Manager/Owner Of Pain Clinic Convicted Of Conspiracy, Distribution Of A Controlled Substance And Money Laundering F0llowing Jury Trial

DENVER -- Keith A. Schwartz, age 47, of Silverthorne, Colorado, was found guilty today of conspiracy, distribution of a controlled substance and money laundering following a 14-day jury trial before Senior U.S. District Court Judge John L. Kane.  The jury deliberated for a day and a half before reaching their verdict.  A sentencing date has not yet been set.  Schwartz, who has been in custody since his indictment, was remanded following the jury verdict.  This is the first case of its kind that has gone to a jury trial in the U.S. District Court in the District of Colorado.
                                                                                                                  
Schwartz was indicted by a federal grand jury in Denver on May 22, 2013.  He was found guilty of one count of conspiracy to distribute and dispense controlled substances, prescription drugs outside the course of usual professional medical practice, two counts of distribution and dispensing a controlled substance and aiding and abetting the same, four counts of use of a telephone to facilitate a drug crime, one count of conspiracy to commit money laundering, and 36 counts of money laundering.  The defendant was found not guilty of two counts of use of a telephone to facilitate a drug crime and two counts of money laundering.

According to the indictment and evidence presented at trial, Schwartz, in conjunction with co-conspirators, all of but one of whom have previously pled guilty, knowingly conspired and agreed 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.  He then laundered the proceeds from the patients through bank accounts in his wife’s name.  The patients didn’t have a sufficient medical necessity for the prescription of the controlled substances.  The primary prescription drug involved in the case was Oxycodone, with over one half million dosage units prescribed in an 18 month period.

Specifically, Schwartz, using an alias, approached a pain doctor named Kevin Clemmer in May of 2011, who at the time was housed in the Federal Detention Center in Englewood, Colorado after his indictment for the unlawful prescription of controlled substances.  Schwartz offered to purchase the list of Clemmer’s patient lists, most of whom received substantially more narcotic or other controlled substance medication than was medically necessary. 

That same month, after obtaining the patient list, Schwartz, and his co-conspirators, first saw Dr. Clemmer’s patients in a Holiday Inn in Wheat Ridge, Colorado, where they enlisted and worked with co-conspirator Dr. Joseph Ferrara, who was registered with the DEA to write prescriptions for controlled substances.  The pain clinic eventually moved into office space, and Schwartz, who was the owner, manager, organizer and operator, had direct communications with patients regarding Dr. Ferrara’s treatment regimen.  The defendant induced Dr. Ferrara to unlawfully write opioid and benzodiazepine prescriptions in large numbers to addicted patients – the amounts of which far exceeded the amount medically necessary and safe to use.  In fact, the government presented expert testimony that proved that many of the controlled substance prescriptions written were up to four times the safe medical limit.  As a result of the unlawful distribution of controlled substances, medication prescribed by Schwartz’s pain clinic contributed to the death of at least three patients.

The relationship among the co-conspirators began in the summer of 2009, when Schwartz recruited and Dr. Ferrara to write medical marijuana recommendations to support Schwartz’s marijuana grow in his house.  During 2009 and 2010, the medical marijuana business expanded to include travel throughout the state of Colorado, where Dr. Ferrara wrote medical marijuana recommendations.  In May of 2011, the conspiracy shifted its primary focus to distribution of prescription controlled substances while also maintaining the medical marijuana recommendation business. 

Schwartz laundered the money obtained by the pain clinic by placing it in bank accounts in corporations in the name of his wife.  Schwartz used some of the illegally obtained money to purchase his $1.6 million house out of foreclosure.

Schwartz faces up to life in federal prison, as well as a fine of not more than $1,000,000 for his convictions. 

This case was investigated by the Tactical Diversion Squad of the DEA, which includes members of the IRS Criminal Investigation and the Greenwood Village Police Department.  The Arvada Police Department assisted in the investigation as well. 

The defendant is being prosecuted by Assistant U.S. Attorney M.J. Menendez.