EarthLink – News
Jury deliberating in Utah case involving major opioid ring
By LINDSAY WHITEHURST | 08:44 EDT
SALT LAKE CITY (AP) — A jury began deliberating Thursday in the case of a Utah man accused of running a multimillion-dollar opioid ring that shipped potentially poisonous, fake prescription drugs across the country, causing at least one fatal overdose.
Prosecutors said during closing arguments that Aaron Shamo’s operation helped fuel the nation’s opioid epidemic by making hundreds of thousands of pills available to addicts and other users. They say it might have been responsible for dozens of other fatal overdoses.
“Shamo was a master manipulator. He knew what buttons to push to get people to do what he wanted, which was to keep working for his organization and keep making more money, more money, more money,” U.S. prosecutor Vernon Stejskal told jurors.
Defense attorneys countered that the 29-year-old Shamo wasn’t a kingpin, just a “dummy” who was desperate to make friends and ended up taking blame for the operation.
Shamo testified during the trial that he convinced himself that he was helping people who needed the drugs, while making money for himself and his friends.
He is facing 13 counts of operating a criminal enterprise, selling drugs that caused a death and other charges.
The jury deliberated for about 90 minutes Thursday without reaching a verdict. They are expected to continue Friday.
Authorities have said the 2016 bust of the operation run from Shamo’s basement in suburban Salt Lake City ranked among the largest in the country. More than $1 million was found in his dresser, according to court documents.
With the help of a handful of friends, Shamo bought the powerful opioid fentanyl online from Chinese manufacturers, pressed it into fake oxycodone pills and sold it on the dark web, prosecutors said.
Two friends Shamo had met while working at eBay packaged the pills, sometimes processing so many that they had to vacuum them off the floor, prosecutors said.
Another former co-worker sent them out through the U.S. mail.
In 2016, prosecutors said, some of those drugs reached 21-year-old Ruslan Klyuev, a baby-faced, curly haired technophile who lived in a working-class suburb of San Francisco.
He died hours after crushing and snorting the fake oxycodone.
A medical toxicologist testified that he would not have died if the fentanyl from the pills had not been in his system.
Shamo’s lawyers downplayed those findings and blamed the mixture of substances in the young man’s system, including alcohol and cocaine additives.
Defense attorney Greg Skordas argued that Shamo was a college dropout who was naive enough to buy much of the drug-making equipment in his own name.
He started with a partner who set up the pill press to make counterfeit Xanax before another friend suggested scaling up to make fake oxycodone, and yet another buddy handled most of the manufacturing of the pills, authorities said.
Shamo is a “follower, he’s a pleaser … he’ll do anything these kids tell him to do because he wants to be friends,” Skordas said.
The drug ring began to fall apart when customs agents intercepted a fentanyl package from China. From there, investigators say they worked their way up to the raid on Shamo’s home in November 2016, apparently in the middle of a pill-pressing run.
EarthLink – News
Air Force veteran convicted in terror case to be resentenced
By LARRY NEUMEISTER | 01:42 EDT
NEW YORK (AP) — A U.S. Air Force veteran was properly convicted on terrorism charges for trying to join the Islamic State group and die a martyr, an appeals court said Thursday, but it ordered a judge to resentence him and better explain his reasons behind any penalty.
Tairod Pugh, 51, of Neptune, New Jersey, is serving a 35-year prison sentence, the maximum possible penalty he faced after a Brooklyn jury convicted him in 2016 of trying to provide material support to a terrorist organization and obstruction of justice.
It was the first verdict in more than 70 cases the U.S. brought against Americans suspected of supporting the militant group.
Pugh’s lawyer Eric Creizman didn’t respond to requests for comment Thursday.
Prosecutors said Pugh, who was an airplane mechanic in the Air Force from 1986 to 1990, was seeking a route into Syria to join the Islamic State group in 2015 when he was stopped at a Turkish airport.
