G. Chambers Williams III

The Tennessean

NASHVILLE, Tenn. -- Authorities have broken up a prescription drug "diversion" scheme operating out of Nashville that sold nearly $60 million in secondhand pills to pharmacies nationwide, pawning them off as new medicines fresh from the manufacturers.

The scheme was allegedly operated through a company called Cumberland Distribution Inc., which ran drug warehouses in Nashville and was licensed by the state of Tennessee as a wholesale distributor of prescription drugs.

But the drugs Cumberland resold — $58 million worth from 2006 to 2009 — were illegally obtained, the government alleged, often from buying unused prescriptions for pennies on the dollar compared with their original prices, from people on the street or in nursing homes.

The drugs were then sorted and repackaged as new and sold to unsuspecting pharmacies, which passed them on to customers who came in to get prescriptions filled, according to the government's case.

Because of the scheme, customers were at risk of getting potentially tainted drugs, or getting drugs that were old and no longer had their required potency.

Among the recycled drugs that were sold as new were some used to treat HIV/AIDS, the U.S. Attorney's Office said. Others included antipsychotic, anti-depression, acid reflux, blood pressure and diabetes medications.

This week, Charles Jeffrey Edwards, 52, and his wife, Brenda Elise Edwards, 43, of Houston entered guilty pleas in U.S. District Court in Nashville and will be sentenced in November, according to court records and U.S. Attorney David Rivera.

Brenda Edwards pleaded guilty to one count of conspiracy, which carries a penalty of up to five years in prison and a $250,000 fine.

Her husband pleaded guilty to a single count each of mail fraud and money laundering. Mail fraud carries a maximum sentence of 20 years and a $250,000 fine, while money laundering can bring up to 10 years in prison and a $250,000 fine.

"Both defendants admitted that Cumberland Distribution purchased a portion of the prescription drugs it resold to pharmacies from individuals and entities that were not licensed to engage in the wholesale distribution of prescription drugs and … were acquired through various networks of 'diverters' who obtained (the) drugs from other unlawful sources," according to the plea deal.

The case was initially investigated by the FDA, which raided the Nashville warehouses on May 14, 2009.

According to the indictment, the defendants made more than $14 million in profits from the scheme over the three-year period.

A third co-defendant, Jerrod Nichols Smith of Houston, who is charged with conspiracy, mail fraud and making a false statement, is scheduled to stand trial Oct. 7 in Nashville.