U.S. Attorney's Office
Southern District of Texas
October 3, 2024
Largest ever criminal enforcement action targeting distributors of pharmaceutical opioids and commonly abused prescription drugs with estimated street value of $1.3B
HOUSTON - Charges have been unsealed as part of a larger enforcement action related to the unlawful distribution of nearly 70 million opioid pills and over 30 million doses of other commonly abused prescription drugs to alleged Houston-area pill-mill pharmacies. Three Houston-area pharmacy operators were also charged for their role in the schemes. Nine individuals have pleaded guilty.
According to court documents, the opioids allegedly distributed - oxycodone, hydrocodone and hydromorphone - were available in numerous strengths and forms, but the distributors allegedly sold the drugs almost exclusively in their most abused, most powerful immediate-release pill forms, i.e., the ones that sold for the most money on the black market. The distributors also allegedly sold prescription drug potentiators such as alprazolam, carisoprodol and promethazine with codeine syrup known for their reputation of enhancing the high from the opioids. The distributors allegedly charged their Houston customers far more for the drugs than what a legitimate pharmacy could or would pay.
As alleged in the charging documents, the defendants mostly targeted pill-mill pharmacies in and around Houston - a nationally recognized “hot zone” for diversion of pharmaceutical opioids onto the black market. The distributors sought to thwart Drug Enforcement Administration (DEA) oversight function in several ways, including by following what one defendant called a “blueprint” for avoiding detection: high prices, low purchasing limits for the controlled drugs and compliance measures that only served appearances. In addition, the distributors were all located outside Texas, far removed from their Houston-area pill-mill pharmacy customers and the communities ravaged by their alleged offenses.
“The distributors that sourced pills into the Houston area may be located across the country, but they targeted Houston, helping to make it a known ‘hot zone’ for drug diversion,” said Hamdani. “This office will always support the prosecution of individuals who are believed to have thwarted law enforcement and oversight by operating across state lines and posing as legitimate businesses, while poisoning our district by targeting pill mills with precisely the drugs at the heart of our country’s addiction crisis. These cases build on this district’s history of systematically dismantling pill-mill clinics, pharmacies and the often-violent drug-trafficking organizations responsible for selling these pills in our community.”
“The defendants, including pharmaceutical drug distributors, allegedly exploited the opioid crisis for profit — selling dangerous and addictive drugs to pill-mill pharmacies at above-market prices, knowing that the drugs would end up on the black market,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s (DOJ) Criminal Division. “These charges represent the Justice Department’s largest criminal enforcement action targeting executives, brokers, and alleged pill-mill pharmacy owners for unlawfully distributing opioids and other commonly abused drugs. Our message is clear: we will not hesitate in our pursuit of those involved in dumping addictive pharmaceutical drugs onto the streets.”
Those charged include Velencia Griffin, 42, Kendal Lyons, 29, and Andre Reid, 44, Houston; Sheldon Dounn, 71, and Jason Smith, 43, Plantation, Florida Plantation; Hernan Alvarez, 52, Phoenix, Arizona; Joshua Weinstein, 50, Miami, Florida; Eric Bailey, 59, St. Louis, Missouri; Joseph Pesserillo, 38, The Villages, Florida; Cassandra Rivera, 40, Ft. Lauderdale, Florida; Richard “Dick” Osbourne, 78, Memphis, Tennessee and Courtney Rotenberry, 45, Savannah, Tennessee.
For unlawful distribution-related count, those charged face up to 20 years in federal prison, while a conspiracy to defraud the United States carries a possible five-year prison term. Conspiracy to use a communications facility to further the commission of a drug felony has a maximum four-year possible prison term.
The DEA, Department of Health and Human Services – Office of Inspector General (DHHS-OIG), FBI, U.S. Postal Service - OIG, Food and Drug Administration - Office of Criminal Investigations and Texas Medicaid Fraud Control Unit conducted the investigation with assistance from the Department of Homeland Security, General Services Administration - OIG, Broward County, Florida, Sheriff’s Office, Houston Police Department and other federal and state law enforcement agencies.
DOJ Trial Attorneys Drew Pennebaker and Devon Helfmeyer are prosecuting the cases. Assistant U.S. Attorney Brandon Fyffe is assisting with forfeiture. The U.S. Attorneys’ Offices for the Southern District of Texas, Southern District of Florida, Eastern District of Missouri and Eastern District of North Carolina are assisting with the prosecution.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,400 defendants who collectively have billed federal health care programs and private insurers more than $27 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.
Source: U.S. Attorney's Office press release
