FedEx Indicted for Delivering Illegal Prescription Drugs

Last week, Federal Express was indicted on federal charges alleging that the shipping giant knowingly distributed prescription drugs on behalf of two Internet companies closed down by state and federal law enforcement agencies.

The indictment, handed down by a grand jury in San Francisco, named FedEx Corp and two subsidiaries as conspirators with two separate Internet pharmacies, the Chhabra-Smoley Organization and Superior Drugs, in distributing pharmaceuticals and other controlled substances, including Valium, Ambien, and Xanax, to customers with “no legitimate medical need” for the drugs.

From 2000 to 2010, FedEx allegedly delivered to customers in vacant lots and abandoned homes, even to individuals who stopped delivery trucks en route to their destinations. Complaints from couriers who expressed concern for their safety in delivering these packages led FedEx to change their procedure by holding pharmacy packages at pickup stations, rather than routing them for delivery.

The indictment alleges that FedEx continued to distribute prescription drugs to customers after owners, operators, and medical professionals associated with by Chhabra-Smoley—a company overseen at one time by Robert Smoley, the former mayor of North Bay Village, Fla.—and Superior Drugs had been indicted, arrested and convicted of illegally distributing drugs.

FedEx issued a statement regarding the indictment that indicated that it “will defend against this attack on the integrity and good name of FedEx and its employees,” and countered the accusations by stating that repeated requests to the U.S. government for a list of illegal online pharmacies has been ignored.

If convicted, the corporate defendants face a maximum sentence of five years probation, $2.5 million in fines or a financial penalty equal to double the profits earned by the illegal shipments, which is estimated at $820 million.