Government drops case accusing FedEx of illegal drug deliveries

In this Jan. 5, 2016 photo, a FedEx truck drives past the skyline in San Francisco. On Friday, June 17, 2016, the U.S. government dropped charges against FedEx accusing the delivery company of knowingly delivering illegal prescription drugs. A nonjury trial in San Francisco federal court ended after a week, when prosecutors concluded they didn’t have evidence for a conviction. Fedex denied the charges, saying it only shipped what it believed were legal drugs from licensed pharmacies and worked with federal agents to weed out illegal pharmacies. (AP Photo/Jeff Chiu, File) less In this Jan. 5, 2016 photo, a FedEx truck drives past the skyline in San Francisco. On Friday, June 17, 2016, the U.S. government dropped charges against FedEx accusing the delivery company of knowingly ... more Photo: Jeff Chiu, Associated Press Photo: Jeff Chiu, Associated Press Image 1 of / 1 Caption Close Government drops case accusing FedEx of illegal drug deliveries 1 / 1 Back to Gallery

Federal prosecutors conceded defeat Friday in their attempt to show that FedEx Corp. conspired with Internet pharmacies to deliver nonprescribed drugs, dropping the case a week into the trial.

It was the first known criminal prosecution of a transportation company for allegedly illegally shipping drugs. A 2014 grand jury indictment accused FedEx and a 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 drugs.

Prosecutors alleged illegal shipments of at least $820 million worth of drugs between 2000 and 2010. If convicted, the company could have been fined twice that amount.

FedEx said it never knowingly delivered illegal drugs and in fact had helped the government prosecute online pharmacies whenever the company learned that it was being used for improper shipments.

The prosecution ran into trouble before U.S. District Judge Charles Breyer of San Francisco. In March, he dismissed 14 of the 18 charges, citing paperwork blunders by a prosecution team that blew legal deadlines for the indictment because it confused FedEx with a subsidiary, Federal Express Corp.

The nonjury trial in Breyer’s courtroom began Monday. According to published accounts, the judge was skeptical from the start, asking whether prosecutors had any evidence that FedEx had tried to solicit business from online pharmacies by treating them more favorably than other customers.

Citing FedEx’s claim that it had cooperated with the government, Breyer asked prosecutors to call two federal agents to the witness stand on Friday. The company’s lawyer, Cristina Arguedas, had told the judge that the agents had met over a two-year period with FedEx representatives, who offered to stop carrying drugs for any pharmacy that the government identified as illegal. The agents would testify that they made no response because it was difficult to tell which shippers were illegal, Arguedas said.

Rather than calling the witnesses, prosecutors told Breyer on Friday that they were dismissing the case.

Afterward, Breyer described FedEx as “factually innocent.”

FedEx responded caustically to the dismissal.

“The case should never have been brought,” Patrick Fitzgerald, a company vice president, said in a statement. “The government should take a very hard look at how they made the tremendously poor decision to file these charges.”

The company also said it remained committed to cooperating with law enforcement “to prevent misuse of its transportation networks.”

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