New York Resident Sentenced in Utah Drug Diversion Case

June 24, 2010 - SALT LAKE CITY—Mohamed Shafeek, age 61, of New York City, has been sentenced to a year in federal prison for his role in a drug diversion scheme that involved individuals and businesses in Utah, New York, New Jersey, and California. He will also forfeit $2.5 million in assets. U.S. District Judge Dee Benson issued the sentence Tuesday afternoon.

Shafeek pleaded guilty to a three-count Felony Information charging him with mail fraud, unauthorized distribution of a drug without a pedigree, and money laundering.

As a part of the plea agreement, Shafeek admitted that from about June 2004 through April 2005, he and corporations he owned established a business relationship with Umit Kagan Ocak and Ayyoob Abbaszadeh, operators of two Salt Lake City businesses, PDRX Marketing and Pharma Discount, LCC. Shafeek’s companies sold diverted drugs to Pharma for distribution and sale. In forming the business relationship, Shafeek advised Ocak that he could not provide pedigrees for any of the drugs sold to Pharma. According to the plea agreement, Ocak said it was not a problem.

Federal law requires each wholesale distributor who is not the manufacturer or authorized distributor of a drug to provide each person to whom a drug is distributed a statement identifying each prior sale, purchase, or trade of such a drug, including the date of the transaction and the names and addresses of all parties to the transaction. The pedigree requirement, if followed, is designed to expose and eliminate unscrupulous wholesale distributors from the drug distribution marketplace, thereby protecting the public from the potential ill effects and dangers stemming from drug diversion.

Shafeek received orders from Pharma/PDRX for various pharmaceutical drugs. Shafeek filled the orders with drugs he obtained from New York suppliers whom he knew were not manufacturers or authorized distributors for the drugs. Pedigrees for the prescription drugs were not provided. Pharma/PDRX then sold and distributed the diverted drugs to pharmacies around the country. The drugs were then sold and dispensed to end-user patients.

As a part of his plea agreement, Shafeek agreed to fully cooperate with the government in its investigation and prosecution of related cases in Utah and New York.

“The United States has one of the best systems in the world for ensuring the integrity of prescription medications. To preserve and maintain this process, those who abuse the market or jeopardize the public’s safety, must be held accountable for their conduct,” Acting U.S. Attorney Carlie Christensen said. “Today’s sentence reflects an appropriate balance between a defendant’s cooperation and a fair sentence in an important case.”

“The FDA is committed to aggressively pursuing those who put the public’s health at risk by introducing diverted and stolen pharmaceuticals into the legitimate supply chain” said Patrick J. Holland, Special Agent in Charge, Food and Drug Administration’s Office of Criminal Investigations, Kansas City Field Office. “We commend our state and federal counterparts and the U.S. Attorney’s Office for their diligent efforts to protect the public health.”

Shafeek was among six individuals and six businesses in Utah, New York, New Jersey, and California charged in a 10-count indictment returned in 2005 with mail fraud and unauthorized distribution of drugs without pedigrees. Shafeek’s case is the last to be resolved.

“This case is an excellent example of the law enforcement community working together to target those who seek to defraud our nation’s health care system. The FBI Salt Lake City Field Office is grateful to its federal, state, and local partners for their continuing support and dedication to this investigation. Unscrupulous individuals should be on notice—the FBI and its law enforcement partners will relentlessly pursue allegations of fraud to safeguard the public and ensure justice is served,” FBI Special Agent in Charge Jim McTighe said.

The case investigation was coordinated by the FDA Office of Criminal Investigations; the FBI, the New York Attorney General's Medicaid Fraud Control Unit, the IRS Criminal Investigative Division, the U.S. Attorney's Office in the District of Utah, the Utah Attorney General's Medicaid Fraud Control Unit, and the Utah Department of Professional Licensing. Other U.S. Attorneys Offices and law enforcement agencies around the country assisted in the investigation of the case.