Jerrod Nichols Smith, 48, of Houston, Texas, was sentenced yesterday in U.S. District Court to 15 years in federal prison, announced U.S. Attorney Don Cochran of the Middle District of Tennessee. Visiting United States District Judge Billy Wilson also ordered Smith to forfeit $1.4 million.

Smith, along with Charles Jeffrey Edwards, 56, and Brenda Edwards, 47, of Houston, was indicted in January 2013 and charged with operating a 32-month, $50 million drug diversion scheme, in which tainted pharmaceuticals were shipped from a warehouse in Nashville to pharmacies around the country.

Smith was the former president of Houston-based Cumberland Distribution, Inc. (“Cumberland”) and was convicted by a jury in February, after a week-long trial, of 15 counts of mail fraud, conspiracy and making a false statement to the U.S. Food & Drug Administration. Charles and Brenda Edwards previously pleaded guilty to related charges. Charles Edwards was also sentenced today to six years in prison and ordered to forfeit $1.4 million. Brenda Edwards will be sentenced later this year.

The evidence at trial established that, from December 2006 through August 2009, Smith and Jeff Edwards purchased millions of dollars of prescription drugs from unlicensed suppliers who had previously purchased the drugs from patients in and around New York and Miami. In most instances, Smith had these drugs shipped to Cumberland’s Nashville warehouse where they were cleaned, sorted, re-packaged, and shipped to independent pharmacies around the country. Generally, the diverted drugs included drugs used to combat HIV/AIDS; antipsychotic medications; anti-depressants; blood pressure medications; diabetes medications and others.

Smith and Jeff Edwards also had drugs shipped from their unlicensed suppliers to shell companies in Louisiana and Arkansas. Although these companies were licensed to sell drugs, Smith and Jeff Edwards used them as pass-through companies to create the appearance that Cumberland was purchasing drugs from licensed suppliers, when, in fact, Cumberland was purchasing diverted drugs from un-licensed suppliers in New York and Miami. The drugs arriving at Smith’s shell companies were forwarded to Cumberland’s Nashville warehouse and re-sold to independent pharmacies.

In order to conceal the drugs’ true origins, Smith and his co-conspirators provided false documentation to Cumberland’s pharmacy customers.

Numerous pharmacies reported problems with drugs they purchased from Cumberland, including prescription drug bottles containing the wrong medicine; the wrong dosage information; and foreign objects inside. At trial, several witnesses testified that at least one bottle of prescription drugs sold by Cumberland contained breath fresheners instead of medicine.

On May 14, 2009, the FDA executed a federal search warrant at Cumberland’s Nashville warehouse. Thereafter, in order to evade authorities, Smith and his co-conspirators rented another warehouse, utilized freight forwarding companies to receive drug shipments, set up private email accounts, purchased burner phones and hired a private pilot to fly drugs to Nashville. Their scheme resulted in gross proceeds of over $50 million.

This case was investigated by the United States Food and Drug Administration Office of Criminal Investigation. It is being prosecuted by Assistant United States Attorneys Henry C. Leventis and Stephanie N. Toussaint.