Federal prosecutors kicked off their case Monday in a closely watched trial against FedEx claiming that the global shipping giant knew it was delivering illegal prescriptions for an internet pharmacy, and continued doing so after it had been warned.
In opening arguments before U.S. District Judge Charles R. Breyer--the brother of U.S. Supreme Court Justice Stephen Breyer--Assistant U.S. attorney John Hemann cited a warning the company had been given by law enforcement officials that an internet pharmacy was using FedEx to deliver illegal drugs to a woman who committed suicide, the Associated Press reported.
Fedex, which has said all along that it would fight the charges, was slapped with a 15-count indictment in 2014, that accused the Memphis, TN-based company of ignoring warnings from authorities for 5 years, and delivering controlled substances and misbranded drugs from illegal online pharmacies. Prosecutors said deliveries included products like generic Xanax, Valium and Ambien and went to people who had no medical reason to get them.
Prior to the indictment, FedEx’s competitor, UPS, settled with authorities, agreeing to forfeit the $40 million it made on deliveries of drugs sold by illegal online pharmacies after soliciting their business.
FedEx, however, has countered with pre-trial arguments that federal authorities want the company to violate one of the basic rules of its business: its agreement to customers that it will not open packages.
Based on courtroom comments made by Breyer ahead of the trial opening, prosecutors may have an uphill battle. During one recent exchange, Bloomberg reported Breyer asked prosecutors why the U.S. Postal Service hadn’t been charged along the lines of FedEx. The response by prosecutors was that the government-run mail service hadn’t done anything wrong, although it delivered the same drugs as FedEx during the same time frame. Breyer’s response, “Really?”
The judge has also expressed doubt that the government can deliver the “essential ingredient" of their case--that they have proof FedEx knew of the illegal drugs and intended them to be distributed illegally.
Last week, prosecutors asked to forgo a jury trial in favor of Breyer deciding the outcome himself. Attorneys for FedEx huddled with their client for two minutes before agreeing to the change in prosecution strategy.
If convicted, the prosecutors say FedEx could face penalties of about $1.6 billion, double the $820 million the Department of Justice estimates the company earned over the years from the operations.
- check out the Bloomberg story
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