BY ROY ALBERT ANDRADE, K1LLER, Inc.
DETROIT, MICHIGAN - Oliver Schmidt, 48, a German national, and former general manager of Volkswagen AG’s U.S. Environment and Engineering Office was sentenced to seven years in prison for conniving to sell as many as 500,000 diesel “clean diesel” automobiles containing software designed to cheat U.S. emissions tests. Schmidt was sentenced by U.S. District Judge Sean F. Cox of the 629,000-square-foot Theodore Levin U.S. Courthouse of Michigan, and ordered to pay a criminal penalty of $400,000. Schmidt pleaded guilty on August 4, 2017 to multiple counts, including one count of conspiracy to defraud the United States, and one count of violating the Clean Air Act.
“Upon learning of Volkswagen’s massive scheme to defraud and mislead U.S. consumers and regulators, Oliver Schmidt chose to join the conspiracy and deceive U.S. regulators,” said Acting Assistant Attorney General Cronan. “This case, along with the prior prosecution of the company and another Volkswagen engineer, further demonstrate the Criminal Division’s unwavering commitment to hold both corporations and individuals accountable for their wrongdoing.”
“Oliver Schmidt cheated the American people, and today’s sentencing shows that such behavior will be prosecuted to the fullest extent of the law,” said Deputy Assistant Attorney General Williams. “The Department of Justice and its partner agencies will continue to work together to ensure a level playing field for all competitors and a cleaner environment for all Americans.”
“This sentence reflects how seriously we take environmental crime,” said Acting U.S. Attorney Lemisch. “Protecting natural resources is a priority of this office. Corporations, and individuals acting on behalf of corporations, will be brought to justice for harming our environment.”
“Americans expect corporations to follow laws and regulations designed to protect consumers and the environment,” said FBI Special Agent in Charge Gelios. “The sentence of Mr. Schmidt demonstrates the Department of Justice’s commitment to hold companies that defraud their customers both personally, as well as, corporately accountable for their crimes.”
“As this case demonstrates, EPA is committed to ensuring a level playing field for companies that follow the rules and pursuing individuals whose actions create an unfair competitive advantage for their employer,” said EPA Acting Assistant Administrator Starfield.
BY ROY ALBERT ANDRADE, K1LLER, Inc.
NOBLESVILLE, INDIANA - On June 22, 2017, Paul J. Elmer, 64, and Caprice R. Bearden, 62, of Pharmakon Pharmaceuticals, Inc. were charged in a 10-count indictment, including defrauding the United States and distributing adulterated drugs. Elmer was the owner of Pharmakon, and Bearden was the Director of Compliance of Pharmakon. Pharmakon Pharmaceuticals, Inc. was a licensed Food and Drug Administration (FDA) registered, and DEA licensed manufacturer, that faild to provide precise sterile admixing services that adhered to every United States Pharmacopeial Convention <797> and Current Good Manufacturing Practices requirements. Elmer and Bearden failed to notify customers and the FDA of potency failures.
On March 6, 2014, Bearden falsified information to FDA investigators, claiming she did not obtain potency results, even though they did in fact receive numerous notices of out-of-specification test results. In March 2014, a hospital employee was preparing to administer a dosage of midazolam, a drug used for procedural sedation, and acknowledged two conflicting strengths on the labeling of a syringe provided by Pharmakon Pharmaceuticals, Inc.. The health professional filed a voluntary report with MedWatch from the hospital, and sparked an onsite investigation conducted by the FDA Office of Criminal Investigations. In conclusion, Pharmakon failed to respect FDA regulations by compounding, and distributing their drugs that were either under-or-over-potent.
On November 22, 2017, The 62-year-old Director of Compliance of Pharmakon pleaded guilty to three misdemeanor counts of introducing adulterated drugs, as described in the FD&C Act under Section 501, into interstate commerce, and six misdemeanor counts among other criminal offenses in the Southern District of Indiana. Chief U.S. District Judge Jane E. Magnus-Stinson, sworn in as a Judge of the United States District Court for the Southern District of Indiana on June 14, 2010, accepted Bearden’s plea. A day for sentencing has not been established as of this writing.
"This guilty plea demonstrates the Justice Department’s commitment to protecting patients and ensuring that compounded drugs are safe,” said Principal Deputy Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Distributing out-of-specification drug products poses a serious risk of harm to patients. The Justice Department will not tolerate efforts to impede FDA’s ability to uncover these types of safety concerns.”
