FedEx's Drug 'Conspiracy'

[neversickanymore]

FedEx's Drug 'Conspiracy'
Aug. 10, 2014

The Justice Department last year announced it would selectively enforce federal marijuana laws in order to use "its limited investigative and prosecutorial resources to address the most significant threats in the most effective, consistent and rational way." Like targeting FedEx FDX +0.60% for drug trafficking?

After a nine-year investigation, the U.S. Attorney for the Northern District of California last month indicted the package delivery company on 15 criminal counts for shipping prescription drugs from fly-by-night online pharmacies. FedEx is fighting the charges but could be dunned $1.6 billion if convicted.

The indictment claims that FedEx "conspired" with Internet pharmacies to distribute prescription drugs that were sold in violation of the Controlled Substances Act. Internet pharmacies are a legitimate business regulated by the Drug Enforcement Administration and the states. But the DEA has been playing whack-a-mole with online pharmacies that fill orders without valid prescriptions.

DEA has shut down dozens of illegally operating pharmacies and drug fulfillment centers, but affiliates crop up under different domain names and recruit new partners. One example was the RxNetwork, whose leader Vincent Chhabra was arrested in 2003 even as his business partners continued to operate.

The U.S. Attorney alleges that FedEx employees knew that the "Chhabra-Smoley Organization"—which encompassed the RxNetwork and its offshoots—was illegally selling prescription drugs and "knew of the connection between these Internet and fulfillment pharmacies and RxNetwork and Chhabra as demonstrated by the principals, company names, shipping addresses and billing addresses that were initially connected to Chhabra and RxNetwork."

Translation: FedEx employees should have connected the dots. But if it's so easy, why didn't the DEA do it? The truth is that unmasking the bad guys would have required an extensive metadata analysis of customer data that is not FedEx's job.

The indictment also notes that FedEx workers visited the premises of the illegally operating fulfillment center Superior Drugs and observed its "operations, including the filling of orders for controlled substances." But Superior's operations wouldn't look any different from a law-abiding online pharmacy. The only difference is that its orders would be based on invalid prescriptions.

The indictment also claims that FedEx knew it was dealing with shady operators because it placed all online pharmacies on restricted credit terms. Yet FedEx didn't know who the bad guys were. That's why FedEx imposed credit restrictions on all online pharmacies. Think about it: Would FedEx knowingly risk doing business with illegal operators that might not pay their bills?

FedEx has promised to cut off illegal operators if the government provides a list. To date, DEA hasn't. Another alternative is to stop shipping all meds ordered on the Internet, but this would hurt law-abiding pharmacies and consumers. Meantime, online peddlers could continue to ship contraband via the U.S. Postal Service and UPS.

Speaking of which: UPS last year signed a "nonprosecution agreement" with the Justice Department to resolve a similar investigation. In addition to forking over $40 million, UPS agreed to beef up its "compliance policies." This suggests Justice's real aim is to coerce FedEx into doing DEA's police work.

FedEx has a strong defense on the facts and on the law because the Controlled Substances Act protects "common contract carriers" that are "acting in the usual and lawful course of business" from criminal liability. This looks like a case of bad prosecutorial judgment trying to compensate for the government's drug enforcement's failures.

http://online.wsj.com/articles/fedexs-drug-conspiracy-1407710272

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Now thats telling it how it really is.. don't forget the gov is also trying to steal 1.6 billion dollars from a innocent legitimate law abiding company.

 

[MyDoorsAreOpen]

This reminds me of the stories you'll hear about small-time hotel owners who wake up one day to not only a summons, but a seizure of their hotel and all their assets, on charges for providing a place for drug trade and/or prostitution. The hotel owner's pleas that he never suspected anything of any of his clientele, let alone actively courted that sort of clientele, then falls on deaf ears, and even after begging and borrowing enough in legal fees to get the criminal charges dismissed, his livelihood is gone.

I know that the missing link for making this all make sense is that the War On Drugs is about money, and that law enforcement agencies care a lot less about who they fleece than that the money keeps coming in. But it begs an interesting (and infuriating) question when it comes to setting legal precedents: How far does an individual or institution's responsibility extend for probing the many and various people we deal with for drug use or other illegal activities?

