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Feds shut down Burnsville Internet pharmacy

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Last update: May 20, 2005 at 10:01 PM

Feds shut down Burnsville Internet pharmacy

http://www.startribune.com/stories/1556/5414466.html

Warren Wolfe and Glenn Howatt, Star Tribune

May 21, 2005

A Burnsville company owned by an internationally known e-mail spammer illegally sold more than $18 million worth of painkillers and other drugs by phone and the Internet before federal authorities shut it down last week, say court papers released Friday.

Xpress Pharmacy Direct, which employed 85 tele- marketers, is owned by Christopher Smith, 25, one of the world's 200 worst spammers, according to the spam-tracking service Spamhaus.

Smith and others have not been charged with a crime, but the FBI says three federal agencies are investigating alleged money laundering, mail fraud and wire fraud.

Last week authorities seized more than $4 million in assets, including a $1.1 million house in Prior Lake owned by Smith and his wife, Anita, and vehicles valued at $1.8 million.

The investigation was started last year by the FBI, Food and Drug Administration and the Drug Enforcement Administration (DEA) after complaints from customers and some employees, the documents say.

It was the second time this year a federal judge shut down an Internet drug firm, said Assistant U.S. Attorney Greg Brooker. The other case involved an unrelated operation in Philadelphia.

"It's extraordinary for a judge to shut down a site and freeze assets before an indictment," Brooker said.

Also named in the civil action to shut down Xpress Pharmacy were Smith's father, Scott Smith of Burnsville; Alton Scott Poe, described in an affidavit as office manager, and 12 associated firms, including a limousine business.

Minneapolis attorney William Michael, who represents Christopher Smith in a spamming lawsuit brought by AOL in March, said Xpress Pharmacy merely "facilitated doctor-patient relationships and doctor-pharmacy situations in order to help patients. [it was] not a pharmacy."

Ron Meshbesher, who represents Poe, said his client was a consultant hired to instill good office practices and had little knowledge of the business. He said Poe is from Texas and owns a house in Minnesota but now lives in Montreal pursuing other business interests.

12 websites

Christopher Smith operated Xpress Pharmacy since 2002 using, at various times, at least 12 websites, an FBI affidavit said. Smith also used the names Bruce Jonson, Chris Jonson and Robert Jonson, it said.

The affidavit by Agent George Kyrilis said Smith's business filled thousands of orders for narcotics and other medications without valid prescriptions, instead paying a New Jersey doctor $7 per prescription to sign more than 22,000 orders for drugs in one four-month period.

Xpress Pharmacy relied on an established California pharmacy to fill more than 7,000 prescriptions for the narcotic drug hydrocodone signed by Dr. Phillip Mach of East Brunswick, N.J., according to the affidavit.

The affidavit said the DEA in New Jersey "has a criminal case open on Dr. Mach." He has not been charged. Mach could not be reached to comment Friday. An Oregon pharmacy also filled prescriptions for Xpress Pharmacy clients, the document said.

All states make it illegal for a doctor to sign a prescription without a legitimate doctor-patient relationship, the affidavit said.

Brooker said that Xpress Pharmacy was not licensed by the state of Minnesota to sell prescriptions, and that it was not authorized by the DEA to sell controlled substances such as hydrocodone.

At times, the company overcharged clients, supplied fewer pills than ordered, sold drugs returned by other customers and supplied different drugs than those ordered, he said.

'Everything looked OK'

Hundreds of Internet drug sellers have sprung up in the United States and other countries in recent years as prescription prices have risen.

"Some are legitimate and some are not," Brooker said.

One pharmacy that filled orders for Xpress Pharmacy is Fallbrook Pharmacy Inc. in Fallbrook, Calif.

"We've been in business for over 30 years now," said Richard Clements, one of the California pharmacy's managers. "From our end everything looked OK. [smith] seemed to be on the up and up."

The arrangement sparked an increase in Fallbrook's overall drug sales, drawing the attention of the DEA. The orders included pain medicine, anti-depressants, diet drugs and hair loss pills, Clements said.

