author headshot standing in dark suit with arms crossedBy George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
On June 15, 2023, a United States District Judge sentenced a Florida man to 15 years in prison for his role in an HIV prescription drug fraud scheme that amassed more than $230 million in two years.  The defendant was initially indicted on June 17, 2022, and charged with six counts of conspiracy and money laundering.  Unlike most of the fraud convictions we report on, this one was directed against the U.S. Food and Drug Administration (FDA) and involved adulterating and misbranding drugs.  The defendant pled guilty to only two counts: conspiracy to defraud the United States and conspiracy to commit money laundering.  Click here to view the press release from the U.S. Attorney’s Office, Southern District of Florida, to learn more about the arrest.

The Charges: Adulterated and Misbranded HIV Medications.

Prescription drug diversion is when prescription drugs are removed from regulated distribution channels and reintroduced into the wholesale market or otherwise illegally distributed.  These drugs can be acquired through theft, fraud, or patients who were prescribed the medication and intentionally did not consume them.
In this case, U.S. vs. Lazaro Hernandez,  the defendant would obtain prescribed drugs illegally, repackage them, falsify the documentation, and resell them to coconspirators through conspiracy wholesalers. To successfully divert the prescription medications, they got wholesale drug distributor licenses for LLC’s in Florida, New Jersey, Connecticut, and New York. These conspiracy wholesalers would purchase the diverted, adulterated, and misbranded drugs and documentation and sell them to pharmacies.
Adulteration occurs when any substance is added to or substituted, in part or in whole, or mixed with an approved drug.  Misbranding of a drug occurs when someone places a label on it that is false or misleading in any way, as defined in Title 21 U.S. Code sections 351(d) and 352 (a)(1).  In this case, the pharmacies billed health care benefit programs and dispensed adulterated and misbranded drugs to patients.  The pharmacies paid $232,800,000 for the diverted drugs between April 2019 and at least October 2021.

The six counts that the defendant was initially charged with include conspiracy to introduce adulterated and misbranded drugs and to defraud the United States, conspiracy to traffic pre-retail medical products with false documentation, conspiracy to commit money laundering, and three counts of money laundering.  The false documentation and money laundering charges were later dropped in the plea deal.

The Sentencing.

The government recommended a sentence of 188 to 235 months, which aligns with the defendant’s criminal history and total offense level (calculated in accordance with federal statutes and regulations), while the defense argued for a lesser amount of time due to the allegedly “secondary” role the defendant played in the fraud.  The judge sentenced the defendant to 180 months. Also included in the sentence was a forfeiture of all proceeds from the scam and restitution in an amount that has yet to be determined.

This lower-than-recommended prison sentence came after the defendant spoke about his gambling addiction, which allegedly led him to participate in the fraud. Also, two of his 47 character references addressed the court in person.  The judge was swayed to give him a lower sentence as a result. View the indictment in the case in full here.

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Minsky, David. “Fla. Man Sentenced To 15 Years In Prison Over HIV Drug Fraud.” Law360. (June 16, 2023). Web.

Becker, Zoey. “In fraud case targeting HIV meds, Florida man gets 15 years in prison.” FiercePharma. (June 21, 2023). Web.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  The Health Law Firm, 1101 Douglas Avenue, Suite 1000, Altamonte Springs, FL 32714.  Phone:  (407) 331-6620;  Toll-Free: (888) 331-6620.

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