FedEx faces U.S. criminal charges over online pharmacies

SAN FRANCISCO Fri Jul 18, 2014 6:41am IST

An all-electric Federal Express delivery truck is seen in San Diego, California September 24, 2013. REUTERS/Mike Blake/Files

An all-electric Federal Express delivery truck is seen in San Diego, California September 24, 2013.

Credit: Reuters/Mike Blake/Files

Related Topics

Stocks

   

SAN FRANCISCO (Reuters) - FedEx Corp was indicted on Thursday for shipping packages from illegal online pharmacies despite repeated warnings from U.S. drug enforcement officials, according to a court filing.

The 15-count indictment, handed down by a federal grand jury in San Francisco, includes charges for conspiracy to distribute controlled substances. FedEx allegedly gained at least $820 million from the conspiracy, the filing said, and could be fined up to twice that amount.

FedEx reported $11.8 billion in total revenue for the quarter ended in May.

In a statement, FedEx Senior Vice President Patrick Fitzgerald said the company is innocent and will plead not guilty. U.S. prosecutors are asking that the company assume responsibility for the legality of millions of packages a day, he said. "We are a transportation company. We are not law enforcement," he said.

Beginning in 2004, the indictment said, FedEx was warned "on no less than six different occasions" that illegal Internet pharmacies were using its services to distribute prescription drugs. Senior managers were among those who received warnings, the filing said.

In one instance, FedEx knew the Drug Enforcement Administration had shut down one pharmacy, but continued to ship packages from its affiliates. FedEx also developed policies and procedures that allowed it to continue shipments, the indictment said.

For example, some drivers in Kentucky, Tennessee and Virginia said they had been stopped on the road by customers demanding packages of pills. Delivery addresses included parking lots and vacant homes where people would wait for pharmaceutical deliveries, the indictment said.

In response, a senior FedEx vice president of security approved a procedure under which Internet pharmacy packages from problematic shippers were held for pickup at specific stations, the filing said.

"This policy was eventually expanded to include all Internet pharmacy packages delivered to the stations that were experiencing concerns," the indictment said.

Melinda Haag, the U.S. Attorney in Northern California, said the indictment "highlights the importance of holding corporations that knowingly enable illegal activity responsible for their role in aiding criminal behavior."

But FedEx's Fitzgerald said the DEA never supplied a list of pharmacies engaging in illegal activity. The privacy of the company's customers is "at risk" because of the charges, he said.

"We continue to stand ready and willing to support and assist law enforcement," Fitzgerald said. "We cannot, however, do the job of law enforcement ourselves."

The case in U.S. District Court, Northern District of California, is United States of America vs. FedEx Corporation, FedEx Express Inc and FedEx Corporate Services Inc, 14-cr-380.

(Reporting by Dan Levine; Editing by Chris Reese and Mohammad Zargham)

FILED UNDER:

Reuters Showcase

GDP Growth

GDP Growth

India revises up 2013/14 GDP growth to 6.9 percent.  Full Article 

Adani Restructuring

Adani Restructuring

Adani hives off power, ports businesses to boost growth.  Full Article 

Bank of Baroda

Bank of Baroda

Q3 net profit down 69 pct on higher provisions  Full Article 

Trading Fees

Trading Fees

BSE slashes fees in FX derivatives battle with NSE  Full Article 

SpiceJet Turnaround

SpiceJet Turnaround

SpiceJet board approves up to $243 mln share sale plan  Full Article 

Currency Market

Currency Market

RBI urges companies to hedge FX exposure  Full Article 

Banking Sector

Banking Sector

Banks say no room to cut lending rates, thwarting RBI easing  Full Article 

ICICI Results

ICICI Results

ICICI sets quarterly record profit as Q3 net rises 14 pct  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage