By Colin Moynihan
In his quarter-century as chief executive of Rochester Drug Cooperative Inc., Laurence F. Doud III made the distributor the country’s seventh-largest wholesaler, sending stock dividends to record highs as revenue topped $1 billion.
He also directed a criminal conspiracy to deceive the Drug Enforcement Administration and pump opioids into pharmacies throughout the Northeast, federal prosecutors said, despite knowing that retailers were diverting the drugs and supplying them to addicts.
On Wednesday, Doud, who was convicted last year of conspiring to distribute narcotics and defraud the United States, was sentenced to two years and three months in prison.
Doud’s indictment in 2019 marked a new approach for federal authorities seeking to stem a crisis that had ravaged large swaths of the country. They had often targeted street dealers and cartel chiefs with criminal charges, but large corporations and senior executives had long escaped criminal culpability.
During Doud’s trial, company emails entered into evidence included descriptions of a pharmacy that was dispensing a “staggering” number of pills to so many suspicious doctors that the data was “screaming red.” Another pharmacy was likened to a “stick of dynamite waiting for DEA to light the fuse.”
Rochester Drug Cooperative, known as RDC, and its former head of compliance, William Pietruszewski, were indicted along with Doud and on the same charges. They were also charged with failing to disclose suspicious orders of controlled substances to the DEA.
RDC entered into an agreement under which the government said it would not prosecute as long as the company paid a $20 million fine, followed the law and submitted to five years of supervision by an independent monitor. Pietruszewski pleaded guilty and testified in Doud’s trial.
Lawyers for Doud had asked Judge George B. Daniels for a sentence without prison time, describing their client, who they said was appealing his conviction, as a pillar of his community who posed no threat to the public and had consistently helped others.
They added that the prosecution was “not typical,” suggesting that Doud had resembled an ordinary white-collar criminal motivated by financial gain rather than a drug kingpin. They wrote that in his case, “threat of physical force or violence was nonexistent.”
Prosecutors did describe Doud’s actions as stemming from greed and concern for his company’s bottom line. But they asked Daniels to sentence him to 15 years in prison, saying that he should be held accountable for the “shattering impact” his actions had on people to whom he had unlawfully funneled opioids.
“It makes no difference whether a dangerous drug like fentanyl or oxycodone comes from a drug dealer, or someone with a medical or business degree,” they wrote, adding: “White collar drug dealers like the defendant should not receive a break.”
In court on Wednesday, a defense lawyer, Robert C. Gottlieb, suggested that Doud had made errors of judgment and had failed to understand the danger of opioids or the importance of adhering to regulations.
Doud told the court he had done a “lousy job” overseeing compliance with regulations but had meant no harm.
“I had no desire to see anyone hurt,” he said, adding, “I am forever sorry for the problems that have occurred.”
Moments later, while issuing his sentence, Daniels said that Doud’s crimes had been “motivated solely by profit” and that he had not fulfilled his duty to protect the public.
The criminal charges stemmed from an investigation that began after RDC violated a deal that resolved a civil case in which the company admitted that it had failed to report thousands of questionable opioid orders from pharmacies, many of which flouted order limits and catered to doctors who ran pill mills.
In 2006 and 2007, prosecutors wrote, Doud received letters from the DEA emphasizing that distributors have a responsibility to avoid filling suspicious orders. Despite that, they wrote, Doud designed a plan to ship drugs to pharmacies that some RDC employees knew were diverting the drugs and supplying them to addicts.
RDC violated its own policies by sending drugs to pharmacies despite red flags that included unusually large orders, a high percentage of prescriptions being purchased with cash, routinely filling prescriptions for high pill counts, as well as filling orders for doctors who were out of state or had demonstrated suspicious behavior.
Doud directed that the shipments continue, prosecutors wrote, saying that he made it clear that he “didn’t care to turn off stores because that would affect the sales of RDC” and that he had also said that it was the DEA’s job to police pharmacies, not his company’s.
Prosecutors wrote that Pietruszewski and another employee, Jessica Pompeo Bouck, said that the company impeded the DEA by not reporting suspicious orders, and they attributed that decision to Doud. He also decided to supply drugs to customers without determining whether those drugs were being distributed legitimately, according to prosecutors.
In addition to testimony from RDC employees, jurors in Doud’s trial heard from a former pharmacy owner, Michael Paulsen, who testified that he purchased oxycodone from RDC and diverted those pills, selling them to drug dealers and people he knew were suffering from addiction.
Another witness was Barbara Castro, who prosecutors wrote became addicted to opioids after suffering from medical problems. Castro testified that a doctor named Carl Anderson, whom prosecutors said RDC had flagged as suspicious, prescribed her oxycodone for no legitimate medical purpose and that she filled those prescriptions at a pharmacy that RDC supplied.
Castro testified that she would go to Anderson’s office as late as 10 p.m. and spend all night there until she got her prescription, prosecutors wrote. They added that Castro also testified that she had visible “track marks on her arms” and would “nod out in the waiting room for hours.”