A federal indictment unsealed in the U.S. District Court of Middle Tennessee accuses a local wholesale pharmaceutical company of funneling pills from “street-level diverters” to pharmacies resulting in approximately $58 million in sales.
Charles Edwards, Brenda Edwards and Jerrod Smith — all involved with an entity called Cumberland Distribution — are named in the indictment as co-conspirators in the alleged fraud.
“In essence, diverted pharmaceuticals are those that have been removed from the regulated distribution channels but then reintroduced into the wholesale marketplace through varying means,” the indictment reads.
From 2006 until 2009, Cumberland Distribution operated two Nashville-based warehouses, located at 5245 Harding Place and at 1419 Donelson Pike. They allegedly bought drugs from various networks of street-level sources in New York City and South Florida, then repackaged them to disguise the origin of the drugs.
Pharmacy customers paid Cumberland Distribution more than $58 million in proceeds during the conspiracy, which netted roughly $14 million in profits, the indictment alleges.
The company allegedly diverted nearly two tons of illegal drugs to a warehouse in Texarkana, Ark., where labels were falsified under an entity called Tristate Management and shipped to Nashville.
In Nashville, employees allegedly were instructed to clean out the pill bottles and remove signs of diversion like glue residue, hair, scratched labels and expiration dates.
Federal authorities raided the Donelson Pike facility in May 2009, and the company quickly relocated to a building located on Foster Avenue. When a subpoena was issued for the documentation, Smith and Charles Edwards turned over false pedigrees to authorities.
The indictment accuses Charles Edwards of 16 counts of mail fraud, 11 counts of wire fraud, one count of conspiracy to defraud and one count of obstruction of justice. Brenda Edwards was indicted on the mail fraud, wire fraud and conspiracy charges. Jerrod Smith was charged on the mail fraud, conspiracy and obstruction of justice charges.
The government is also seeking forfeiture for properties related to the fraud and a money judgment of $56 million related to the crime.
Congress enacted the Prescription Drug Marketing Act in 1987 in order to combat diverted pharmaceuticals, according to the indictment.