They said he had a laptop with information on Turkey-Syria border crossing points; 180 jihadist propaganda videos, including footage of an Islamic State prisoner beheading; and a letter declaring: “I will use the talents and skills given to me by Allah to establish and defend the Islamic States.”
Trial evidence included a letter Pugh wrote to his wife saying, in part: “There is only two possible outcomes for me: Victory or martyr.”
A three-judge panel of the 2nd Circuit in Manhattan said in a written ruling that the letter to his wife was properly allowed into evidence and that other challenges by defense lawyers to the trial provided no basis to overturn the verdict.
But it also said U.S. District Judge Nicholas G. Garaufis provided an inadequate explanation for why he imposed the maximum allowable sentence on the military veteran, who moved to the Middle East to work for aerospace companies after he left the military.
The appeals panel noted that most of the court’s comments at sentencing related to Pugh’s guilt rather than why the sentence he was announcing was appropriate.
“The present record does not permit meaningful appellate review of the substantive reasonableness of Pugh’s sentence,” the 2nd Circuit said.
At his 2017 sentencing, Pugh said he was innocent. During a lengthy rambling statement, Pugh was cut off by the judge as he started to cry and after he had spoken long enough to fill over 17 transcript pages.
“I can’t listen to this whole thing. I just can’t. … I’m not the psychiatrist. I’m the judge, and I’m limited in what I can do,” Garaufis said. He allowed Pugh time to refocus his remaining statements, but Pugh chose not to resume.
Creizman, his attorney, said Pugh was feeling small after losing his job when he started researching the rise of the Islamic State group in the summer of 2014, impressed that Muslims were trying to create a country and wouldn’t “back down from anything.”
EarthLink – News
Marshal: Murder suspects faked medical emergency to escape
By TERRY TANG | Thu, August 29, 2019 08:02 EDT
PHOENIX (AP) — A husband and wife being transported across the country to face murder charges used a medical emergency ruse and then overpowered two security guards, tied them up and left them and a third uninvolved prisoner outside a rural Arizona town, authorities said Thursday.
David Gonzales, the U.S. marshal for Arizona, told The Associated Press that a privately operated prison transport van had departed from Blanding, Utah, on Monday afternoon when Susan Barksdale pretended to have an “intestinal issue.”
“It was compelling enough that they felt the need to pull over,” Gonzales said.
The guards were unarmed and did not feel the need to take a handgun that was inside a locked box. But Susan and Blane Barksdale charged at them once they opened the rear compartment, the marshal said. The male and female guards weren’t physically injured, Gonzales said, but the Barksdales used shoelaces to bind them and then put them in the back with a third inmate. They also took a key to free themselves of a waist restraint.
Blane Barksdale, 56, “is not a big guy but he can be very imposing,” Gonzales said. “I don’t think these two guards were equipped physically and emotionally with the experience needed for these types of individuals.”
The Barksdales drove the van to the town of Vernon, Arizona, where they met up with a friend who gave them access to his red GMC pickup truck. The friend has not been charged but law enforcement continues to question him, Gonzales said.
From there, each drove away in a vehicle for about 40 miles (65 kilometers) and abandoned the van near the town of St. Johns, Arizona. The couple took off with the money in guards’ wallets, which “wasn’t much,” according to Gonzales. They were likely unaware of the handgun, which was still in its box. The guards and the third prisoner were left behind.
“This other prisoner, he wanted no part of this deal,'” Gonzales said. “He was very forthcoming.”
It took the guards two to three hours to break free, eventually kicking out some windows. By the time authorities reached the area, the Barksdales had been gone for several hours. The third prisoner has since been taken to his intended destination — a southern Arizona jail.
The Barksdales were arrested May 24 near Rochester, New York, on suspicion of first-degree murder and other crimes related to the April death of a 72-year-old man in Tucson. Tucson police say a fire followed by an explosion broke out in April at the home of Frank Bligh. His car was found abandoned the next day.
While his body has not been found, investigators say evidence in the car indicated he was likely dead. The Barksdales were later identified as suspects.
Gonzales said multiple agencies including the FBI and Tucson police are interviewing people from Arizona to New York. The Marshals Service on Wednesday offered a $20,000 reward — $10,000 for each suspect — for information leading to their arrest. He believes they are somewhere in the Southwest, possibly Arizona or New Mexico. He also thinks they likely have since shed their prison uniforms.
“In any crime or situation like this, somebody knows something. Sometimes a reward can be that little push to make a call to us,” Gonzales said.
Gonzales said Blane Barksdale has a criminal history and his arms are covered in tattoos, including swastikas. He served two prison terms, according to online records. He spent nearly eight years in Arizona prisons for theft and drug convictions dating to 1984. He was released in January 1993.
Barksdale also was sentenced to 10 years in prison for a 2003 federal marijuana possession convictions in Taylor County, Kentucky, and was released in early 2012, according to records.
In a letter to the judge in the Kentucky case, Barksdale said he was thankful that he didn’t receive a stiffer sentence. “I sir, will not ever make you regret giving us this second chance either,” Barksdale said in the handwritten letter.
After his release he married Susan Barksdale, now 59, in December 2013.
Officials in Pima County, where Tucson is located, announced Wednesday they were suspending use of the transport company, Security Transport Services, pending a review of the escape. A spokeswoman at the Topeka, Kansas-based company did not immediately return a message seeking comment Thursday.
Associated Press writer Jacques Billeaud in Phoenix contributed to this report.
This story has been changed to correct the spelling of David Gonzales’ last name from Gonzalez.
EarthLink – News
Atmospheric battle will determine where Dorian hits Florida
BY SETH BORENSTEIN | 04:47 EDT
It’s a battle of mammoth meteorological forces, and at stake is where Hurricane Dorian strikes the United States.
Four days before the system is expected to come ashore, Dorian could hit practically anywhere in Florida because the weather forces that will determine its path have not yet had their showdown, meteorologists said. As of Thursday, the National Hurricane Center had practically all of eastern Florida in a cone of uncertainty, meaning the entire region was at risk.
Forecasters are fairly confident about one thing: Dorian will be powerful.
With 86-degree water as fuel and favorable moist winds, there’s little to prevent the storm from powering up Friday. On top of that, the warmer-than-normal water is running deeper than usual, adding more fuel. The hurricane center predicts Dorian will make landfall on Labor Day as a Category 4 storm with 130 mph winds.
Stacy Stewart, a senior hurricane specialist at the center, said there’s a chance for a “fairly dramatic” change in storm direction on Saturday based on what’s happening in the atmosphere and the storm altering its own environment, helping to steer its own path.
The forces that will determine Dorian’s fate — and that of Florida — are already at work.
A high pressure system is building over Bermuda, acting as a wall and blocking storms from curving north, which is a natural pathway. It is essentially pushing Dorian westward, more toward densely populated southern Florida, said University of Miami hurricane researcher Brian McNoldy.
Meanwhile, a low pressure system in the Midwest is chugging eastward. When it clashes with the Bermuda high, there’s a chance it will nibble away at the western edges, allowing a weakening in that wall and pulling Dorian to the northwest toward Cape Canaveral or Jacksonville, with a small chance of the storm heading north of Florida, said Weather Underground Meteorology Director Jeff Masters, who used to fly into hurricanes for forecasts.
Whichever one of those forces wins — the blocking high or the pulling low — Florida is likely to lose.
Dorian will have a lot to say about its own movements. Stewart said the storm can feed back on its surroundings and modify them, effectively allowing the hurricane to chart its own course.
Stewart sees the high pressure system winning, with an assist from Dorian itself. That means following a track that points generally toward Palm Beach County and President Donald Trump’s Mar-a-Lago resort.
Colorado State hurricane researcher Phil Klotzbach said the slower the storm moves, the more time there is for the atmospheric wall to weaken and Dorian to be pulled farther north. That’s why Klotzbach sees similarities between Dorian and 2004’s Frances , which hit Stuart, Florida, with 105 mph winds and caused nearly $9 billion in damage in the United States.
So far, Dorian is a relatively small storm. Because of that “a small change in track can make big differences in terms of where it ends up,” Klotzbach said.
A slower speed also means Dorian can dump more rain and bring more opportunities for storm surges to hit during high tide. And a new moon means extra high tides, Masters said.
“If it makes landfall as a Category 3 or 4 hurricane, that’s a big deal,” McNoldy said. “A lot of people are going to be affected. A lot of insurance claims. It’s still quite an ordeal.”
Follow Seth Borenstein on Twitter: @borenbears
The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.
EarthLink – News
Where did the Sacklers move cash from their opioid maker?
By ADAM GELLER | Fri, August 30, 2019 01:41 EDT
Ninety minutes outside London, a turn down a narrow lane leads past fields of grazing cattle to a sign warning “Private Keep Off.” Around an elbow bend, a great stone manor, its formal gardens and tennis court hidden behind thick hedges, commands a 5,000-acre estate.
The estate is a pastoral prize — proof of the great wealth belonging to the family accused of playing a key role in triggering the U.S. opioid epidemic. But there’s little evidence of that connection. On paper, the land is owned by a handful of companies, most based in distant Bermuda, all controlled by an offshore trust.
The haziness surrounding the estate hints at one of the challenges for government lawyers as they eye a potential settlement with Purdue Pharma L.P. and its owners, the Sackler family, for their alleged role in flooding communities with prescription painkillers.
All but two U.S. states and 2,000 local governments have taken legal action against Purdue, other drugmakers and distributors. Sixteen states have sued family members by name, alleging they steered Purdue while draining more than $4 billion from the company since 2007. That’s when the Oxycontin maker pleaded guilty to misleading doctors, patients and regulators about the drug’s risks.
Purdue’s CEO has said the company could file for bankruptcy. And this week, news organizations reported that Purdue, the family and government lawyers are negotiating a possible settlement , valued at $10 billion to $12 billion, that would see the Sacklers give up company ownership and contribute $3 billion of their own money.
But where, exactly, did the money withdrawn from Purdue over the years end up? And how much might the family be holding that state and local governments should consider fair game?
Answers are complicated by the way the Sacklers have shielded their wealth in a web of companies and trusts, a review by The Associated Press has found. Some are registered in offshore tax havens far from Purdue’s Connecticut headquarters.
The web’s complexity and offshore reach could affect the calculus for government lawyers as they weigh how to go after Purdue, including how to calibrate demands in settlement talks.
“The Sacklers allegedly moved significant money offshore, which potentially would make it harder for any judgment creditor to reach,” said Mark Chalos, a lawyer representing counties and cities including Nashville, Tennessee, in suits against opioids makers.
“This is the real question and you’re seeing it playing out in a lot of different states in different ways,” said Elizabeth Chamblee Burch, a professor of law at the University of Georgia. “How do you make sure that they (the Sacklers) are not siphoning off those assets and hiding them away?”
A representative for the family of Purdue co-founder Mortimer Sackler declined to comment for this story, as did a company spokeswoman. A representative for the relatives of Raymond Sackler, Purdue’s other scion, did not respond to a request for comment.
Purdue and the Sacklers have long relied on a coterie of attorneys and accountants, as well as the family’s closely held ownership of the company, to keep their business and personal dealings private.
But AP’s review of court papers, securities filings by companies that have had dealings with Purdue, and documents leaked from an exclusive Bermuda law firm, show how the family has tried to protect their wealth.
Purdue — controlled through layers of limited partnerships, holding companies and trusts — is at the center of the family’s web. But it hardly ends there.
In Purdue’s 2007 plea agreement with federal prosecutors, it listed 215 companies under its corporate umbrella. But that list did not include a number of companies used to manage property and investments for family members or the trusts, some offshore, set up to administer their fortunes.