Do the DEA, the feds, and your local cop shop expect us to all be vigilantes? Is it our civic duty to preemptively deter or threaten anyone who has anything to do with illegal drugs? Just like the lady who sued McDonald's when their coffee burned her, will all businesses someday be posting signs on their doors saying that drug users (or sellers) are unwelcome, and that the management will cooperate fully with law enforcement in ferreting them out, lest they be named as accomplices? Will businesses far and wide someday have to bear the cost of searching bags, swabbing cheeks, or testing a drop of blood from people's fingers before admitting them? If I were to discover by accident that my best friend uses drugs, would it be on me to sever ties with him and never be spotted by LEOs in the same room or car as him, even if my urine is clean? This could become a witch hunt, depending on how aggressive (read: desperate for money) the government wants to get.

 

[drug_mentor]

Neversickanymore on what basis do you say that FedEx is an innocent law abiding company?

I fucking hate the US Government, the DEA and The War on Drugs, but the last article posted in DitM on this matter (link) claims that FedEx were warned at least six times over the last decade that the packages they were delivering from certain companies contained illicit pharmaceuticals, they completely disregarded these warnings and continued delivering packages from these companies.

Obviously we don't currently have all the facts, but I don't see why many people seem so willing to believe that Fed Ex is innocent of any wrongdoing. If I was a drug courier for illicit pharmaceuticals I would be charged, you can plead ignorance once or twice but if you are told "hey, those packages you are delivering are illegal" and you decide to keep doing it for a profit, then how is it much different to the people who manufacture or sell those drugs to the end consumer? At the end of the day they wouldn't be getting their drugs if you hadn't knowingly delivered the package. The delivery of these drugs is obviously a crucial step in the illicit drugs transaction, when you are aware the package contains illegal drugs and decide to deliver it for a profit, then what is the distinction between that and drug trafficking?

I don't really want to see anybody go down for drugs but it sets a pretty ridiculous precedent to let FedEx get away with knowingly delivering/trafficking illicit drug packages for ten years after they were first warned, and warned another subsequent five times to boot. Sorry, but that is a hell of a lot more chances and courtesy than any individual caught up in a drug case would be afforded.

Companies should not be afforded more rights than people, and if they engage in conduct that would clearly result in you or I being thrown in jail, what possible justification is there for those who made the same illegal decisions in a corporate setting to face either lessened or zero punishment?

MDAO, I don't think the issue is that the Government expected FedEx to be vigilantes, I think the expectation was that when they were told that certain packages they were delivering were illegal, that they would stop delivering these packages, there is a pretty big difference.

Obviously there is a chance FedEx is completely free of wrongdoing, although I am personally a bit skeptical that is the case, but in light of the allegations that have been made, I am not sure why would would choose to assume they are an "innocent legitimate law abiding company" and fail to consider the possibility that they may be guilty.

 

[neversickanymore]

Neversickanymore on what basis do you say that FedEx is an innocent law abiding company?

I am suspicious of most companies and corporations, so I guess my comment was aimed at this specific case. That being said this company enjoys a realy high reputation, including a very desirable company to work for.
FedEx Earns #10 Spot on FORTUNE’s World’s
Most Admired Companies List

This tells me that the company is not greedy. I can't imagine that these shipments constituted much of there business. This is hypothetically backed up since they increased there income by close to 3 Billion dollars since these companies were shut down totaling 9.37B in 2014. (if I remember correctly they are charged with this from 03-10?)
Annual Financials for FedEx Corp.

Why would a company conspire to distribute illegal narcotics, for no extra charge, when they make bank already.. they wouldn't.

Given the definition of conspiracy (general and not legal specific)
con·spir·a·cy
kənˈspirəsē/Submit
noun
-a secret plan by a group to do something unlawful or harmful.
-the action of plotting or conspiring.

While CEO of FedEx in 2008, Frederick W. Smith earned a total compensation of $10,434,589, which included a base salary of $1,430,466, a cash bonus of $2,705,000, stocks granted of $0, and options granted of $5,461,575.[20]

>source<

With a net worth of 3.5 billion >source<

By many indications these companies were fly by night operators who were so successful that they evaded the government for many years. Did Fedx ship something that was illegal to ship? No prescriptions are shipped all the time. Is it fedX job to track down illegal pharmacies that are slippery enough to evade the gov, I say no. Did the US postal service conspire with the SR to distribute their narcotics, no. Did fedX benefit in any increased way from shipping packages from these companies, I would be shocked. Did fedX deny customer information to the gov until they came up with a proper warrant or something like this, maybe, but that's admirable and not against the law.

