfeit drug, complete
with imitation holographic safety seals, lot numbers and stamps almost
identical to those on the real thing. His sentence Wednesday was part of
a plea bargain reached in June.

\"You were very lucky and society was very lucky that it was stopped
when it was,\" U.S. District Judge Adalberto Jordan told Gorrin during
sentencing.

Procrit is prescribed to people with HIV and cancer patients with
anemia. Officials have said none of the fake drugs ever reached
patients.

\"I just thank God every day that nobody was hurt by the stupidity of my
actions,\" Gorrin told the judge. \"I expect to pay for my mistakes.\"

Two other men involved in the scam were sentenced Friday.

William Chavez, 39, was sentenced to three months in prison for
brokering sales of unlicensed drugs to undercover FDA agents.

Duviel Gonzalez, 31, was sentenced to six months of house arrest for
attending one of the sales and storing boxes of the fake drugs in
exchange for \$3,000.

Chavez was arrested in February for selling fake Procrit to an
undercover FDA agent. He agreed to cooperate and wore a wire as he
turned over money to Gorrin. Agents then nabbed Gorrin and later
arrested Gonzalez.

In all, the FDA bought 120 boxes of fake Procrit, and recovered another
333 boxes sold to others. Agents found another 5,000 boxes printed and
ready for filling.

Legitimate Procrit wholesales for \$1,700 for a box of four vials. The
counterfeit boxes were sold for \$350 to \$800 per box, but
investigators say it cost Gorrin no more than \$1.50 to make a box.