FedEx Indicted for Delivering Illegal Drugs to Addicts

A federal grand jury in San Francisco has indicted FedEx Corporation, FedEx Express, Inc., and FedEx Corporate Services, Inc. with conspiracies to traffic controlled substances and misbranded prescription drugs for its role in delivering prescription pain pills, sedatives, anti-anxiety drugs, and other controlled substances from illegal Internet pharmacies. The 15-count indictment from the U.S. Department of Justice (DOJ) essentially charges the company as a drug dealer who facilitates procurement of illegal drugs without proper prescriptions by addicts.

If FedEx is convicted, the company could face penalties of $1.6 billion. FedEx has denied any culpability and has vowed not only to plead not guilty, but also to refuse to settle with the regulators. It further states that any investigation into these accusations before the indictment would have violated the company’s policy of not opening any packages it handles, thus giving FedEx deniability. However, the company did state in an SEC filing that if it is found guilty, the penalties could be “material” to its finances.

Regulators Accuse FedEx of Conspiring with Illegal Drug Companies

According to the indictment, FedEx delivered illegal drugs for over five years, even after being informed that the company may be in violation of the Controlled Substances Act, the Food, Drug and Cosmetic Act, and numerous state laws by both the Food and Drug Administration and the DOJ. Despite this knowledge, FedEx allegedly continued business as usual, even making it easier for illegal pharmacies to evade prosecution by the Drug Enforcement Agency (DEA).

Documentation indicates that in order to avoid losing shipping business as pharmacies constantly changed shipping companies and locations to avoid detection by the DEA, FedEx created a sales policy under which all online pharmacies were assigned to a catchall goods classification. This gave the companies more privacy and hid the identities of the drug providers.

Furthermore, FedEx is accused of willfully ignoring signs that deliveries were being made to addicts and dealers trying to conceal their identities. Many drivers of the company reported concerns that delivery addresses for these companies were sometimes parking lots and other abandoned locations. Moreover, some drivers reported being stopped on delivery routes by customers desperately demanding packages of pills. Senior management dismissed these concerns.

Even when a major customer of Fedex was indicted for selling illegal drugs, the company continued to deliver packages for its successor. The indictment further alleges that FedEx’s accounts from online pharmacies tripled to more than 600 during the five-year period, majorly contributing to the growing problem of counterfeit drugs entering the United States.

Although it remains to be seen if these charges will stick, the implications of such an aggressive lawsuit could be serious for other actors in the industry. Its competitor UPS has already settled similar charges, and it is possible that similar indictments will be handed down to other companies. What is clear, however, is that United States regulators will be investigating illegal Internet pharmacies more aggressively in the future. Perhaps some of the next targets of these probes will be buyers of the illegal drugs. In this case, consumers using these websites should be even more aware of the risks.