De La Osa v. State

Citation158 So.3d 712
Decision Date18 February 2015
Docket NumberNo. 4D11–4898.,4D11–4898.
PartiesJoel DE LA OSA, Appellant, v. STATE of Florida, Appellee.
CourtCourt of Appeal of Florida (US)

Teresa Williams of Williams and Trese, LLP, Fort Lauderdale, for appellant.

Pamela Jo Bondi, Attorney General, Tallahassee, and Cynthia L. Comras, Assistant

Attorney General, West Palm Beach, for appellee.

Opinion

GROSS, J.

In a 90 page indictment filed in 2003, appellant Joel de la Osa, along with 17 other defendants, was charged with crimes arising from an elaborate scheme spearheaded by Michael Carlow to sell adulterated prescription drugs to wholesale distributors, thus ensuring the drugs' placement on the retail market. The State's theory of the case was that Michael Carlow organized a conspiracy in which he and others marketed illicitly obtained prescription drugs to legitimate prescription drug wholesalers, with the other named co-defendants forming his criminal enterprise. De la Osa illegally provided prescription drugs to Carlow in exchange for money, which Carlow then resold to drug wholesalers, who in turn sold the drugs to unsuspecting consumers at full price. After a 2011 jury trial where he was tried with co-defendant Arturo Godinez, de la Osa was convicted of racketeering, conspiracy to commit racketeering, and organized scheme to defraud.

We affirm the convictions for conspiracy to commit racketeering and organized scheme to defraud, but reverse the racketeering conviction because the State failed to prove that de la Osa committed the two predicate acts required by the Florida RICO (Racketeer Influenced and Corrupt Organization) Act, sections 895.01 –895.06, Florida Statutes (2003).

Prescription Drug Sales in Florida

To provide context, the State called the staff director for the Florida Senate Committee on Health Regulation to testify about the regulation and distribution of prescription drugs in Florida from 2001 through 2003. The staff director explained that prescription drug sales have, at all times, been “tightly regulated” both in Florida and throughout the country; in general, the federal Food and Drug Administration must approve the manufacture and sale of a drug, the drug must go through licensed entities in the distribution chain, and the drug must ultimately be dispensed by a licensed pharmacy or practitioner.

In Florida, wholesale distributors wishing to directly participate in the state's prescription drug market were required to obtain permits, depending on their level of interaction. In-state drug wholesaler permits allowed business entities to purchase, store, and sell prescription drugs from specific business locations, provided the business maintained certain minimum standards such as a security system and appropriate storage facilities. Use of a private residence as a storage facility would not suffice. By contrast, a prescription drug broker permit allowed an entity to purchase drugs from approved sources and sell them to approved purchasers without the strict storage facility requirement, so long as the broker never took possession of the drugs.

Florida statutes required that prescription drugs be sold with “pedigrees”—documents created by the wholesaler that trace the distribution channel of the drug from the manufacturer to the party that dispenses the drug to the consumer. From 2001 through 2003, Florida's pedigree requirements were more stringent than their federal counterparts; federal statutes established in 19881 required pedigrees to only go back to an authorized distributor of record, which was a wholesale distributor “that had an ongoing relationship with the manufacturer.”2 In either respect, the purpose of pedigrees was to ensure that licensed wholesalers purchased drugs only from manufacturers or other licensed wholesalers; purchasing prescription drugs from patients, pharmacies, clinics, or doctors was strictly prohibited.

Through 2002, the Florida Department of Health “loosely regulated” the pedigree requirement, resulting in violations not being “aggressively enforced.” To combat rampant noncompliance, the Department notified drug wholesalers of its intent to enforce the pedigree requirements mandating documentation dating back to the drugs' manufacturers. The result was a backlash from the drug sale industry, as many wholesalers expressed concerns that strict enforcement of Florida's pedigree laws would be untenable. After establishing a task force, Florida's Secretary of Health submitted a February 18, 2002 advisory letter to the Department, essentially conforming Florida's pedigree laws with federal practice, stating that authorized distributors need not pass a pedigree and that wholesale distributors need only provide pedigrees to the last authorized distributor. However, pedigrees from non-authorized wholesale distributors remained a necessity.

