Two drug suppliers plead guilty in $50M ‘straw purchase’ resale scheme
An alleged conspiracy involving two drug suppliers and several doctors tied to the diversion and resale of nearly $50 million in medications has led to a series of guilty pleas, the U.S. Department of Justice from the District of New Jersey announced Tuesday.
The two men who most recently pleaded guilty—Frank Incognito, 46, and Stephen Corba, 50, both from New Jersey—were the operations manager and owner of a wholesale drug seller, respectively. The name of the company was not revealed.
According to prosecutors, the duo worked with doctors to resell cancer and ophthalmology medications, purchasing them from licensed distributors under false pretenses. Because Incognito and Corba were unable to buy the pharmaceuticals themselves, they relied on physicians to make “straw purchases” in exchange for kickbacks.
The doctors would promise manufacturers the drugs were being purchased for their patients. Instead, they slipped them to Incognito and Corba, who then resold the medications on the black market at significant profit.
The DOJ said none of the drugs were ever administered to the patients of the physicians who participated in the scheme.
In federal court, Incognito and Corba admitted to illegally dealing pharmaceuticals, pleading guilty to conspiracy charges.
The illegal arrangement spanned seven years, from June 2012 through January 2019. Diverted and resold drugs were mostly “cold-chain biologic infusion medications that physicians typically use to treat cancers, macular degeneration and autoimmune diseases,” authorities said.
Incognito and Corba have not yet been sentenced. Hearings scheduled this summer will determine their fate. Each faces a maximum of five years in prison and a fine of up to $250,000.
Three doctors also convicted
Three physicians—Anise Kachadourian, MD; Jon Paul Dadaian, MD; and Joel Lerner, MD—previously pleaded guilty for their roles in the conspiracy. The DOJ did not provide details about their sentencing status.
It remains unclear whether additional participants could face charges.
The DOJ said the U.S. Food and Drug Administration’s Office of Criminal Investigations New York Field Office assisted with the investigation.
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