“This defendant distributed serious drugs to hospitals in Indiana and around the country, knowing that the drugs were significantly under or over the strength they were supposed to be,” said Josh Minkler, United States Attorney for the Southern District of Indiana. “She put greed and the reputation of her company ahead of the health and safety of our most vulnerable patient populations.”
BY ROY ALBERT ANDRADE, K1LLER, Inc.
MURFREESBORO, TENNESSEE - On May 27, 2016, then Rutherford County Sheriff, Robert Arnold, Chief Deputy Joe L. Russell II, and Arnold's uncle, John Vanderveer, of Marietta, Georgia, entered a Nashville courtroom in handcuffs, and were charged in a 14-count indictment by a federal grand jury on bribery concerning federal programs, obstruction of justice, wire fraud, among other related charges. The indictment alleged that Arnold, and Russell II used their official positions to increase their income by indirectly re-selling electronic cigarettes to Rutherford County jail inmates through JailCigs, LLC (JailCigs), a start-up company they formed together. In 2015, JailCigs, earned an estimated $156,975 in revenue from Rutherford County jail inmates, which, doesn't include monies received from online sales from other resources.
Arnold, and Russell II welcomed their company's electronic cigarettes into the Rutherford County Jail as permissible items, and successfully managed cooperating jail employees to conduct business on their behalf while on county time. As a marketing strategy, JailCigs paid a $5 commission for every electronic cigarette sold in Rutherford County jail, and to other officials at other detention facilities willing to risk their livelihood to make some cash on the side. On April 17, 2015, Arnold's uncle, John Vanderveer, heard of a criminal investigation through media reports, and instructed one of JailCig's sales representatives to destroy evidence pertaining to their lucrative scheme. Arnold, and Russell II made false statements to the media, denying ownership of the business, and paying themselves commission payments that should have been paid to Rutherford County.
On January 18, 2017, former Rutherford County Sheriff Robert Arnold, then 40, pleaded guilty to federal charges, including fraud and corruption, reported Acting U.S. Attorney, Jack Smith, for the Middle District of Tennessee. “Today, Robert Arnold admitted his guilt and participation in the brazen criminal scheme charged in the indictment brought against him by the grand jury,” reported Acting U.S. Attorney Jack Smith. “His guilty pleas hold him accountable for his criminal conduct and we look forward to the sentencing hearing in this matter. I would like to thank the Tennessee Bureau of Investigation and the FBI for their extraordinary work in investigating this case. I’d also like to thank District Attorney General Jennings Jones for his assistance and cooperation, as well as the Department of Justice’s Public Integrity Section, who partnered with us on the prosecution of this case. As I have said in the past, the conduct of Arnold is in no way representative of the fine and often heroic work done daily by the law enforcement officers in our district. Finally, let me thank the citizens of Rutherford County for their patience while waiting for justice to be served in this case.”
Arnold pleaded guilty to honest services fraud, wire fraud, and extortion under color of official right. He agreed to pay restitution in the amount of $52,500 to Rutherford County, and sentenced by Chief Judge Sharp on May 8, 2017 to 50 months in federal prison, forfeiting $66,790. “This plea is the result of the hard work by the men and women of the FBI and our law enforcement partners,” said Michael T. Gavin, Special Agent in Charge of the Memphis Division of the Federal Bureau of Investigation. “We all rely on those who hold positions of public trust to execute their duties with integrity and in the best interests of the public. The FBI will continue to work with its partners to identify and investigate law enforcement officers who violate the law out of personal greed, which harms the reputations of all law enforcement officers, the majority of which are honest, hardworking men and women who serve with honor, integrity, and professionalism.”
On September 6, 2017, Arnold's uncle, John Vanderveer, was sentenced to one year in federal prison for attempting to tamper with a key witness in the criminal investigation by ordering JailCig's sales representative to destroy incriminating documents related to the company's scheme. Vanderveer was ordered to pay $52,500 in restitution.
This morning, on November 16, 2017, former Rutherford County Sheriff's administrative Chief Deputy, Joe L. Russell II, was sentenced to 15 months in federal prison by Senior U.S District Judge Marvin Aspen of the Northern District of Illionois, and instructed to pay $52,500 in restitution, including the forfeiture of $52,234.41, equivalent to monetary amount he received from JailCigs, LLC.