FedEx Corp has lost a legal bid to dismiss charges brought by the US Department of Justice of ‘conspiracy to distribute controlled substances’ in connection with the express delivery company’s alleged role in transporting illegal prescription drugs.
However, Reuters reported that US District Judge Charles Breyer ruled in favour of the company on a motion to subpoena some communication records, which FedEx said would prove that the company had aided US law enforcement agencies in their fight against the transport of illegal drugs.
In a statement to CEP-Research following the ruling, FedEx senior vice president for marketing and communications, Patrick Fitzgerald, said: “We accept the rulings of the Court, even those with which we disagree. FedEx is innocent of all of the charges filed in this matter. We will continue to defend against this indictment, which is an attack on the integrity of FedEx.”
FedEx was first indicted last July, accused of shipping packages from illegal online pharmacies despite allegedly receiving repeated warnings from US drug enforcement officials. The US Attorney’s Office for Northern California, which announced the charges that FedEx denies, said FedEx had been warned by federal officials and some internal staff since 2004 about the shipments. It claimed that FedEx earned at least US$820 million from shipping the goods and said that, if the charges are proven, the company could be fined up to twice this sum, implying a possible penalty of more than $1.6 billion.
Last August, a new charge – a so-called “superseding indictment” – was filed in court, alleging that FedEx had accepted payment from several pharmacies when it knew the revenue came from invalid prescriptions, allegedly breaching money-laundering laws. The indictment alleges that senior company managers were repeatedly warned that online pharmacies that had been the subject of criminal prosecutions for supplying drugs without prescriptions were using its services. Instead of stopping the conduct, FedEx devised policies so it could continue, according to the filing.
The charges follow a nine-year investigation by the US Drug Enforcement Administration (DEA) into both FedEx and UPS over allegations that the firms had aided illegal online drug sales by not properly controlling their shipments. UPS paid a $40 million fine in 2013, but FedEx has maintained its innocence.
The case has been described as an unprecedented action by the government seeking to hold a parcel carrier responsible under the Controlled Substances Act (CSA) for the contents of packages delivered on behalf of its pharmacy customers.
Responding to the 17 July indictment, FedEx said the government appeared to be suggesting that FedEx must assume criminal responsibility for the legality of the contents of the millions of packages that it picked up and delivered every day, arguing that it is a transport company not a law enforcement company.
FedEx said it had partnered with the FBI, the Department of Homeland Security, DEA, and other federal, state and local law enforcement teams around the world to help stop illegal drug activity and bring criminals to justice, including providing assistance to the DEA in combatting rogue internet pharmacies.
