“In some cases, completely different tablets were in the bottles, including an antipsychotic drug with ‘potentially serious side effects that require vigilant medical supervision.’ All of the bottles were sold with forged documentation.”
The U.S. District Court for the Eastern District of New York unsealed multiple documents last week that named the kingpins behind an alleged counterfeit HIV medication conspiracy. An unsealed amended complaint filed in late September names the two alleged kingpins as Lazaro Roberto Hernandez and Armando Herrera, both of Florida.
The two “kingpin defendants” are accused of being “at the head of the conspiracy” and “career criminals who organized the conspiracy and controlled the flow of the counterfeits, all while operating from the shadows and using extensive measures to conceal their identities.” Hernandez was identified by basic geolocation data associated with burner phones used to communicate details about the conspiracy.
Asset Freeze Order
The unsealed documents also included an asset freeze order against more than 60 defendants related to an anticounterfeiting suit filed last year by Gilead Sciences, Inc. Additionally, the court unsealed a document ordering law enforcement to seize all products with a Gilead trademark, all business records and correspondence, and any counterfeiting equipment at nine addresses in Florida, Pennsylvania, Tennessee and New York. Both the asset freeze and seizure orders were filed in August by U.S. District Judge Ann Donnelly.
The defendants are accused of marketing, selling, and distributing counterfeit HIV medication nationwide. The indictment alleges that the operation raked in $230 million by selling the counterfeit medication. Hernandez is alleged to have laundered the money through a complex system of shell companies, and he was arrested in June as part of a federal investigation. In Hernandez’s detention hearing, the government alleged that the Miami resident led an organization that purchased expensive prescription drugs on the street and repackaged them for sale with forged documentation.
The complaint also newly named two additional mid-level leaders and an array of shell companies, suppliers, pharmacies, and distributors accused of facilitating the counterfeit conspiracy. Allegedly, the suppliers sold counterfeit HIV medication to already existing licensed distributors with an existing pharmacy customer base. Using their established customer base, the distributors then sold the counterfeit medicine to pharmacies across the U.S.
In a September 28 press release, Gilead announced, “to disrupt this complex criminal network, Gilead named as defendants in this litigation entities and individuals across all levels of the conspiracy that have been identified to date.”
The counterfeit conspiracy ranged from the alleged kingpins all the way down to individuals who bought back the counterfeit medication from patients to boost the number of counterfeits and launder money. In total, the district court ordered the assets of 32 individuals and 30 corporations to be frozen. This includes defendants accused of holding assets and real estate bought with illicit funds to obscure the identities of the kingpins. For example, Herrera’s girlfriend is accused of owning and controlling shell companies that hold assets including real estate bought with profits from the counterfeit operation.
Gilead: ‘The Danger is Dire’
The counterfeiters targeted Biktarvy® and Descovy® and sold them to pharmacies, where they were given to patients in authentic-looking bottles. The accused conspirators used a network of low-level “collectors” who illegally bought used, empty bottles. These collectors are accused of targeting “particularly vulnerable populations, such as individuals who are homeless or suffering from drug addiction, who receive their HIV medication for free and may be susceptible to being coerced into giving up their medication for cash.”
This process allowed the conspirators to obtain authentic Gilead bottles. In some cases, completely different tablets were in the bottles, including an antipsychotic drug with “potentially serious side effects that require vigilant medical supervision.” All of the bottles were sold with forged documentation. The authentic medications do not cure HIV, but they provide life-saving-saving treatments for people living with HIV.
In the fourth amended complaint, Gilead said, “the danger these counterfeits pose is dire. Those who receive and ingest these counterfeits unwittingly miss their HIV treatment or falsely believe themselves to be protected against HIV infection.”
As part of the lawsuit, Gilead is seeking punitive damages of no less than $25 million from each defendant, and all of the illegal profits, lost profits, and remedial costs. According to Gilead’s Second Quarter 2022 Financial Results, in the first six months of 2022, $7.9 billion of the company’s 12.8 billion in total revenue came from HIV product sales. Biktarvy® sales increased 28% year-on-year in 2022 while Descovy® increased by 6%.
The Foster City, California-based company first filed the lawsuit in 2021. Geoffrey Potter of Patterson Belknap Webb & Tyler LLP is currently representing Gilead in the case.
In June, shortly after Hernandez’s arrest, his lawyer Marc Seitles said the prosecution’s case was based “solely from the words of cooperators trying to reduce their prison sentences.”
Unsealed court documents also accuse Hernandez of intimidating and beating a former co-conspirator who was cooperating with the government. Hernandez allegedly beat the government witness in a Florida strip club shortly before his arrest and told him, “that’s what you get for snitching.”
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