Some charges dropped in pharmacy drug case against FedEx

Citing paperwork blunders by federal prosecutors, a judge in San Francisco has dismissed many of the criminal charges against FedEx Corp. that accused the company of conspiring with Internet pharmacies to deliver drugs that were illegally bought online without a prescription.

Before any charges were filed, the U.S. attorney’s office and defense lawyers discussed a possible settlement and signed a series of written agreements to put the case on hold and suspend legal deadlines. But in those agreements, prosecutors mistook a similarly named FedEx subsidiary for the parent company of the package-shipping chain, which didn’t sign the agreements.

Little impact expected

By the time the negotiations ended in 2014 and prosecutors obtained a grand jury indictment, the five-year statute of limitations — the deadline for filing charges — had already lapsed for 14 of the 18 charges against FedEx Corp., U.S. District Judge Charles Breyer said in his ruling Friday.

Prosecutors admitted their error but asked Breyer to excuse it, arguing that lawyers for FedEx had known of their mistake from the start, had contributed to it with documents that failed to distinguish between the companies, and should have cleared things up. The judge was unsympathetic.

“The government appears to have forgotten that in a criminal prosecution, the defendant is not required to make the government’s case,” Breyer wrote. More bluntly, during a March 2 hearing on the issue, he told a federal prosecutor that “some level of competence would require a governmental agency to check sources,” such as FedEx’s Securities and Exchange Commission filing that spelled out its corporate structure.

Apart from embarrassment, the ruling may not have much impact on the case. While the broadest conspiracy charges against FedEx Corp., dating from 2000 through 2009, were dismissed, they remain pending against the subsidiary, Federal Express Corp. — also known as FedEx Express — while the parent company still faces charges of conspiring with another group of pharmacies from 2002 through 2010.

Dismissal of the additional charges “will have no effect,” Assistant U.S. Attorney Kirstin Ault told Breyer at the March 2 hearing. However, the dismissal might limit prosecutors’ ability to use contacts between Internet pharmacies and FedEx Corp. as evidence of a conspiracy by FedEx Express.

The case is the first known criminal prosecution against a transportation company for allegedly shipping illegal drugs. The 2014 indictment accused FedEx and its subsidiary of plotting with two pharmacy groups to distribute medications, including narcotics, to customers who had no legitimate medical need or valid prescription for the drug.

FedEx says it’s helping U.S.

Prosecutors said FedEx shipped drugs valued at least $820 million between 2000 and 2010. Criminal penalties could include a fine equal to twice the value of the drugs.

FedEx has denied knowingly delivering illegal drugs and said it helped the government prosecute “rogue Internet pharmacies” whenever it learned that it was being used for illegal shipments.

“No FedEx entity is guilty of anything more than attempting to assist the government in doing its job of enforcing the law, and we will demonstrate this at trial,” the company said after Breyer’s ruling.

The office of acting U.S. Attorney Brian Stretch declined to comment on the ruling, which involved events during the tenure of then-U.S. Attorney Melinda Haag.

Bob Egelko is a San Francisco Chronicle staff writer. Email: begelko@sfchronicle.com Twitter: @egelko