Two Florida men were charged last week in widespread prescription fraud cases that could have left unsuspecting patients across the country without the proper medication to treat cancer, H.I.V. and psychiatric conditions, according to federal officials.
The indictments of Lazaro Hernandez, 51, who is also known as Fat Laz or Godfather, and Eladio Vega, 37, also known as Spanky or simply E, brought the total number of defendants to 15 people in a third superseding indictment over the alleged fraud scheme, announced Friday by federal prosecutors in Florida and Washington. So far, eight people have entered guilty pleas, prosecutors said.
Mr. Hernandez was also arrested and charged separately on Friday with distributing more than $230 million in adulterated H.I.V. drugs, a wholesale pharmaceutical distribution operation that federal prosecutors said was part of a nationwide scheme to defraud the U.S. Food and Drug Administration. Hernandez was accused of laundering proceeds through several corporations based in Miami.
Mr. Hernandez and Mr. Vega acquired and supplied the medications that were misbranded and sold to unknowing patients, according to the indictment.
The two were charged with conspiracy to distribute misbranded and adulterated drugs, conspiracy to traffic in medical products with false documentation, conspiracy to commit money laundering and four counts of mail fraud. Mr. Hernandez was also charged with two counts of money laundering. No lawyers were listed for the men in online court records.
Stephen Manuel Costa, Rafael Angel Romero and Angel Caminero Alvarez were also listed in the indictment; 10 others are named as co-conspirators.
The scheme’s purpose, the indictment alleges, was for the men “to unlawfully enrich themselves by selling misbranded, adulterated, and otherwise diverted drugs as if they were part of the legitimate pharmaceutical market.”
A federal prosecutor involved in the cases said it was difficult to pinpoint the number of people affected by the fraud. They said Mr. Hernandez and his co-conspirators had established drug distribution companies in Florida, New Jersey, Connecticut and New York, in the case concerning the distribution and sale of fake H.I.V. drugs.
Prosecutors said the wider fraud scheme, which started around January 2013 and continued until May 2019, entailed several different facets. First, street-level drug dealers would supply medication to people who would inspect, clean and package the drugs for shipment to others with established pharmaceutical wholesale companies. Then, the company owners would prepare fake documents that falsely represented legitimate drug manufacturers.
The individuals would buy the drugs from “sources who had obtained them from theft and burglary and from health care fraud, including buying them from patients who had received them at greatly reduced prices through Medicare and Medicaid,” the indictment said. The scheme participants also sought to disguise the origin of the drugs, shipping them from Florida to Arizona with false records, the indictment charged.
By obtaining and distributing the drugs this way, prosecutors said the men were able to “generate very large profits, at the cost of jeopardizing the health of patients.”
The company owners would then sell the medications to retail pharmacies who then sold the medications — which had not been properly transported or stored — to patients.
“In order to effectuate their scheme, the defendants assisted and arranged for their accomplices to sell drugs with altered labels,” prosecutors wrote in the indictment. The information put “innocent purchasers” in the dark about the “nature and integrity of the drugs.”
To help conceal the fraud, those involved would route money obtained from sales of the mislabeled and adulterated drugs through the bank accounts of multiple shell companies, according to the court documents. The drugs were also shipped from Florida to Arizona with false information on the shipping records to help further disguise the origin.