"The DEA in our area knew of these people months ago. We showed them the contracts," Clements said. "Nobody told us not to do it. If there seemed to be a problem back then, something should have been done."

Now Fallbrook is taking calls from customers who paid Xpress Pharmacy but haven't gotten their drugs, he said. Xpress also owes the pharmacy money for previous orders, he added.

Clements said he expects Xpress Pharmacy to be back in business soon.

Receiver takes over

On Friday, U.S. District Judge Michael Davis ordered Christopher Smith and others to cease "from continuing to perpetrate their fraudulent scheme." He reaffirmed his previous order freezing assets and appointed a receiver to take control of company assets.

The receiver, Minneapolis attorney Andrew Luger, said his duties will include paying employees past wages and settling with creditors.

Anthony Darst, 19, of Burnsville, who said he worked at Xpress Pharmacy for about six weeks, said he is owed $1,500 to $2,000 in wages and commissions. Darst said employees typically earned between $1,000 and $2,000 a week, mainly from commissions.

"We kind of wondered about how the business operated, but they had a lawyer come in not long ago and he said it was all legit, all OK," Darst said. He did not recall the name of the lawyer.

The company's website was not operating Friday, but Luger said he will reinstate it and post a message that tells former employees, customers and creditors how to contact him.

Staff Writer Ron Nixon contributed to this article.

The writers are at

wolfe[at]startribune.com and

ghowatt[at]startribune.com

Christopher Smith

5414466_137602.html

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Last update: June 4, 2005 at 7:16 PM

A web of trouble

http://www.startribune.com/stories/789/5439175.html

Warren Wolfe, Star Tribune

June 5, 2005

In 1998, a few months after Chris Smith dropped out of Lakeville High School, his concerned father talked to him about the benefits of college -- and was startled by his son's reply.

"Dad, I made $69,000 online by 11 a.m. Why go to college?"

Over the next seven years, Christopher William Smith became known as a notorious Internet spammer nicknamed "Rizler," who, the FBI says, graduated to selling addictive drugs online and over the phone.

The golden-haired entrepreneur with a knack for computers was taking in $2 million a month by the time he was 25, enough to buy a string of luxury cars, including a Ferrari, a BMW and four Mercedes-Benzes, and to move into a $1.1 million house in Burnsville, court papers say.

[snip]

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That may explain the drop in pill spams...they are finally cracking down on these criminals. Let's hope they get them all!

Edited by dra007

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That may explains the drop in pill spams

28889[/snapback]

Which drop? All I have seen is a shift from Viagra to Cialis, but the pill spam volume has actually increased.

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Last update: June 4, 2005 at 11:47 PM

Xpress employees to get their checks

http://www.startribune.com/stories/462/5439184.html

June 5, 2005

So far, 53 former employees of Xpress Pharmacy Direct have been paid back wages for jobs lost when federal authorities shut down the Internet and telemarketing operation last month.

More of the 85 to 100 employees will receive checks between 2 and 4 p.m. on Tuesday at XPress Pharmacy's office, 12400 Portland Av. S., Suite 150, Burnsville, said Andrew Luger, the court-appointed receiver who took possession of the company's bank accounts and financial records.

[snip]

Luger said about $1.6 million was available from the company's bank accounts, "and we're not sure yet if that's enough to cover the payments owed" to employees, creditors and pharmacy customers seeking refunds.

[snip]

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I think this kid is a genius and the Gvt should leave hime alone at least he is helping some of those people to get medication that the gvt can't give to our senior citizen due that the gvt took all your savings now they refuse for you to have some medication by any means !!!!! Is that Democratie or Dictaturship, they both start with a D , D..k. :angry:

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"graduated to selling addictive drugs online and over the phone."

yeah. those seniors really benefitting there. And spam=theft of service.

/me smacks himself for feeding the troll.

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Can somone give a spell checker to this troll, the spelling is atrocious.