Does fedex represent a potential huge cash cow for the people who filed the charges, yes it does. It also seems like these people might have exspected to just put there hands out with a charge filed and get dumped millions like other companies did. Big cases and hauls of money from fines give government prosecutors erections and can promote there careers big time.

Sound familiar, thats why they charge drug cases so fuking high, cause looking at 15 years for a nights worth of shit makes people scared as shit. Then they take deals and are motivated to do the work of the cops by turning their friends and family in to be next in the never ending bust supply line.

More plea deals, means more convictions, means less work, means less money spent, means more money raked in, means happy politicians, means more funding.

They just crack a few "big" drug rings out from time to time, pad that report up like they saved the world and ship it off claiming they are winning and making a difference. Meanwhile out on the street its business like usual.

Ever wonder why drug investigations take so long, cause cops know they aren't going to make a difference, so why work so hard.. its not like the work will ever be done right? Best to just chill out, let the snitches do the work, and make it look good on the reports. Of course if they get word of some big cash they swoop, cause in many places what was confiscated at 20 grand hits the evidence locker at 10 grand.

I think there is almost no way fedx conspired with illicit pharmacies to distribute illegal prescription drugs. I think there is a good chance that fedx blocked customer records because proper legal pathways were not followed. Does the government charge companies all the time in order to grab large fines from them, I say it does.. and these funds never seem to benefit the people who any grievance was carried out on.

Im glad fedx is standing up to this shit and I hope they win in spades. Fight, fight, fight!!

 

[subotai]

it's better to send drugs via the USPS ironically enough. when a package/letter doesn't go through customs there is almost zero chance of it being scrutinized unless it is poorly packaged to the point where the parcel literally falls apart during the transportation process. Even if they somehow obtain a reason to either open it or for whatever reason it opens itself, it is not illegal to receive mail from someone. They will have to prove that you knew of the package and its contents. I could send a kilo of coke to my next door neighbor using a fake name, give an anonymous tip about it coming through, and he would just get a letter in the mail stating that his package was deemed to contain illicit material and with instructions on how to claim it if he wanted to go through that process. If you just deny, deny, deny, they can't prove that you knew the contents of the package, let alone it existed in the first place

UPS and FedEx are both private companies and therefore reserve the right to do more or less anything with your package. They can't damage your item in the package, but since you are agreeing to have them ship it for you, you sought them out on your own accord, you agreed to their guidelines that you probably didnt read, they can do what they want with your package. It's just really not very practical to try and inspect every package, so it is kind of more just in theory. But it is reason enough to not use them.

the USPS is an agency that people are forced into using, an agency created by the people for the people. Your constiutional rights are in full effect, which includes the 4th amendment (requirement of a warrant for any search and subsequent seizure supported by probable cause.

if your package never goes through customs they don't have a lot of tools at their disposal to obtain probable cause because again, it's just impractical to do that for domestic mail. The USPS already loses enough money as is

now I mean, if you were getting shit seized from the same address over and over again, eventually they might look into your shit. Not the USPS though, a different govt agency to say the least...

 

[Hammilton]

The CSA basically gives these guys immunity. Why waste our tax dollars when they have no chance of winning this case? Fedex will walk, in terrible uniforms.

Really,though, you should never trust an adult man who's uniform includes shorts.

 

[drug_mentor]

I can't imagine that these shipments constituted much of there business. This is hypothetically backed up since they increased there income by close to 3 Billion dollars since these companies were shut down totaling 9.37B in 2014. (if I remember correctly they are charged with this from 03-10?)
Annual Financials for FedEx Corp.

Why would a company conspire to distribute illegal narcotics, for no extra charge, when they make bank already.. they wouldn't.

I don't know what they would get out of it, other than the profit from delivering the packages, which as you point out, would probably be insignificant in relation to their overall profits.

My guess is, the people running the show at FedEx have quite a big ego, once they were notified that certain companies they were delivering for were dealing in illicit contraband they thought they could continue business as usual and because of the scale of their operation they would get away with it, or at worst pay a fine, which is still probably all that will come out of this ultimately.

By many indications these companies were fly by night operators who were so successful that they evaded the government for many years. Did Fedx ship something that was illegal to ship? No prescriptions are shipped all the time. Is it fedX job to track down illegal pharmacies that are slippery enough to evade the gov, I say no. Did the US postal service conspire with the SR to distribute their narcotics, no. Did fedX benefit in any increased way from shipping packages from these companies, I would be shocked. Did fedX deny customer information to the gov until they came up with a proper warrant or something like this, maybe, but that's admirable and not against the law.

