Five drug distributor executives and five drug company sales representatives have been charged in federal district courts in Texas, Florida, Missouri and North Carolina in connection with the alleged illegal sale of nearly 70 million opioid pills and more than 30 million doses of other commonly abused prescriptions drugs to pill mill pharmacies in the Houston area.

The Department of Justice (DOJ) said that the indictments were part of the largest ever enforcement action targeting distributors of pharmaceutical opioids and commonly abused prescription drugs. The products had a total estimated street value of $1.3 billion.

According to federal prosecutors, the distributors “sold the drugs almost exclusively in their most abused, most powerful immediate-release pill forms — i.e., the ones that sold for the most money on the black market.”

The defendants also allegedly sold prescription drug potentiators, including alprazolam, carisoprodol and promethazine with codeine syrup. The substances are “known for their reputation of enhancing the high from the opioids,” the DOJ said.

The government added that the distributors “charged their Houston customers far more for the drugs than what a legitimate pharmacy could or would pay.”

Houston is “a nationally recognized ‘hot zone’ for diversion of pharmaceutical opioids onto the black market,” the DOJ noted.

“The distributors sought to thwart the [DEA’s] oversight function in several ways,” federal prosecutors reported, “including by following what one defendant called a blueprint for avoiding detection: high prices, low purchasing limits for the controlled drugs, and compliance measures that only served appearances.”

The distributors allegedly were all located outside Texas, the government said.

Defendants Charged, Convicted

Among the defendants named by the DOJ were the following:

• Sheldon Dounn, of Plantation, Florida, who was charged with five counts of unlawfully distributing and dispensing controlled substances, two counts of conspiracy to unlawfully distribute and dispense and to possess with the intent to distribute and dispense controlled substances, and one count of conspiracy to defraud the United States, for allegedly brokering the sale of opioids and other commonly abused prescription drugs, primarily to Houston-area independent pharmacies that then sold the pills to the black market.
• Richard Osbourne, of Memphis, Tennessee, the president of Wholesale Rx, who pleaded guilty to one count of conspiracy to unlawfully distribute and dispense and to possess with the intent to distribute and dispense controlled substances.
• Courtney Rotenberry, of Savannah, Tennessee, sales manager at Wholesale Rx, who pleaded guilty to one count of conspiracy to defraud the United States and one count of conspiracy to use a communications facility to further the commission of a drug felony.
• Hernan Alvarez, of Phoenix, the president of Salus Medical L.L.C., a drug distributor, who pleaded guilty to one count of conspiracy to unlawfully distribute and dispense controlled substances in connection with a scheme to distribute more than 18.6 million opioid units. At a meeting with DEA officials in 2017, the government said, Alvarez and his sales manager “were informed of distributors’ obligations to provide effective controls against diversion and were trained on red flags for Salus to look out for.” Nevertheless, Alvarez worked with certain Houston-area pharmacies that were willing to pay more than market prices for commonly abused prescription drugs, which the pharmacies unlawfully sold to street-level drug dealers for cash.
• Joshua Weinstein, of Miami, the president of a Miami-based drug wholesaler, who pleaded guilty to one count of conspiracy to unlawfully distribute and dispense and possess with intent to distribute and dispense controlled substances, and Derrick “Chad” Atkinson, of Lumberton, North Carolina, a sales representative, who was charged with the same offenses, in connection with a scheme to distribute more than 7 million hydrocodone, oxycodone and hydromorphone pills. According to the DOJ, the two defendants and their coconspirators implemented “purported compliance measures that mostly facilitated, instead of prevented, diversion.” Weinstein also allegedly served as a sales representative for a Houston-area pill mill pharmacy.
• Jason Smith, of Plantation, Florida, the owner and operator of Proven Rx Sales L.L.C., a purportedly drug consulting company, who pleaded guilty to one count of conspiracy to unlawfully distribute and dispense and to possess with intent to distribute and dispense controlled substances; and Joseph Pesserillo, of The Villages, Florida, and Cassandra Rivera, of Ft. Lauderdale, Florida, both Proven sales representatives, who were charged with one count of conspiracy to use a communications facility to further the commission of a drug felony. The three were charged in connection with a scheme to help distribute “tens of millions” of commonly abused prescriptions from Salus and three other drug wholesalers, the government said.
• Eric Bailey, of St. Louis, the owner and operator of the drug distributor Emed Medical Co. L.L.C., who pleaded guilty to one count of possession with intent to distribute hydrocodone and oxycodone. “In December 2021,” the DOJ reported, “Bailey was notified by a drug manufacturer that unless Emed implemented improved drug diligence programs, the manufacturer would no longer sell Emed controlled substances. Bailey received compliance recommendations but did not implement them. Instead he purchased thousands of oxycodone and hydrocodone pills from a new drug manufacturer with the intent to distribute them to Emed’s Houston-area pharmacy customers that he knew would unlawfully distribute them.”
• Velencia Griffin, Kendal Lyons and Andre Reid, of Houston, who pleaded guilty to conspiracy to unlawfully distribute and dispense and to possess with intent to distribute controlled substances. The three defendants operated Houston-area pharmacies that purchased commonly abused controlled pharmaceutical drugs ordered through Sheldon Dounn.

The case was investigated by the DEA, the Department of Health and Human Services Office of Inspector General, the FBI, the U.S. Postal Service Office of Inspector General, the FDA Office of Criminal Investigations, and the Medicaid Fraud Control Unit, with the help of the Department of Homeland Security, the General Services Administration Office of Inspector General, the Broward County, Florida, Sheriff’s Office, the Houston Police Department, and other federal and state law enforcement agencies.