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Thousands of Pills Involved, Including Oxycodone and Hydrocodone

October 31, 2008

MILTON W. CHEUNG, a Washington State licensed pharmacist, appeared today in federal district court in Seattle and entered guilty pleas to two felony offenses: Acquiring Controlled Substances by Deception, and Misbranding Drugs. These offenses are punishable by up to four years in prison, a $250,000 fine, and up to one year of supervised release.

CHEUNG, 55, of Lynnwood, Washington, graduated from the University of Washington School of Pharmacy in 1976. For the past several years CHEUNG has been employed as Pharmacy Manager at the Top Food Drug Store, located at 21900 Highway 99, in Edmonds, Washington. As pharmacy manager, CHEUNG was the principal pharmacist responsible for the daily activities and operations at the Top Food Drug Store in Edmonds.

On a yearly basis, beginning in 2003, and continuing through September 2008 (when he resigned), CHEUNG was named Pharmacy Manager of the Year by Haggen, Incorporated, the owner of Top Food Drug Store, based upon his performance in managing the Top Food Drug Store in Edmonds. Haggen operates seventeen Top Food Drug Stores in the State of Washington.

In pleading guilty, CHEUNG admitted that beginning at least as early as 2007, and continuing through September 2008, when his actions were uncovered, CHEUNG engaged in a variety of illegal acts at the pharmacy. These unlawful practices included the federal felonies of acquiring drugs by deception and subterfuge, a violation of the Drug Abuse Prevention and Control Act, and misbranding drugs while held for sale in violation of the Food and Drug Cosmetic Act.

In particular, during 2007, and continuing through September 2008, CHEUNG solicited a number of Washington State medical providers, including doctors, hospices, and clinics, as well as Top Food Drug Store customers, to provide expired and unexpired drugs to him at the Edmonds Top Food Drug Store, on the alleged basis that he would then provide these drugs to less developed countries as part of a philanthropic mission. In truth and in fact, while CHEUNG collected these drugs ostensibly for these reasons, CHEUNG intended to, and did in fact, purposefully divert much of the drugs collected, by placing the drugs into the regular supply bottles at Top Food Drug Store. This gave him a much larger inventory of drugs to distribute to pharmacy customers and made the pharmacy which he managed appear more profitable. He then proceeded to distribute these returned drugs to customers at the Edmonds Top Food Drug Store when filling new customer prescriptions, even though a large portion of these drugs were expired drugs, and all of the drugs were adulterated in that they had already been distributed to and possessed by others, and were returned merchandise which CHEUNG was doling out as new inventory.
Drugs collected by CHEUNG based upon this deception and subterfuge, and later distributed by him at the Edmonds Top Food Drug Store to unwitting customers, included such Schedule II through IV controlled substances as fentanyl, methadone, morphine, oxycodone, hydrocodone, and lorazepam, in addition to many other drugs. Thousands of pills containing numerous drugs were collected by CHEUNG during 2007 and 2008 as part of this subterfuge, and many of the drugs, including many pills containing expired medications, were unlawfully added to regular pharmacy inventory and distributed by CHEUNG in filling prescriptions. All prescription drugs carry an expiration date after which the drugs are no longer regarded as medically effective or safe to consumers. Here, Top Food Drug Store customers were never advised that they were receiving expired or adulterated drugs. CHEUNG knew that he was breaking the law by collecting the drugs and re-distributing them to customers in this manner. Moreover, the entire drug re-distribution scheme conducted by CHEUNG ostensibly to provide drugs to developing nations was unlawful as such a program had not been lawfully sanctioned by the DEA or any other valid regulatory authority.

As to misbranding, all prescription medications in pharmacies are required by federal regulation to be contained in stock containers which show their true lot number and expiration date. This is done to ensure the safety of what is being sold and distributed to the public. When CHEUNG purposefully poured into these containers pills from other sources, both expired and unexpired, from other lots, he was misbranding these drugs, by purposefully causing the labeling on the pharmacy stock bottles to be incorrect, false and misleading. None of these errors were corrected when the drugs were then distributed to customers.

In addition, in pleading guilty CHEUNG admitted stealing money from Top Foods Drug Store in a variety of ways, including by pocketing cash from co-pay payments provided by customers when paying for prescriptions, by processing phony merchandise returns from customers and pocketing the cash supposedly refunded to customers, and by purchasing and cashing gift cards to which he was not entitled.

All of these offenses were committed by CHEUNG for purposes of economic benefit.

In September, 2008, in response to the criminal conduct by CHEUNG, Haggen Incorporated issued a drug recall, printed in the Seattle Times, advising customers of the Edmonds Top Food Drug Store to return all potentially expired drugs.

CHEUNG is scheduled to be sentenced by United States District Judge John C. Coughenour on February 13, 2009.

This case is part of a series of cases focused upon the unlawful diversion of controlled substances by medical professionals in the State of Washington. Investigating agencies in this case include the Drug Enforcement Administration, Internal Revenue Service, and Edmonds Police Department.

The case was prosecuted by Assistant United States Attorney Ronald J. Friedman.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.

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