The former head of a generic drug distributor was sentenced to 2 1/4 years in prison in New York for conspiring to sell opioids to crooked pharmacies to boost his own profits and paychecks.
“This was a crime that was motivated only by profit,” US District Judge George Daniels said at Laurence F. Doud III’s sentencing hearing in Manhattan Federal Court on Friday.
Doud, 79, spent 25 years as Rochester Drug Co-operative’s chief executive officer. He was found guilty last year in what prosecutors called the “first-of-its-kind” prosecution for selling addictive opioids to pharmacies that were suspected of dispensing to addicts and street dealers. He faces the possibility of spending the rest of his life in prison.
A jury in New York found Doud guilty in February 2022 of orchestrating a scheme within the company to sell the addictive drugs oxycodone and fentanyl to the business despite “red flags” that included unusual sales volume, a high proportion of cash purchases, buyers traveling from outside. state to buy from a suspected drug store, and a prescription from a doctor on an opioid watch list.
Daniels chose a sentence at the end of the guidelines that, according to prosecutors, called for Doud to ask for 30 years to life in prison. The government instead asked Daniels to give him 15 years. But the judge ruled that prosecutors had failed to show how many opioids from Doud’s company were actually diverted for illegal use. He agreed with Doud’s team that the guideline was only 27 to 33 months and gave the lower end of that range.
Doud’s lawyers did not ask for prison time, arguing that substantial prison time would be a life sentence for the retired executive.
In addition to time behind bars, Doud must pay a $100,000 fine and serve three years of probation after his release. Daniels ruled Doud can remain free on bond while he appeals the conviction.
‘Monumental Travesty’
Doud was convicted of conspiracy to distribute a controlled substance and conspiring to defraud the U.S. government by failing to report suspicious orders to the Drug Enforcement Administration. He earned $500,000 in bonuses from RDC opioid sales in the five years before he retired, according to the government. The panel of judges gave their verdict after deliberation on the second day of deliberation.
When Doud was indicted, his attorney, Robert Gottlieb, called the verdict a “monumental cause of justice.” In court papers, Doud’s team said compliance failures at drug distributors have never given rise to criminal charges, but have been dealt with through civil enforcement by regulators.
“There is nothing unusual about the sentencing in this case and the aspect of the alleged conduct that the jury voted to convict is currently under considerable debate,” Doud’s attorney said in a court filing.
Doud’s team also said his age and health issues supported his request to stay out of prison.
‘Devastating impact’
During the trial, Doud’s attorney argued that he was not responsible for failing to stop the sale of illegal opioids and that there was no agreement between Doud and his employees to illegally distribute drugs. The company hired an outside consultant, including a former DEA agent, to look into RDC compliance, he said.
Prosecutors say Doud ignored strict laws that make it illegal to sell the drug without controls to prevent it from being diverted to illegal uses, and ignored red flags.
In court papers, prosecutors said Doud was motivated by “greed and the bottom line of the company” to sell addictive drugs to pharmacies that are diverting to addicts. Arguing to send him to prison, possibly for the rest of his life, he called him a “white-collar drug dealer” and pointed to the scheme’s “terrible impact” on people suffering from addiction.
William Pietruszewski, RDC’s former chief compliance officer, testified at the hearing that Doud knew that many of the drugs he illegally shipped were being diverted. Pietruszewski pleaded guilty to his role in the scheme in 2019 and agreed to cooperate with prosecutors.
RDC, formed in 1905, was once the sixth largest pharmaceutical distributor in the US. It agreed to pay $20 million to resolve a narcotics conspiracy charge the same day Doud surrendered to authorities. The company filed for bankruptcy in March 2020, listing assets of more than $50 million and debts of more than $100 million.
“I want you to know that I did nothing with malice,” Doud told the judge. “I never want to see anyone hurt.”
But the former executive said he was responsible for all areas of the business.
“I realize what a bad job I did” in managing compliance with the rules restricting the sale of opioids to suspicious pharmacies, he said.
The case is US v. Doud, 19-cr-00285, U.S. District Court, Southern District of New York (Manhattan).
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