Preet Bharara, the United States Attorney for the Southern District
of New York, Bridget G. Brennan, the Special Narcotics Prosecutor for
the City of New York (“SNP”), James J. Hunt, the Acting Special
Agent-in-Charge of the New York Field Division of the U.S. Drug
Enforcement Administration (“DEA”), and William Bratton, the Police
Commissioner of the City of New York (“NYPD”), announced today the
unsealing of an Indictment against 24 defendants in connection with a
massive drug distribution ring that operated out of a purported medical
clinic with multiple locations in the Bronx, New York, known as
“Astramed,” and unlawfully distributed more than five million tablets of
the prescription painkiller oxycodone over a three-year period. The
participants in the distribution ring included doctors, clinic
employees, and drug traffickers who oversaw crews of “patients” who they
sent into the clinics in order to obtain medically unnecessary
prescriptions. The prescriptions were then filled at pharmacies, and
the resulting pills resold on the streets of New York and elsewhere.
Twenty-one defendants were arrested yesterday in connection with
today’s charges. The defendants will be presented in Manhattan federal
court before U.S. Magistrate Judge Gabriel W. Gorenstein later this
afternoon. Related charges against one of the clinic doctors were also
unsealed today by SNP. The defendant is expected to be arraigned later
today in Manhattan Supreme Court before Judge Bruce Allen.
Manhattan U.S. Attorney Preet Bharara said: “The world of
prescription drug trafficking is looking more and more like the world of
old-school trafficking in narcotics like heroin, cocaine and crack. In
this case, the drug spot was a clinic controlled by traffickers, often
through intimidation and violence. The traffickers were supplied with
prescriptions by corrupt doctors and clinic employees, dispensed to
lower-level ‘pretend’ patients so that massive quantities of oxycodone
could be distributed wherever the most money could be made, often in
communities hundreds of miles away. This is poison by prescription, and
the volume and money allegedly involved would make hardened illegal
drug traffickers envious – over 31,000 medically unnecessary oxycodone
prescriptions for 5.5 million tablets sold with a street value between
$170 million and over half a billion dollars. Even legal drugs
illegally obtained can be deadly, and more people have been dying from
prescription drug abuse than heroin and cocaine combined. Unnecessary
painkillers can simply end up being killers. This has to stop and we
will do everything we can to stop it.”
Special Narcotics Prosecutor Bridget G. Brennan said: “These clinics
have long been a source of community concern and complaints. Dr. Robert
Terdiman is charged with selling prescriptions for highly addictive
painkillers on a scale we have not seen before – flooding the black
market with oxycodone carrying a street value of over $90 million. Not
only is he charged with perpetuating a practice that did little to heal
and much to harm, both he and The Clinic reaped huge profits. We would
like to recognize the extraordinary commitment and dedication of all of
the agencies that participated in this investigation.”
DEA Acting Special Agent in Charge James J. Hunt said, “Twenty two
arrests, the dismantlement of the largest pill mill in the northeast and
the ability for residents living near Southern Boulevard and
Westchester Avenue in the Bronx to reclaim their neighborhood from drug
dealers are the end results of unified police work by local, state and
federal law enforcement in New York. I commend the diligent work of the
numerous law enforcement agencies who participated in this
investigation.”
NYPD Commissioner William Bratton said: “Instead of abiding by the
Hippocratic Oath, these doctors scheduled pseudo physical exams for
greed and self-profit. They fueled a criminal operation which
distributed highly addictive prescription drugs in the Bronx community
and surrounding areas. Thanks to the investigators and prosecutors in
this case, Lowe and his crew will no longer traffic illegal drugs.”
According to the allegations contained in the Indictment and other documents unsealed today in Manhattan federal court:
Senator Jeff Klein
applauded the work of New York City and State law enforcement in arresting and
indicting Dr. Robert Terdiman, Dr. Kevin Lowe and 21 individuals who took part
in an illegal scheme to sell prescriptions for oxycodone at their clinic,
Astramed Physicians, PC, in the Bronx. The two year investigation leading to
yesterday’s arrest and indictment came from a tip provided by Senator Klein’s
office, alerting them of potentially illegal activity at that site in 2010.
Senator
Klein said: “For years, the physicians at Astramed have
illegally sold narcotics prescriptions to individuals who could score up to $30
per pill on the black market. But the impact of Astramed’s illegal activity
went beyond just the illegal sale of prescriptions. Astramed – which moved
three separate times in the Bronx before being caught – fundamentally disrupted
the quality of life for residents and small business owners in the surrounding
area. When I first learned of possible suspicious activity at Astramed, I
reached out to partners at stage agencies immediately, and eventually teamed up
with law enforcement to monitor activity.
“I commend Special Narcotics Prosecutor Bridget
G. Brennan, the DEA, the NYPD and the U.S. Attorney’s office for putting an end
to the despicable practices of Astramed’s physicians. We cannot – and will not
– allow pill mills like Astramed open doors in our communities. I am proud of
the immediate action my office took to bring attention to Astramed’s illegal
activities and am thrilled that our community will finally be rid of this
scourge to our way of life.”
Four years ago, a constituent of Senator Klein’s
notified Klein’s office of a possible methadone clinic instituted without
notification to the community. Klein’s office tried to call the clinic, but
both the physicians and their office administrators did not return calls. After
contacting numerous state agencies, including the NYS Dept. Of Health, NYS
OASAS, NYS Office of Mental Health and NYS Office of People with Developmental
Disabilities to learn more about the services Astramed provided, Klein’s office
contacted the Drug Enforcement Administration.