The issue here (according to the article I linked in my last post any way) is that these dodgy pharmaceutical companies only evaded the Government so long, when they came to the Government's attention, the Government notified FedEx with the expectation they would stop delivering packages for these companies, instead, FedEx continued business as usual.

This did not require any investigation on the part of FedEx to determine which companies were operating as illegal online pharmacies, the only action that was required by FedEx was to cease delivering packages from companies that they were notified as being illicit drug distributors.

FedEx clearly did benefit by delivering these packages, the question is just how much did they benefit. At the minimum, they received payment for delivery of packages that they otherwise would not, admittedly, it does seem arrogant, stupid and short sighted for a company to make this decision, but arrogant, stupid and short sighted decisions have been made many times by humans in the past.

Does fedex represent a potential huge cash cow for the people who filed the charges, yes it does. It also seems like these people might have exspected to just put there hands out with a charge filed and get dumped millions like other companies did. Big cases and hauls of money from fines give government prosecutors erections and can promote there careers big time.

There is no question that FedEx is a cash cow and that is the only reason they are being targeted. Still, that doesn't mean that they didn't knowingly break the law or that there isn't a legitimate case for them to be prosecuted here, which if the Government's claims are to be believed (obviously that is in question) I think they rightly should be.

If it was confirmed that the Federal Government did warn FedEx certain companies it was delivering packages for were operating exclusively as black market online pharmacies 6 times in the last decade, and FedEx chose to completely disregard these warnings and keep delivering packages for these black market online pharmacies, would this change your opinion of wrong doing on the part of FedEx?

 

[CLICKHEREx]

If the feds provided a list of those companies they knew, or strongly suspected were providing illicit drugs, and FedEx ignored it, I would agree that they were complicit, but they didn't.

So what are they expecting FedEx to be; mind readers? Conspiracy is a difficult charge to prove, and I hope the FedEx legal team plead not guilty, and force the US Attorney General's office to attempt to prove conspiracy (where exactly is their evidence of a prearranged plan between two, or more parties to commit an illegal act?) which they will certainly fail.

They're just trying it on, hoping that FedEx will offer a settlement.

 

[drug_mentor]

^ Why are you so certain that did not happen?

According to the article posted here it says on the Federal indictment that they were warned six times about illicit pharmacies using their services, I am betting that if the Government are making this claim that they have some evidence to back it up, I could obviously be wrong on that, but I really don't understand how or why you would presume to know with certainty that this did not happen, unless you are the CEO for FedEx or something...

 

[subotai]

FedEx was notified of the companies but the US govt never actually proved beyond a reasonable doubt that they were breaking the law. They just expected FedEx to take their word for it essentially.

This is still America, even if you kill someone in front of a crowd of people, you must still get your day in court. The govt didnt want to spend the time and money giving these online pharmacies due process, so they just tried fo circumvent that by bullying FedEx and UPS to do what the USPS could not do (refuse packages with no concrete legal reason)

but they are privately owned companies, so this was possible. Just not fully required by law. Only encouraged

but I guess in the govt's eyes, both companies should have just looked the other way at due process and played along

 

[drug_mentor]

FedEx was notified of the companies but the US govt never actually proved beyond a reasonable doubt that they were breaking the law. They just expected FedEx to take their word for it essentially.

I guess by the nature of overseas pharmacies it can be pretty hard for the US Government to actually track down an individual behind them and prosecute said person for the offence, it does not mean they did not have definitive proof that the company in question was selling illicit drugs. When you are a company making billions of dollars annually, if the Federal Government approaches you and says these companies are using your services to traffic drugs, please put a stop to that, common sense would be to take them at their word and lose the very small percentage of their profit margin in doing so.

The problem I have with this isn't even that FedEx broke the law, just that so many people seem to think they should get away with it because they are a private company, if they were a private citizen they would be caught dead to rights.

Take for example if I am a sub contracting courier driver by trade, I drive packages for people and companies from one place to another. I have a regular customer (who unbeknownst to me at the time, is a drug dealer) who pays me to take a package to a specific place every week, if the Police pulled me up one day and warned me, the guy who is giving you these packages is a known drug dealer and we suspect that the packages he is paying you to deliver contain drugs, common sense would tell me to stop doing deliveries for this person. If I were to ignore common sense, I am quite sure that it would not take long for the Police to pull me over while I was in the midst of delivering said package, and I would get done for drug trafficking when the contents were found to be drugs.

