Pharmacist Sentenced to Prison for Black Market Medication Scheme

Long Island pharmacist Glenn Schabel and his namesake company have been sentenced in connection to a nationwide scheme to sell diverted HIV medication to unsuspecting New York patients.

The scheme involved distributing HIV medication illegally obtained from the black market to individuals. The medications were illicitly bought through a variety of illegal means, such as “buying back” drugs from patients. These drugs were rebottled using fake labels and serial numbers, had broken seals, or contained different medications than what was stated on the label.

Schabel acquired the prescription medications from his codefendants, who obtained the drugs using various sources, which included pills that had been previously dispensed to patients and were resold into the black market. Under Schabel’s supervision, the diverted pills were purchased by MOMS Pharmacy, a corporate pharmacy headquartered in Melville, New York, and then dispensed to unknowing patients.

Diverted medications are a serious public health risk because of their unknown origin and quality. In some cases, these diverted medications can be counterfeit, expired, improperly stored, or mislabeled. As a result, patients are exposed to possible adverse drug interactions, overdoses, or ineffective treatment.

Many of the patients who received diverted medications were Medicaid recipients. The New York State Medicaid program reimbursed MOMS Pharmacy in excess of $150 million for the diverted medications dispensed to patients.

The sentencing, a part of the Attorney General’s Medicaid Fraud Control Unit’s (MCFU) “Operation Black-Market Meds” investigation, ordered Schabel to serve 2 to 6 years in prison and required him to forfeit $5,456,267 to New York’s Medicaid program.

In April 2012, MCFU investigators arrested Schabel and 3 other individuals, and also charged 10 companies with their involvement in the operation. All of the defendants were charged for using a network of fraudulent prescription medication wholesalers in Alabama, Mississippi, North Carolina, and California to launder money and sell more than $274 million worth of diverted medications.

Schabel pleaded guilty to the crime in March 2016, when he admitted to accepting more than $5 million in bribes over a 4-year period.

Ira Gross, the leader of the scheme, was convicted by a jury on August 9, 2016, and is still awaiting sentencing.