Despite this enforcement relaxation, the staff director testified that the Department's definition of an “adulterated” prescription drug remained static. In July 2003, following the collapse of the Carlow enterprise, the Florida Legislature amended section 499.006, Florida Statutes, to define an “adulterated drug or device” as drugs either sold without pedigree papers or “purchased, held, sold, or distributed at any time by a person not authorized under federal or state law to do so.” In addition, the Legislature amended the racketeering statutes to make violations of Chapter 499—specifically sections 499.0051, 499.0052, 499.0053, 449.0054, and 499.9691—predicate acts.3 Nevertheless, the staff director explained that prior to these amendments, the Department considered drugs that were stored in unlicensed facilities, purchased from non-approved sources, counterfeited, mislabeled, or accompanied by a false or fraudulent pedigree to be adulterated.

The Prescription Drug Sale Conspiracy

In this case, the State established that Michael Carlow owned and operated several companies, licensed under other persons' names, that sold prescription drugs to prescription drug wholesalers. After acquiring prescription drugs through a variety of illicit sources, including stolen and relabeled drugs, Carlow and his associates stored the drugs in unapproved locations, including their homes. Carlow and his associates fabricated invoices and false pedigrees to give the appearance that the drugs were properly obtained. The group then sold the drugs to drug wholesalers throughout the country—particularly Albers in Missouri—and the drugs were, presumably, purchased by consumers at full retail price. One of Carlow's former employees estimated that over seventy-five percent of the drugs were shipped to wholesalers outside Florida.

On appeal, de la Osa raises a judgment of acquittal argument directed at the structure of Carlow's entire scheme under conspiracy law. With Carlow's rise, several individuals, including de la Osa, formed pharmaceutical wholesale businesses to latch on to Carlow's enterprise and turn a profit as Carlow's suppliers. As a supplier, de la Osa contends the scope of his conspiracy extends only to Carlow and not to the other suppliers. If he cannot be held responsible for the criminal acts of the other suppliers, de la Osa asserts that the State proved his involvement in only one predicate act, thus negating his convictions for racketeering and conspiring to racketeer.

To evaluate de la Osa's argument, we examine the proof at trial as it involved each cog in the conspiracy's machine.

Michael Carlow—The Hub

The conspiracy's origins date back to July 1998, when Carlow obtained a permit to operate Medical Infusion Services, a wholesale pharmaceutical business. Medical Infusion bought unused AIDS medication from patients being treated at Carlow-owned clinics. To effectuate the operation, Carlow introduced employee Mark Novosel to de la Osa's co-defendant, Arturo Godinez, stating that Godinez “would be sending [Novosel] the medications that he used to get.” Under this agreement, Godinez sold Medical Infusion “a lot of cancer

drugs,” specifically a drug called Lupron.

In early 2000, Carlow was arrested for purchasing drugs from unlicensed dealers and the State of Florida revoked Medical Infusion's license. Several months later, Carlow started a new prescription drug wholesale business called MedRx and licensed it in Florida under Novosel's then-girlfriend's name, telling Novosel that Godinez would continue to be a supplier. MedRx began receiving drugs without pedigrees, although Novosel did not know their sources or where the drugs were sold. Novosel and Carlow then fabricated pedigrees for the drugs, listing drug manufacturers as the source so the drugs could be resold on the open market.

Around the time MedRx was formed, Carlow masterminded three additional pharmaceutical businesses relevant to this case: Accucare, LLC; BTC Wholesale; and G & K Pharma, LLC. Accucare was incorporated in Florida under the name of Carlow's wife—with Carlow serving as “President”—and became licensed for pharmaceutical sales in another state. BTC Wholesale, based in Kissimmee, obtained a Florida wholesale distributor permit on August 10, 2001, under the name of Carlow's brother-in-law, Thomas Atkins, Jr., a mattress salesman prior to the formation of BTC. Finally, G & K Pharma was a licensed wholesale distributor based in numerous states—most notably, Maryland—which never obtained a Florida drug wholesaler permit. Each of these businesses would later serve as conduits for selling illegally obtained prescription drugs.

Joel de la Osa—A Supplier

Appellant de la Osa's role in the enterprise was as one of Carlow's suppliers. Prior to his entanglement in the pharmaceuticals industry, de la Osa was a mechanic who owned and operated a repair shop. Despite having no medical or pharmaceutical experience, in May 2002, de la Osa found himself the named founder of Complete Wholesale (“Complete”), a prescription drug wholesale distributor that shared an office with G & K Pharma in Maryland.

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