USA v. The Purdue Frederick Company, Inc. et al
Criminal

PLEA AGREEMENT as to The Purdue Frederick Company, Inc.

Western District of Virginia, vawd-1:2007-cr-00029-64632

Current View

Full Text

CLERK'S OFFICEU.S. DIST COURT AT ABINGDON, VA FILED IN THE UNITED STATES DISTRICT COURT MAY 10 2007 FOR THE WESTERN DISTRICT OF VIRGINIA ABINGDON DIVISION JOHN A. CORCORAN, CLERK UNITED STATES OF AMERICA 21 DEPUTY CLERK Case No. 7: 070629 THE PURDUE FREDERICK COMPANY, INC .) PLEA AGREEMENT THE PURDUE FREDERICK COMPANY, INC. ("PURDUE") has entered into a Plea Agreement with the United States of America, by counsel, pursuant to Rule 11 (c) (1) (C) of the Federal Rules of Criminal Procedure ("Fed. R. Crim. P .") . The terms and conditions of this agreement are as follows: CHARGE TO WHICH PURDUE IS PLEADING GUILTY AND WAIVER OF RIGHTS PURDUE will enter a plea of guilty to Count One of an Information, charging it with the felony of misbranding a drug, with the intent to defraud or mislead, in violation of Title 21, United States Code, Sections 331 (a) and 333 (a) (2) . The maximum statutory penalty is a fine of $ 500, 000. 00 or twice the gross gain or loss, pursuant to Title 18, United States Code, Sections 3571 (c) (3) and 3571 (d), plus a period of probation of up to five years, pursuant to Title 18, United States Code, Section 3561 (C) (1) . In addition, PURDUE's assets may be subject to forfeiture. PURDUE understands that fees may be imposed to pay for probation and that there will be a $ 400 special assessment, pursuant to Title 18, United States Code, Section 3013 (a) (2) (B) . PURDUE's attorney has informed it of the nature of the charge and the elements of the charge that must be proved by the United States beyond a reasonable doubt before PURDUE could be found guilty as charged. PURDUE hereby waives its right to be proceeded against by indictment and consents to the filing of an Information charging it with a violation of Title 21, United States Code, Sections 331 (a) and 333 (a) (2) . PURDUE acknowledges that PURDUE has had all of its rights explained to it. PURDUE expressly recognizes that, as a corporation, PURDUE may have the following constitutional rights and, that by voluntarily pleading guilty, PURDUE knowingly waives and gives up these valuable constitutional rights: The right to plead not guilty and persist in that plea. The right to a speedy and public jury trial. The right to assistance of counsel at that trial and in any subsequent appeal, The right to remain silent at trial. The right to testify at trial. Plea Agreement United Staies v. The Purdue Frederick Company, Inc. Page 1 of 12 Authorized Corporate Officer's Initials: fficer's Initiats: Rea 4 Pageid #: 196 The right to confront and cross - examine witnesses. The right to present evidence and witnesses. The right to compulsory process of the court. The right to compel the attendance of witnesses at trial. The right to be presumed innocent. The right to a unanimous guilty verdict. The right to appeal a guilty verdict. PURDUE is pleading guilty as described above because PURDUE is in fact guilty and because PURDUE believes it is in its best interest to do so and not because of any threats or promises, other than the terms of the Plea Agreement, described herein, in exchange for its plea of guilty. PURDUE agrees that all of the matters set forth in the Information are true and correct. PURDUE understands that the plea is being entered in accordance with Fed. R. Crim. P. 11 (c) (1) (C) . SENTENCING PROVISIONS The parties agree and stipulate that the 2006 United States Sentencing Guidelines ("U. S. S. G .") Manual should be used and the following sentencing guidelines sections apply, exclusively. The Offense Level is computed as follows: + 2 § 2B1. 1 (a) (2) Base offense level (cross reference from $ 2N2. 1 (b) (1)) . 82B1. 1 (b) (2) (A) (ii) The offense was committed through mass - marketing. § 2B1. 1 (b) (9C) The offense involved sophisticated means. Total + 2 10 12 $ 2B1. 