Illinois man denies cancer drug smuggling conspiracy charge

AP News
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Posted: Aug 25, 2015 4:40 PM

HELENA, Mont. (AP) — An Illinois man pleaded not guilty Tuesday to conspiring with an online Canadian pharmacy to smuggle mislabeled, unapproved and, in two cases, counterfeit prescription drugs into the U.S. to sell to doctors.

Ram Kamath appeared before U.S. Magistrate Judge Jeremiah Lynch for arraignment in Missoula. So far, he is the only one of the 14 individuals and companies named as defendants to appear in court to face criminal smuggling, conspiracy and money laundering charges.

Federal prosecutors accuse Canadadrugs.com, its CEO Kristjan Thorkelson and its affiliated companies and associates of selling $78 million in prescription drugs, primarily cancer treatment drugs, to U.S. doctors. Nearly all of the drugs are legal in the U.S. when sold by FDA-approved manufacturers and marketers.

Prosecutors said some of the drugs were mislabeled by having text in a foreign language or missing the required "Rx only" symbol. Others, such as the Turkish drug Altuzan, are not approved by the Federal Drug Administration. Two types of cancer treatment drugs turned out to be counterfeit versions, according to the indictment.

"Canada Drugs purchased its inventory from questionable sources and ultimately sold counterfeit versions of the drugs Altuzan and Avastin to physicians in the United States," the indictment read.

Federal prosecutors will seek to extradite Thorkelson and the other defendants from Canada, the United Kingdom and Barbados if they do not voluntarily appear, according to court documents.

Assistant U.S. Attorney Chad Spraker, defense attorney Michael Sherwood and a Canadadrugs.com spokesman did not return calls for comment.

The 14-year-old Winnipeg company's website describes itself as offering low prices on medicine from Canada, the U.K., Australia and New Zealand.

In 2009 and 2010, Canadadrugs.com bought companies — including Montana Healthcare Solutions — that sold pharmaceuticals directly to U.S. doctors. Using those companies' customer lists, Canadadrugs.com began selling to doctors by shipping drugs from its U.K. subsidiary, according to the indictment.

The subsidiary, River East Supplies, falsified customs labels to undervalue the packages' contents in an attempt to avoid scrutiny of the shipments, federal prosecutors said. The drugs would go to unnamed companies in Illinois, Washington state and Tennessee for storage and distribution.

When the company discovered the counterfeit drugs, it tried to conceal the problem by asking Kamath to store some in his Downers Grove, Illinois, home while the company scrambled to recall them to the U.K.

Kamath was director of pharmacy policy and international verifications for an unnamed company, for which he inspected storage facilities kept by Internet pharmacies. The online pharmacies funneled cash to Kamath's company and paid for a trip to Barbados with four-star accommodations for Kamath to inspect Canadadrugs.com's facilities there, according to the indictment.

"In exchange, Kamath would help provide them with the veneer of legitimacy that comes with having been inspected by an 'independent' party," the indictment read.

Kamath did not document in his inspection reports that he stored counterfeit drugs in his garage, prosecutors said. He is charged with one count of conspiracy to smuggle goods into the United States.