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I think this kid is a genius and the Gvt should leave hime alone at least he is helping some of those people to get medication that the gvt can't give to our senior citizen due that the gvt took all your savings now they refuse for you to have some medication by any means !!!!! Is that Democratie or Dictaturship, they both start with a D , D..k. :angry:

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Although this is the Lounge area, this response is seen as lacking any corresponding back-up to substantiate the diatribe. Based on the evidence presented in the article, there are many violations of law, cheating of "customers", mis-representation, etc. cited in the presented case / situation. How that translates into "doing some good" is leaning a bit towards lunacy. If you seriously wish to discuss health issues, please start your own 'new' Topic and cite some actual data. This type of posting is not appreciated here.

/me smacks himself for feeding the troll.

29971[/snapback]

Guidance: this should be the last response offered to this particular post.

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Last update: July 7, 2005 at 9:43 PM

Grand jury has sights on Internet drug seller

http://www.startribune.com/stories/462/5496103.html

Warren Wolfe, Star Tribune

July 8, 2005

A federal grand jury is considering fraud and money-laundering charges against Internet drug seller Christopher Smith, and an indictment may come within months, a federal prosecutor said Thursday.

Grand jury proceedings usually are cloaked in secrecy, but Assistant U.S. Attorney Nicole Engisch and other prosecutors disclosed the investigation during a court hearing in which they argued that Smith violated a May 20 court order after his Xpress Pharmacy Direct, which is based in Burnsville, was shut down by federal officials and more than $4 million in assets were seized.

Smith, 25, of Prior Lake, was arrested a week ago in the Twin Cities and jailed after he stepped off a plane from the Dominican Republic.

Judge Michael J. Davis delayed ruling on whether Smith's actions violated the court order and set a hearing for Aug. 25. But after two days of testimony about Smith and his off-shore business efforts, Davis ordered that Smith be released today on $50,000 bail. He'll also be monitored electronically and needs permission to leave the state.

Smith is charged with contempt of court for setting up an illegal online pharmacy in the Dominican Republic, and using a cash card to withdraw $2,000 from a bank account seized by the government.

[snip]

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I can't tell you how happy I am for the article above. You would not believe the problems Chris Smith has caused for at least 60 innocent cell phone owners across North America.

As you can tell, his company basically calls thousands/millions of cell phones across America, and they do it via an automated sales message telling people to call them to order cheap drugs.

Well, I work for a wireless phone company in Toronto, Canada and Xpress Pharmacy Direct was/is using one of our client's cell numbers to display on their outbound caller ID. Meaning, thousands of people in America were getting these sales calls, but it looked like it was coming from our client's phone number! They spoof their numbers!

Long story short: our client was getting 100's of call-backs every day from people saying "hey, you just called me; who are you?" I took our client's number and put it on a test phone here so I could talk to these callers. Many of them sent the original calls to voicemail, then would call me back...just because they were curious who the call was from. It's amazing how many people care that much to call back a strange (long distance) number out of curiosity!! I mean, who really cares that much?

Other people would tell me the call was from "an online pharmacy" and gave me their numbers. Eventually, I had ended up talking to 5 different "floor supervisors" at Xpress Pharmacy Direct who told me they were trying to get their system to stop showing our client's number, but nothing was ever done. One manager said they knew of at least 60 different people with the same problem as I had. SIXTY PEOPLE WERE GETTING THEIR NUMBERS SPOOFED FOR MR. SMITH'S EVIL DESIGNS!

Anyway, as the FBI has been closing in on this kid, the calls have been dropping off. But you can be sure that he still has some operation going on and making calls, because this test phone of mine has rung twice today from people trying to find this online pharmacy.... FBI: I hope you're reading this. Mr. Smith still has active operations!!

By the way, the stupid thing is that 85% of the people who called my phone would say that as soon as they answered those calls, the call would hang up. Their system was so unreliable that it would just hang up when answered. What a great way to run a (illegal) business, huh? How much did they waste on phone bills?

I hope they find out where he's still running this phone-spam operation.....

-shawn

]

Edited by thunderjack

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shawn, if any of those people being called in the first place are your customers, can you use ANI to find the source of the calls? Thanks!

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Last update: August 25, 2005 at 7:23 AM

Online pharmacy operator charged with fraud

http://www.startribune.com/stories/467/5577218.html

Maura Lerner and Warren Wolfe, Star Tribune

August 25, 2005

A federal grand jury has indicted the owner of a Burnsville-based online pharmacy on charges of fraudulently selling millions of dollars in addictive painkillers without valid prescriptions.