At the very least, FedEx had strong reason to believe that certain packages they were delivering contained goods that were illegal, this may not hold up as drug trafficking in court, but at the least it would have to be called criminal negligence.

How come if I get on an International flight I am responsible for what is in my luggage, even if someone else puts it there, but a company that has thousands of employees and makes billions of dollars per year delivering packages has zero responsibility about the contents of those packages, even after they were told on good authority that specific packages were illegal?

 

[subotai]

At the very least, FedEx had strong reason to believe that certain packages they were delivering contained goods that were illegal, this may not hold up as drug trafficking in court, but at the least it would have to be called criminal negligence.

probably what will happen, I'm not sure if criminal negligence is called something different for corporations but they will definitely not be charged with drug trafficking. Honestly, I'm sure FedEx did the numbers on whether it would be more profitable to just carry on with business as usual or actually heed the Fed's warnings. Jobs like the one Ed Norton had in Fight Club do exist in real life.

How come if I get on an International flight I am responsible for what is in my luggage, even if someone else puts it there, but a company that has thousands of employees and makes billions of dollars per year delivering packages has zero responsibility about the contents of those packages, even after they were told on good authority that specific packages were illegal?

because the contents of the packages aren't FedEx's property, and your luggage is your property. International drug smugglers are more the welcome to fight their charges in a court of law but when you go to trial you will invariably lose 99.9% of the time and get a greater sentence, so they cop a plea.

nobody wanted to charge American Airlines with terrorism for being responsible for 9/11 did they? These transportation companies are just a means to an end, I totally agree with FedEx about them saying they can't police every package. That is supposed to be the job of the DEA, to stop these criminal enterprises before they can even abuse FedEx.

Sure, it was probably plainly obvious that something fishy was taking place, but in the eyes of the law I really don't see how they can be punished overly harsh simply for being incompetent.

And that's where the Fed's are alleging: That they were more than incompetent, and that they conspired with these pharmacies in order to facilitate their drug peddling.

But again, as with any court case ever in existence, prove it brah

Now, I'm not above thinking some new revelations might come out in the future due to the Federal govt really looking into this matter, but it depends on what their end-goal is really.

Are they trying to completely shut down FedEx and put hundreds of thousands of people out of work? Probably not

Are they trying to go after the real culprits in the online pharmacies? "Trying" is a good way of putting it

I think it is more just a culmination of a long chain of events that involved a lot of bureaucratic practices and grey area, and they are just trying to send a message to everyone and maybe collect a few billion from FedEx at the same time.

There's people in the Federal Governement who's sole job is to look into shit like this, just like there's people employed by FedEx who's sole job is to figure out how to get out of shit like this

these people need to do something to justify their salary

also, to put it simply

Take for example if I am a sub contracting courier driver by trade, I drive packages for people and companies from one place to another. I have a regular customer (who unbeknownst to me at the time, is a drug dealer) who pays me to take a package to a specific place every week, if the Police pulled me up one day and warned me, the guy who is giving you these packages is a known drug dealer and we suspect that the packages he is paying you to deliver contain drugs, common sense would tell me to stop doing deliveries for this person. If I were to ignore common sense, I am quite sure that it would not take long for the Police to pull me over while I was in the midst of delivering said package, and I would get done for drug trafficking when the contents were found to be drugs.

no you wouldn't, it's not your property if you are officially registered as a courier company. You would have to comply with the authorities and give them all available information about it's origin, but you are not going to be charged with a crime. Unless they can prove that you had prior knowledge of the actual contents of the package, and proceeded to transport it anyway. A guy with a pulled up collar and low brimmed hat going "psst, that package has drugs in it" isn't knowledge, it's hearsay. Which will never stand in any respectable court. Even if it's ultimately true, it doesn't matter because it is not a fact. That's why some prosecutors don't even use the most obvious evidence they seemingly have sometimes, because it's not real evidence in the eyes of the law.

The Feds like to intimidate people with this shit when in reality if you just read the Bill of Rights you would see it is just that, intimidation.

and my theory is that's why they never tried to rephrase the amendments and left them in the same words as how people talked in the 18th century. They don't want you to understand it

two most important words in the American legal system: PROVE IT

it is impossible to include every conceivable criminal act into the legal code so they use generalizations. As a result of that, almost no crime is impossible to defend. you just need a good enough lawyer

the only problem I have with how this might turn out is the Federal Government breaks the law to prove things all the time, so don't feel too bad for them

 

[Zerrr]

FedRx