Some offshore entities “appear to have served as conduits for monies from Purdue,” a lawyer for New York’s attorney general wrote recently to the judge presiding over the state’s lawsuit.
New York has issued subpoenas to 33 Sackler companies, advisers and banks in the U.S., seeking details about money transferred out of Purdue. It is asking for court assistance to demand that four offshore entities also provide information about millions of dollars that “should be clawed back.”
Many companies set up limited partnerships and country-specific subsidiaries to cap liabilities for shareholders, and many wealthy individuals manage their investments through opaque entities.
But an examination of the Sacklers’ web shows striking complexity and a desire for secrecy, while revealing links between far-flung holdings.
The British estate, known as Rooksnest and acquired before Purdue introduced Oxycontin, is one example. The manor is the domain of Theresa Sackler, widow of one of Purdue’s founders and, until last year, a member of the company’s board of directors. Set in the West Berkshire countryside, it includes a stone mansion that dates to the 16th century, 10 acres of formal gardens and expansive pastures for heritage cattle, red deer and wheat.
It’s run by a Bermuda company called Earls Court Farm Limited, records filed with UK authorities show. But some of the land is owned by five more companies, three also in Bermuda. Earls Court is owned by yet another offshore company. And all the companies are controlled by a trust, based on Jersey in the Channel Islands.
Public filings don’t show who actually owns the estate, and gardeners at the site told an AP photographer they could not answer questions. But documents leaked from Appleby, a Bermuda law firm employed by numerous wealthy clients, show that the companies belong to the Sacklers, among at least 30 island-based entities controlled through family trusts.
Indeed, the leaked documents show that the trustee of the British estate also controls a Sackler company named in U.S. securities filing as one of Purdue’s two “ultimate parents.”
Some states have also sued that firm, Beacon Co., based in the Channel Islands, along with Purdue and the Sacklers. New York state is seeking to subpoena the offshore trust company used to control both Beacon and the British estate.
It has long been known that the Sacklers use Bermuda as a base for Mundipharma, a network of companies set up to do business outside North America. But their island portfolio also includes family foundations, real estate holding companies and an insurer, according to documents leaked in 2017 to the German newspaper Suddeutsche Zeitung. The documents are part of millions known as the Paradise Papers that were shared with the International Consortium of Investigative Journalists which provided access to the AP.
The Sacklers’ use of offshore holding companies and trusts is telling, said Jeffrey Winters, a Northwestern University professor whose research focuses on how the powerful protect their fortunes.
“One would not put those trusts there if you didn’t see some wealth defense benefit,” Winters said. “It’s very hard to see what’s in there and it’s very hard to seize what’s in there. That’s the purpose.”
But David S. Neufeld, an international tax lawyer who works with wealthy clients and closely held companies, said the layered, partly offshore structure used to control Purdue, while not typical, is also not that uncommon.
“Somewhere in this picture is a desire to limit exposure to business liabilities. That’s not, in and of itself, a problem. That’s the very nature” of setting up a corporation, Neufeld said.
The Sacklers had an estimated net worth of $13 billion as of 2016, making them America’s 19th-richest family, according to Forbes magazine. One of their largest holdings outside pharmaceuticals appears to be an estimated $1.7 billion portfolio in a family company, Cap 1 LLC, that recently sold a stake in 17 U.S. ski resorts.
Massachusetts, New York and other states are alleging that the family has worked methodically to move money out of Purdue to insulate their fortune.
At a meeting in December 2010, for example, the Sacklers and other board members approved the withdrawal of $261.3 million from Purdue, according to company records recently made public in the Massachusetts case, the first to name individual family members. Until recently, eight Sacklers served on Purdue’s board.
The board instructed that the money be passed through three layers of holding companies, then split equally between Beacon Co. and Rosebay Medical Co., the other “ultimate parent” of Purdue. Both are controlled by Sackler trusts.