Christopher William Smith, 25, was arrested Wednesday morning at his home in Prior Lake, according to the U.S. attorney's office in Minneapolis. He was ordered held without bail after a court appearance in St. Paul.

The indictment also charged Dr. Philip Mach, 47, of Franklin Park, N.J., and Bruce Lieberman, 45, of Farmingdale, N.Y., with helping Smith and his company, XPress Pharmacy Direct. Federal agents shut down the business and seized its assets in May.

The indictment alleges that Smith sold prescription drugs to customers around the country without ensuring that they had valid prescriptions. He solicited business through spam e-mail, Internet websites and telemarketing.

[snip]

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I believe that's Rizzler. He already tried skipping the country. He deserves everything he gets.

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Last update: August 27, 2005 at 6:36 AM

Internet drug seller off to halfway house

http://www.startribune.com/stories/462/5581727.html

Glenn Howatt, Star Tribune

August 27, 2005

A Prior Lake man charged with running a fraudulent online pharmacy will be placed in a halfway house and must wear an electronic monitoring device until he goes on trial, a federal judge ruled Friday.

Christopher William Smith, 25, owner of the Burnsville-based XPress Pharmacy Direct, has been in custody since his arrest Wednesday. A federal grand jury had indicted him on charges of selling addictive painkillers without valid prescriptions.

At a court appearance, Smith pleaded not guilty to the charges, which include conspiracy to distribute controlled substances, wire fraud, selling misbranded drugs and money laundering.

U.S. District Judge Michael Davis said Smith must reside at the halfway house until the trial begins, which could take many months since both sides are still preparing their cases.

[snip]

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"Bout time...hope he rots in jail on the way to hell. Has anyone else noticed a drop in the illegal meds spam?

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"Bout time...hope he rots in jail on the way to hell. Has anyone else noticed a drop in the illegal meds spam?

32113[/snapback]

no

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Why are the empoyees of the spammer entitled to back pay? It was a criminal operation, and all money made from a criminal operation is supposed to go to the govt or to the victims of the criminals. Just because the employees didn't 100% know it was a gangsta they where working for is no excuse.

Also if he was processing orders via credit card, they should be going affter the bank, too many banks and merchant card services are getting off scott free even though they provide the infrastructure the spammers need to exist.

In the story the employees even admit there where being paid on commission - which means they where directly profiting from drug dealing, the more drugs they pushed, the more they got paid.

The people who received the spam and reported it, and the people who had the PC taken over by Smith and Mob friends are the ones entitled to "back pay".

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Good points Devilwolf. All I can think of is that unpaid employee wages is one of the quickest ways to force bankruptcy. Just what prospect those employees have of recovering any actual arrears and what situation it puts them in individually, when/if they accept such payments, are further matters of interest.

Couldn't agree more re the free ride/no liability of banks and card services. They tend to regard money a bit like the Masai regard cattle - they own the lot, just haven't finished gathering it in yet.

Edited by Farelf

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I'm not a big fan of the war on drugs, but congress seems to be all up in arms about controling the sale of sudafed to stop meth dealing..... But I NEVER get emails from meth and crack dealers, but I get tons of emails from presciption amphetamine and opiate dealers. The spammers are basically "door to door" drug dealers who are much more likely to kill people then some biker bar crank dealer, because they are always seeking out new users to get hooked where-as the average "street corner" dealer generally deals to fixed client base, and generally doesn't advertise his/her busienss to 2-3 million people a day.

Most people who go to ghetto type dealers know what they are getting into, but spammers are promoting recreational drugs to an unsophisticated market.

The war on drugs is all about money (asset forfiture) and the spammers have more money then street corner dealers, and they are linked into the whole russian mafia. So it would be a better ROI for the govt to go after spammers.

Except that the spammers are selling a product that is produced by companies that give millions to the democrats and republicans.

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but I get tons of emails from presciption amphetamine and opiate dealers.