1 (b) (9) If the resulting offense level is less than level 12, increase to level 12. Total Offense Level is 12 The Culpability Score is computed as follows: WS: 5 $ 8C2. 5 (a) Start with 5 points. $ 8C2. 5 (b) (2) (A) (ii) The organization had 1, 000 or more employees. $ 8C2. 5 (g) (3) The organization accepted responsibility for its criminal conduct. - 1 Total Culpability Score is 8. The Base Fine for an Offense Level of 12 is $ 40, 000. 00 ($ 8C2. 4 (d)) . Plea Agreement United States v. The Purdue Frederick Company, Inc. Page 2 of 12 Authorized Corporate Officer's Initials: 4 Pageid #: 197 WWW The Minimum Multiplier for a Culpability Score of 8 is 1. 60 ($ 8C2. 6) . The Maximum Multiplier for a Culpability Score of 8 is 3. 20 (§ 8C2. 6) . The Guideline Fine Range is $ 64, 000. 00 to $ 128, 000. 00 ((1. 60 x $ 40, 000. 00) to (3. 20 x $ 40, 000. 00)) ($ 8C2. 7) . The United States asserts that an upward departure to a statutory maximum fine of $ 500, 000. 00 is appropriate because, pursuant to $ 5K2. 0 (a) (1) (A), there exists an aggravating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines. PURDUE does not oppose the Court ordering the statutory maximum fine of $ 500, 000. 00. The parties agree and stipulate that determining the pecuniary gain or loss would unduly complicate or prolong the sentencing process and, in accordance withU.S. S. G. $ 8C2. 4 (c) and 18U.S. C. $ 3571 (d), should not be used for the determination of the fine. The parties agree that if the Court refuses to accept the Plea Agreement with the agreed - upon sentence, this Plea Agreement will be null and void, and PURDUE will be free to withdraw this guilty plea. In the event the Court refuses to accept the Plea Agreement with the agreed - upon sentence and PURDUE withdraws this guilty plea, nothing in this plea Agreement shall be deemed a waiver of the provisions of Federal Rule of Evidence ("Fed. R. Evid .") 410 and the United States will move to dismiss the Information without prejudice to the United States ' right to indict PURDUE or any other entity or individual on any charge. The parties have not agreed to any matters concerning the length and terms of probation. Accordingly, the Court may impose whatever length and terms of probation, if any, that it determines is appropriate. 3. FINANCIAL OBLIGATIONS PURDUE agrees and understands that any of the money paid pursuant to this Plea Agreement will be returned if, and only if, the Court refuses to accept the Plea Agreement with the agreed - upon sentence and, as a result, PURDUE withdraws its guilty plea. For the remaining portions of this " FINANCIAL OBLIGATIONS " section, " PURDUE " means " THE PURDUE FREDERICK COMPANY, INC. or Purdue Pharma L. P .") a. Immediate Payments Prior to the entry of PURDUE's guilty plea, PURDUE will make the following disbursements: (1) $ 3, 087, 277. 60 (three million eighty - seven thousand two hundred seventy - seven dollars and sixty cents) to the Federal and State Medicaid programs for improperly calculated Medicaid rebates for the years 1998 and 1999; Plea Agreement United States v. The Purdue Frederick Company, Inc. Page 3 of 12 Authorized Corporate Officer's Initials: 4 Pageid #: 198 AMA Y - - - - R. LV L J. . . . . (2) $ 500, 000. 00 (five hundred thousand dollars) to the Clerk,U.S. District Court, Abingdon, Virginia, as payment of the maximum statutory fine; (3) $ 20, 000, 000. 00 (twenty million dollars) will be paid into an account to be held in trust ("Trust Account") solely for the operation of the Virginia Prescription Monitoring Program ("PMP") or its successors. The Trust Account funds should be prudently invested to ensure an adequate return. Money may be drawn from the Trust Account solely for the purpose of funding the PMP (including, but not limited to, operating and maintaining the PMP and providing training and educational programs concerning the use of the PMP .) The maximum amount to be drawn from the account each year shall be the lesser of (a) sufficient funds to fund Virginia's Prescription Monitoring Program or (b) the Yearly Expenditure Cap. The Yearly Expenditure Cap will be $ 1, 000, 000. 