Four Charged In $70 Million Black Market HIV Treatment Drug Scam
SAN FRANCISCO (CBS SF) -- A grand jury has indicted for Southern California men for operating a large-scale clearing house for illegal HIV treatment drugs that generated $70 million in sales, according to federal prosecutors.
In a joint statement, United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett said Edvin Ovasapyan, Hakob Kojoyan, Lorik Papyan and Stephen Silverman have been charged with several counts of conspiracy for their roles in a company named Mainspring Distribution.
The superseding indictment describes how Ovasapyan, Kojoyan, and Papyan conspired to acquire large quantities of diverted prescription HIV medications on the black market, and then created false documentation claiming that the medications had been acquired from licensed suppliers.
Prosecutors said all four defendants allegedly then conspired to sell these diverted prescription drugs to retail pharmacies and wholesalers across the United States.
The indictment alleges Silverman, an attorney, was aware of the illicit nature of the operation and assisted his co-defendants by, among other things, agreeing to launder the proceeds of the fraud.
Mainspring's customers were never informed that they were purchasing prescription drugs acquired on the black market. Over the course of the conspiracy, Mainspring earned more than $70 million through sales to its customers.
According to the indictment, the defendants also laundered funds, routing a portion of Mainspring's earnings through misleadingly named bank accounts designed to create the appearance of a lawful supply chain.
All four defendants have been charged with conspiracy to commit wire fraud and conspiracy to engage in the unlawful wholesale distribution of drugs.
If convicted of conspiracy to commit wire fraud, the defendants face a maximum sentence of 20 years in prison, a fine of $250,000 (or twice the gross gain or loss), and restitution.
If convicted of conspiracy to commit money laundering, the defendants face a maximum sentence of 20 years in prison, a fine of $500,000 (or twice the value of the property involved in the transaction), and restitution.
If convicted of conspiracy to engage in the unlawful wholesale distribution of drugs, the defendants face a maximum sentence of 5 years in prison, a fine of $250,000 (or twice the gross gain or loss), and restitution.
