Couple who ran wholesaling scam plead guilty

The U.S. has gotten guilty pleas out of a Texas couple that ran a fake drug wholesaling business that sold nearly $60 million worth of drugs obtained off the street. Using fake businesses to create pedigrees and a paper trail, Charles Jeffrey Edwards and Brenda Elise Edwards admitted to raking in $14 million in profits by taking "diverted" drugs and selling them back into the U.S. supply chain.

Brenda Edwards faces 5 years in jail and $250,000 in fines and her husband, up to 30 years in jail and $500,000 in fines after pleading guilty to charges of conspiracy, money laundering and mail fraud.

According to the U.S. Attorney's Office for the Middle District of Tennessee, the couple, along with Jerrod Smith, operated Cumberland Distribution for three years, buying drugs from dealers in New York and Miami, who in turn were getting them from people with legitimate prescriptions. The drugs included HIV/AIDS drugs, antipsychotics and antidepressants, blood pressure medication and diabetes medications. Cumberland Distribution was based in the Houston area and had warehouses in Nashville, TN.

To obscure their trail, the three had another partner who set up a front business in Texarkana, AR, Tristate Management Group. The drugs would be run through Tristate to create a provenance, then shipped to Nashville, where they were repackaged, prepared with fake pedigrees and then sold to pharmacies. Authorities allege that between 2006 and 2009 the trio sold $58 million in drugs and netted about $14 million in profits. Smith goes on trial later this year.

Authorities have broken up other similar operations, including one in 2012 that operated out of South Carolina through Altec Medical. Federal authorities say that operation sold about $55 million worth of drugs that had been diverted, then repackaged and given fake paperwork. Last year they got guilty pleas from a number of people tied to Arlington, VA-based Gallant Pharma International, which bought foreign-made Botox and cancer drugs on the black market and sold them into the U.S. supply chain.

The danger when drugs are diverted is that there is no way of knowing whether they have been stored properly or expired and so become unsafe or ineffective. In some cases they have turned out to be counterfeit. They compete with the sales of legitimate products and can tarnish the reputations of manufacturers.

- here's the announcement