Houston Man Convicted in $50 Million Drug Scheme
By Joey Berlin

drug_convictionA former president of a Houston-based pharmaceutical company has been convicted on charges stemming from a drug diversion scheme in a case where witnesses said at least one prescription drug bottle actually contained Tic-Tacs, according to the U.S. Department of Justice (DOJ).

The U.S. Attorney’s Office, Middle District of Tennessee, says Jerrod Nichols Smith was convicted of conspiracy, mail fraud, and making false statements to the Food and Drug Administration. Mr. Smith, from Houston, is the former president of Houston-based Cumberland Distribution, Inc., according to the prosecutors.

DOJ says Mr. Smith and one of two codefendants:  

  • Bought millions in prescription drugs from unlicensed suppliers who had bought them from patients in and around New York and Miami;
  • Usually shipped those drugs to Cumberland’s warehouse in Nashville, where they were repackaged and shipped to independent pharmacies; and
  • Used shell companies licensed to sell drugs as a pass-through to create an appearance that Cumberland was buying drugs from licensed suppliers. 

The diverted drugs included HIV/AIDS medication, antidepressants, antipsychotics, and diabetes and blood pressure medications. According to the prosecutors, pharmacies reported prescription drug bottles they bought from Cumberland contained incorrect medicine, wrong dosage information, and foreign objects. Several witnesses testified that at least one bottle Cumberland sold contained Tic-Tacs. Gross proceeds from the scheme exceeded $50 million, the government said.

Mr. Smith faces up to 20 years in prison and a $250,000 fine for each of 15 counts of mail fraud, as well as up to five years in prison and a $250,000 fine for the convictions for false statements and conspiracy. He’ll be sentenced later this year. An attorney for Mr. Smith didn’t return a call from Texas Medicine.

The two co-defendants previously pleaded guilty to related charges, the prosecutors said.

Published On

March 05, 2018

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Joey Berlin

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Joey Berlin is associate editor of Texas Medicine. His previous work includes stints as a reporter and editor for various newspapers and publishing companies, and he’s covered everything from hard news to sports to workers’ compensation. Joey grew up in the Kansas City area and attended the University of Kansas. He lives in Austin.

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