Navigatr1 Posted May 22, 2005 Share Posted May 22, 2005 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 Link to comment Share on other sites More sharing options...
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