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November 21, 2011

Department of Justice

United States Attorney William C. Killian Eastern District of Tennessee

Hawkins County Pharmacist Pleads Guilty to Unlawful Distribution of Oxycodone

GREENEVILLE, Tenn.- Stephen Douglas Pearson, 61, of Rogersville, Tenn., pleaded guilty today in U.S. District Court for the Eastern District of Tennessee at Greeneville, to a two-count information charging him with unlawful distribution of oxycodone and omitting material information from records required to be kept under the Controlled Substances Act (CSA). Sentencing was set for April 2, 2012, at 9:00 a.m. He faces a term of up to 24 years in prison and over $1 million in fines.

As set forth in his plea agreement, Pearson, a pharmacist licensed by the State of Tennessee since 1975, registrant with the Drug Enforcement Administration (DEA), and owner/operator of Bulls Gap Drugs, unlawfully distributed oxycodone, a Schedule II controlled substance, to other persons. Further, he kept no records of the disposition of the drugs as required by the CSA and DEA regulations.

Controlled substances may only be distributed or dispensed lawfully in the manner prescribed by the CSA. The mechanism created by the CSA to allow legitimate use of controlled substances is based upon the concept of a closed system of distribution. This requires each entity in the distribution chain to obtain a registration from the DEA and keep records and make reports of all controlled substance transactions.

In early September 2010, Pearson was contacted by a Knoxville woman requesting that he provide her narcotics for pain she claimed to have. The woman advised Pearson that oxycodone was the only thing that would help her pain. Pearson told the woman to meet him at his business, Bulls Gap Drugs, where he provided her with 25 to 30 oxycodone 30 milligram tablets in an unlabeled bottle. Pearson knew that the woman had not presented him a valid prescription for the oxycodone and that his distribution of the oxycodone to her without a valid prescription was unlawful.

Pearson did not keep any records as to the dispensing of the controlled substance to this woman as required by the CSA. He also failed to conduct a biennial inventory of the controlled substances at Bulls Gap Drugs as required by federal regulations. During an inspection by a DEA investigator in November 2010, it was discovered that Pearson last conducted a biennial inventory in May 2008, even though he knew he was obligated to conduct such an inventory at least every two years.

The charges were the result of an investigation by the DEA Office of Diversion Control and the Hawkins County Sheriff's Office. Assistant U.S. Attorney Neil Smith represented the United States.

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