00 (one million dollars) for the first year and will increase by 4 % per year. If, prior to December 31, 2057, there is a calendar year during which Virginia does not have a PMP or its rough equivalent, the remaining money in the Trust Account shall be paid to the United States Treasury. The money in the Trust Account may not be used for any purpose other than funding the PMP, prior to December 31, 2057. As of December 31, 2057, if the PMP and its successors no longer exist, the money remaining in the account may be used for any purpose, for the benefit of the Commonwealth of Virginia; (4) $ 5, 300, 000. 00 (five million three hundred thousand dollars) to the Virginia Medicaid Fraud Control Unit's Program Income Fund; and (5) $ 151, 100, 000. 00 (one hundred fifty - one million one hundred thousand dollars) as directed by the United States Attorney's Office as partial payment of a total forfeiture of $ 276, 100, 000. 00 (two hundred seventy six million one hundred thousand dollars) . Civil Settlement Payments PURDUE will pay a total of $ 160, 000, 000. 00 (one hundred sixty million dollars) to the United States and the States to settle civil governmental claims, as set forth below: (1) PURDUE shall pay $ 100, 615, 797. 25 (one hundred million six hundred fifteen thousand seven hundred ninety - seven dollars and twenty - five cents) to the United States plus interest at the rate of 4. 75 % per annum ($ 13, 093. 84 per day) on $ 100, 615, 797. 25 from the Plea Agreement United States v. The Purdue Frederick Company, Inc. Page 4 of 12 Authorized Corporate Officer's Initials: M 4 Pageid #: 199 weg uidame date of the plea by The Purdue Frederick Company, Inc. and continuing until and including the day before complete payment is made pursuant to the Civil Settlement Agreement (attached as Attachment D) between the United States and PURDUE; and $ 59, 384, 202. 75 (fifty - nine million three hundred eighty - four thousand two hundred two dollars and seventy - five cents) to the States as set forth in Section 3 (b) (2) below. These payments shall satisfy Purdue's obligation to make restitution under this Plea Agreement; The $ 59, 384, 202. 75 paid to the States shall be placed in a dedicated interest bearing account. Each state that elects to participate in this settlement shall, upon execution of the Form State Release (attached as Attachment L) (or an alternative release agreed to by PURDUE and the state), receive its proportionate share as determined by the Medicaid Fraud Control Unit Negotiating Team, plus interest in accordance with the Form State Release, in a timely manner in accordance with the schedule as provided in the Form State Release. Any money remaining in the dedicated interest bearing account after PURDUE has fully paid all of its obligations shall be returned to PURDUE; and (3) The parties agree and stipulate, pursuant to 18U.S. C. $ 3663 (a) (1) (B) (ii), that no other restitution should be ordered. C. Subsequent Forfeiture Payments On or before the six month anniversary of the entry of its guilty plea, PURDUE will deposit $ 90, 000, 000. 00 (ninety million dollars) as directed by the United States Attorney's Office as payment toward a total forfeiture of $ 276, 100, 000. 00 (two hundred seventy six million one hundred thousand dollars) . On or before the twelve month anniversary of the entry of its guilty plea, PURDUE will deposit $ 35, 000, 000. 00 (thirty - five million dollars) as directed by the United States Attorney's Office as final payment of a total forfeiture of $ 276, 100, 000. 00 (two hundred seventy six million one hundred thousand dollars) . d. Compensation and Settlement Based on the agreement in principle reached between PURDUE and the United States on October 25, 2006, PURDUE set aside a total of $ 130, 000, 000. 00 (one hundred thirty million dollars), some or all of which will have been paid by the date of the entry of the guilty plea, for