Working with investigators from the NYS
Department of Health in the summer of 2010, Klein’s office established through
video surveillance that between 75 – 100 people were coming out of the office
in any given day, along with a preponderance of cars with out-of-state plates
surrounding the location.
In October 2010, Astramed moved to 2029
Westchester Avenue in Castle Hill. Klein’s office continued to field complaints
from the surrounding community while the investigation by law enforcement was
ongoing. They subsequently moved to a location on Southern Boulevard.
Oxycodone is a highly addictive, prescription narcotic-strength
opioid used to treat severe and chronic pain conditions. More than 13
million Americans abuse oxycodone, with the misuse of prescription
painkillers such as oxycodone leading to as many as 500,000 annual
emergency room visits. Oxycodone prescriptions have enormous cash value
to street level drug dealers, who can fill the prescriptions at most
pharmacies and resell the resulting pills at vastly inflated rates.
Indeed, a single prescription for 180 30-milligram oxycodone pills has
an average resale value in New York City of more than $6,000, and up to
$18,000 in nearby states.
From approximately January 2011 until January 2014, a drug
distribution ring centered at “Astramed,” a purported medical clinic
with multiple locations in the Bronx, including a primary location on
Southern Boulevard (the “Clinic”), unlawfully diverted and trafficked
millions of oxycodone tablets, which netted participants in the
distribution scheme hundreds of millions of dollars in proceeds.
Astramed was owned and operated by KEVIN LOWE, a medical doctor, who
reaped millions of dollars by charging cash for the thousands of
medically unnecessary prescriptions written by the clinic doctors (the
“Doctors”). The Doctors were corrupt, Board-certified, state- licensed
doctors who, in exchange for cash, were willing to write medically
unnecessary prescriptions for large quantities of oxycodone. The Clinic
typically charged $300 in the form of a money order for “doctor visits”
that usually lasted just a minute or two, involved no actual physical
examination, and consistently resulted in the issuance of a prescription
for large doses of oxycodone, typically 180 30-milligram tablets, or a
daily dosage of six 30-milligram tablets. Indeed, the Doctors, who
worked directly for LOWE, were paid only for each prescription they
wrote – rather than for each patient they saw – and they were paid
nothing if they did not write a prescription.
Various employees of the Astramed clinics controlled access to the
Doctors and created false documents in exchange for cash payments. To
avoid detection by law enforcement, the Doctors sometimes asked the
“patients” for medical documentation, such as MRIs, purporting to
document injuries, or urine samples purporting to show that the
“patient” was taking oxycodone. Fake MRIs and urine samples were sold
by members of the conspiracy to Astramed’s “patients,” typically inside
the Clinic or immediately outside its premises.
The Clinic itself bears little resemblance to a standard medical
office. For example, on a daily basis during the time set forth in the
Indictment, crowds of up to one hundred people gathered outside the
Clinic, clamoring to see one of the doctors at the clinic and thereby
get a prescription for oxycodone. The majority of these individuals had
no medical need for oxycodone, or any legitimate medical record
documenting an ailment for which oxycodone would be prescribed.
Instead, most of these individuals were members of “crews” – that is,
they were recruited and paid by high-level drug traffickers, oxycodone
distributors (the “Crew Chiefs”), to pose as “patients” in order to
receive medically unnecessary prescriptions from the Doctors. The Crew
Chiefs then arranged for and oversaw the filling of the resulting
prescription at various pharmacies and took possession of the oxycodone
pills to be resold on the street. Crew Chiefs also paid the Clinic’s
employees hundreds of dollars in cash at a time to get their Crew
Members into the Clinic to see one of the Doctors. The Crew Chiefs
maintained their joint control over the operations of the Clinic, in
part, as a result of intimidation and the threat of violence.
In total, between approximately January 2011 and January 2014,
Astramed Doctors issued approximately 31,500 medically unnecessary
prescriptions for oxycodone, comprising nearly 5.5 million oxycodone
tablets with a street value of up to $550 million. LOWE alone collected
nearly $12 million in fees for “doctor visits” during this time period.
Based on the street market value of the pills distributed, the
participants in the distribution ring together made hundreds of millions
of dollars as a result of the clinic fees charged and the proceeds
obtained from the resale of the illegally obtained oxycodone.
* * *
All of the defendants are charged with one count of conspiracy to
distribute and possess with intent to distribute oxycodone, which
carries a maximum sentence of 20 years in prison.
A chart containing each defendant’s age and residence information is
attached. The case is assigned to U.S. District Judge Lorna G.
Schofield.
Mr. Bharara thanked the DEA and the NYPD for their work in the
15-month investigation, which he noted is ongoing. Mr. Bharara also
thanked, the Office of the Special Narcotics Prosecutor for the City of
New York, the Town of Orangetown Police Department, the Westchester
County Police Department, the United States Department of Health and
Human Services, the United States Marshals Service, the New York State
Health Department’s Bureau of Narcotic Enforcement, the Office of the
Medicaid Inspector General, New York City's Human Resource
Administration, the New York State Attorney General’s Office Medicaid
Fraud Control Unit, Beacon New York Police Department, the Internal
Revenue Service-Criminal Investigation and the El Dorado Task Force for
their assistance.
The case is being prosecuted by the Office’s Narcotics Unit.
Assistant U.S. Attorneys Edward B. Diskant and Tatiana R. Martins are in
charge of the prosecution. Assistant U.S. Attorney Micah Smith of the
Office’s Asset Forfeiture Unit is responsible for the forfeiture of
assets.
The charges contained in the Indictment are merely accusations, and
the defendants are presumed innocent unless and until proven guilty.