32256[/snapback]

I only seem to get drug spam pushing things like: Subject: =?iso-8859-1?Q?Gre=C4t_C=CCAIS_VIAGRR=E1?= which are obviously fake because they spelled them wrong ;)

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<snip>they are linked into the whole russian mafia. So it would be a better ROI for the govt to go after spammers.

Except that the spammers are selling a product that is produced by companies that give millions to the democrats and republicans.

32256[/snapback]

According to a recent BBC exposé, there is a huge underground industry operating out of India too - wholesale and retail with some very sophisticated counterfeiting tied into the picture, proven outlets in Europe and Africa, who knows where else? This goes way beyond the range "promoted" by the spammers but undoubtedly includes that as well. Common themes are unreliability of these pharms (with potentially lethal consequences), the extraordinary efforts of the legitimate drugs industry to keep it all under wraps (a consumer & investor confidence thing) and the seeming impotence of regulatory and enforcement authorities in every country.

As usual, the authorities play by the rules and operate under all sorts of legal constraints (presumably their investigative powers are at least the match of a BBC reporting team's). No way to win a "war" (the real war) but what is the alternative? I shall resign myself to pounding the odd spammer and keeping my fingers crossed that the supply chain ending at my local pharmacist remains uncontaminated. A bit of lobbying of political leaders might help but I'm an Australian (we get in early by despising our politicians from the start of their respective terms, thereby saving having to do it later and avoiding much disappointment along the way).

Edited by Farelf

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I'm not a big fan of the war on drugs, but congress seems to be all up in arms about controling the sale of sudafed to stop meth dealing..... But I NEVER get emails from meth and crack dealers, but I get tons of emails from presciption amphetamine and opiate dealers.

32256[/snapback]

It's not just Sudafed, it's any decongestant sold over the counter. For those of us that use Claritin daily, its become a real PITA! Some stores won't sell the 30-count boxes but will sell the 10-count, so you can't even buy a weeks worth at a time. Plus, you get the third degree even for that. I'm going to get the doctor to change me to a prescription equivalent. I'm pretty sure others are going to do the same. Talk about knee-jerk reactions to a problem. It hurts more people than it helps.

Edited by loafman

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It's not just Sudafed, it's any decongestant sold over the counter.  For those of us that use Claritin daily, its become a real PITA!  Some stores won't sell the 30-count boxes

32275[/snapback]

And I'm sure that will create a whole new market for spammers. One of my co-workers is already bitching about it, if she, her kid, and her husband all get sick, that can't buy even a one day supply of decongestant for the family without one of them having to go to the pharmacy almost every day, and if they go to same pharmacy....

So its a ripe market for spammers.

The claims about "playing by the rules" hampering law enforcement doesn't hold up. In the US the Constitution is pretty much a dead letter when it comes to drug dealing. Visa and MC have been terminating relationships with casinos and porn sites because of pressure from our Christian Taliban. Visa and MC recently turning over, w/o a warrent thousands of records of card holders with off shore accounts.

Under the RICO laws any bank processing payments for drug spammer, any co-location site, and any courier deliverying teh drugs can be 100% seized and liqudated by the US govt.

It would be a good source of capital for the US, which needs a lot of money for all the wars we have to fight (war on drugs, war on terrorism, war on looters, war on Iraq). may the feds are just waiting for the spammers to build up enuff assets.

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<snip>

The claims about "playing by the rules" hampering law enforcement doesn't hold up. In the US the Constitution is pretty much a dead letter when it comes to drug dealing. Visa and MC have been terminating relationships with casinos and porn sites because of pressure from our Christian Taliban. Visa and MC recently turning over, w/o a warrent thousands of records of card holders with off shore accounts.

Under the RICO laws any bank processing payments for drug spammer, any co-location site, and any courier deliverying teh drugs can be 100% seized and liqudated by the US govt.

It would be a good source of capital for the US, which needs a lot of money for all the wars we have to fight (war on drugs, war on terrorism, war on looters, war on Iraq). may the feds are just waiting for the spammers to build up enuff assets.

32355[/snapback]

...You forgot to mention black helicopters and the conspiracy to suppress investigation into UFOs. :D <big g> Edited by turetzsr

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