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Doctor and Five Others Indicted in DEA Prescription Drug Investigation

MAY 24 (DENVER)   –  Dr. Joseph Ferrara and five others were indicted by a federal grand jury in Denver this week on charges related to the illegal distribution of prescription medication and money laundering, U.S. Attorney John Walsh, Drug Enforcement Administration (DEA) Special Agent in Charge Barbra Roach, and Stephen Boyd, Special Agent in Charge of IRS Criminal Investigations, announced.  Ferrara had medical practices in Wheat Ridge and in Dillon.  At least one patient who received prescription drugs from Ferrara died of an overdose.  Ferrara and Keith Schwartz were arrested yesterday morning in Summit County.  Karyn Smith, Karen Plaia, and Melissa Toothman were arrested yesterday in the Denver area.  Lauren Schwartz is out of state, and is in the process of arranging her surrender.

According to the indictment, beginning in May 2011 and continuing until February 2013, defendant Dr. Joseph Ferrara, in conjunction with co-conspirators Keith Schwartz, Lauren Schwartz, Karen Plaia, Karyn Smith, Melissa Toothman, and others known and unknown to the grand jury, knowingly conspired and agreed to work interdependently to dispense and distribute, or facilitate the dispensing and distribution of controlled substances to patients at times and in circumstances outside the usual course of professional medical practice, and for a purpose other than legitimate medical purpose, with death resulting from the use of the controlled substances.

During the course of the scheme, Ferrara allegedly prescribed drugs such as oxycodone, morphine, methadone, oxymorphone, hydromorphone, hydrocodone, amphetamines, carisoprodol, alprazolam, clonazepam, lorazepam, triazolam, and zolpidem tartrate to patients without determining a sufficient medical necessity for the prescription of these controlled substances.  In concert with his co-conspirators, Ferrara dispensed and distributed these drugs to patients in quantities and dosages that would allow patients to abuse, misuse, and become addicted to them, while failing to adequately address the misuse and abuse of the prescribed controlled substances by patients.

Ferrara and his co-conspirators worked interdependently to obtain payment for services rendered outside the course of usual professional practice by taking cash, checks, and credit cards from those to whom he distributed.  Insurance was not accepted.  The dispensing and distribution of controlled substances to patients were in such high quantities, in such combinations, and at such levels that retail pharmaceutical outlets called the Drug Enforcement Administration to report suspicious prescribing practices.

Furthermore, the indictment alleges that the defendants and co-conspirators did knowingly conduct and conceal the true nature of their financial transactions, concealing proceeds to facilitate, promote and expand the drug distribution operation for financial gain, using the concealed proceeds from the unlawful sale and distribution of the narcotics and related activities to acquire personal assets.  In one such instance, Ferrara engaged in a cash purchase of a 2010 Honda Crosstour. 

Beginning on December 13, 2010, and continuing through March 26, 2012, Ferrara devised, intended to devise, and participated in a scheme to defraud the Bankruptcy Court and his creditors in relation to a bankruptcy proceeding by taking a variety of steps to conceal his ownership and control of substantial assets from the Bankruptcy Court, the Chapter 7 trustee, and his creditors.

The indictment includes an asset forfeiture allegation, which states, “As a result of the foregoing offenses, the defendants shall forfeit to the United States any and all property, real or personal, constituting or derived from any proceeds obtained directly or indirectly as a result of the violations and any and all property used or intended to be used in any manner or part to commit and to facilitate the commission of the criminal violations, including but not limited to a money judgment in the amount of proceeds obtained as a result of the foregoing offenses, for which the defendants are joint and severally liable.”

Ferrara is charged with one count of conspiracy to distribute and dispense controlled substances resulting in the death of an individual (punishable by not less than 20 years to life); six counts of distribution and dispensing of a controlled substance and aiding and abetting the same (punishable up to 20 years per count); one count of distribution and dispensing of a controlled substance and aiding and abetting the same resulting in the death of an individual (punishable by not less than 20 years to life); four counts of use of a telephone to facilitate drug crime (punishable up to 4 years per count); two counts of conspiracy to commit money laundering (punishable up to 20 years per count); twenty seven counts of money laundering (punishable up to 20 years per count); and four counts of bankruptcy fraud (punishable up to 5 years per count).  Ferrara’s co-defendants face a variety of the charges listed above.

“Prescription drug misuse and abuse is a rapidly growing problem leading to addiction, suffering, and even death for many people,” said DEA Special Agent in Charge Barbra Roach.  “While the vast majority of doctors offer healing and compassionate care to their patients, there remain some who violate their oath and the law.  DEA and our law enforcement partners will continue to identify, investigate, and prosecute doctors and other medical professionals who abuse their trust and power by engaging in criminal drug trafficking of prescription drugs.”

This case was investigated by the Drug Enforcement Administration and the IRS Criminal Investigations Division.

The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.

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