“Do you know whether any of these sums distributed between 2008 and 2011 made their way into any bank account over which you had control?” an attorney asked Dr. Kathe Sackler, one of the family members who approved the transfers, during a deposition this past April.
“I hope so,” she answered, according to a partial transcript recently made public in court filings. “I think so.”
The family’s withdrawal of substantial sums from Purdue was noted by Dr. Richard Sackler, the former president and chairman, in a 2014 email to his sons, filed as an exhibit in court proceedings.
“In the years when the business was producing massive amounts of cash,” he wrote, “the shareholders departed from the practice of our industry peers and took the money out of the business.”
He did not need to remind his sons that the only shareholders of Purdue are Sacklers.
It is not clear where the money drawn from Purdue ended up. New York’s attorney general alleges that the Sacklers sent it offshore to “unknown trusts, partnerships, companies” and other entities they control.
The possibilities are numerous. When family members directed payments to Rosebay Medical, for example, the company served as much more than a parent of Purdue. It is also the owner-of-record for Sackler companies spread from Poland to New Zealand, corporate registries in those countries show.
Rosebay is run from an office in Oklahoma City that manages many family holdings. When David Sackler, son of one of Purdue’s founders, paid $22.5 million last year for a mansion in Los Angeles’ Bel Air neighborhood, the executive who administers Rosebay served as his representative for the purchase.
Lawsuits allege that the Sacklers’ money management decisions were framed by their awareness of state investigations of Purdue.
“Despite this knowledge, the Sackler defendants continued to vote to have Purdue pay the Sackler Families significant distributions and send money to offshore companies,” Nevada’s lawsuit says.
Family members voiced concerns about threats to their holdings.
“While things are looking better now,” Mortimer D.A. Sackler wrote to his cousins months after Purdue’s 2007 guilty plea, and Quote: d in Connecticut’s lawsuit, “I would not count out the possibility that times will get much more difficult again in the future and probably much sooner than we expect.”
Purdue agreed in March to a $270 million settlement with the state of Oklahoma to avoid going to trial. That included $75 million from the Sacklers.
A federal judge in Cleveland overseeing suits by local governments has pushed all parties to work toward a nationwide settlement. The resulting negotiations have included representatives for some of the state attorneys general who have filed suit.
The first federal trials are scheduled to start in October. Unless there’s a settlement, family members could face more questions about their decisions to move money out of Purdue, some of it offshore.
At trial, lawyers for states and cities would “need to prove that the transfer of the money to these offshore accounts were made with fraudulent intent,” said William J. Moon, a professor of law at the University of Maryland.
States can ask courts to order the return of such money to satisfy a legal judgment. But going after money moved offshore would be time-consuming and expensive, with few guarantees, Moon and others said.
Governments suing the company could start by asking judges to order the seizure of Sackler assets in the U.S., pending an eventual verdict, said Gregory Grossman, a Miami attorney specializing in international insolvency. That would require convincing a judge that they’re likely to win the case. But it would be far easier than getting a U.S. judge to freeze offshore assets, he said.
“How comfortable is the court with ordering the seizure of things that are not in their jurisdiction?” Grossman said. “If they are comfortable, will they get cooperation with folks on the other side of the pond?”
If Purdue files for bankruptcy, all the company’s assets would be considered fair game for creditors. But the company’s coffers are separate from the family’s own wealth.
Unless a state had already won their case by that point, a bankruptcy filing by Purdue would put lawsuits against it on hold, said Jessica Gabel Cino, a professor of law at Georgia State University.
As states decide how to proceed, they could find lessons in efforts to recover money lost in broker Bernard Madoff’s infamous Ponzi scheme.
A court-appointed trustee has long sought money Madoff paid out to investors in offshore “feeder funds,” using cash others entrusted to him. Madoff was arrested in December 2008. But just this February, a federal judge ruled that the money Madoff directed offshore had to be returned.
The ruling, though, is likely to be appealed.