United States Drug Enforcement Administration

LOS ANGELES - A Los Angeles area physician pleaded not guilty to federal drug trafficking charges that allege he illegally distributed drugs, to include the powerful and addictive painkiller oxycodone.

Dr. Daniel Cham, 47, was arraigned on a 31-count indictment late Thursday afternoon after he was arrested at his residence in Covina, CA on Wednesday.  Bond was set at $140,000.  Cham was also ordered to serve home detention and was prohibited from practicing medicine.

The indictment, returned by a federal grand jury on October 7 and unsealed when the defendant was arrested, charges Cham with drug trafficking, money laundering, fraud and making false statements to federal authorities. The indictment focuses on prescriptions Cham wrote at various locations, including his medical offices in La Puente and Artesia. The drugs involved in the allegedly illegal prescriptions include (a powerful narcotic painkiller best known under the brand name OxyContin), (a narcotic painkiller often sold under the brand names Vicodin and Norco), (commonly known by the brand name Xanax), and (as muscle relaxer best known as Soma).

“Daniel Cham's arrest sends a clear message to doctors who violate their sworn public duty by selling prescriptions for highly addictive opioids - the DEA will shut down your operation and put you behind bars,” said Anthony D. Williams, Special Agent in Charge of the DEA’s Los Angeles Field Division. “Along with our law enforcement partners, we continue to aggressively target medical professionals who act as drug traffickers cloaked in a white lab coat.”

In May 2014, investigators executed federal search warrants at 13 locations, including Cham’s residence and medical offices. According to the supporting affidavit, unsealed at Cham’s arraignment, the doctor often saw patients between 8 p.m. and 2 a.m. on Fridays, Saturdays and Sundays, and he post-dated prescriptions to make them appear to have been written on weekdays. In the year preceding March 2014, Cham issued more than 5,500 prescriptions for controlled substances - primarily for oxycodone, hydrocodone, alprazolam and carisoprodol - and he issued more than 42,000 such prescriptions since July 2010.

The affidavit also discussed how an undercover officer made three visits to Cham’s La Puente office earlier this year, when Cham wrote him prescriptions for controlled substances in exchange for $200 or $300 in cash or money orders. Cham issued a prescription for oxycodone even though the undercover operative said he “had been high and drunk while receiving controlled substance prescriptions” previously from Cham. On another occasion, Cham prescribed oxycodone even though the undercover presented, in lieu of photo identification, a written notice that his license had been suspended for driving under the influence.

“The problem of pharmaceuticals being diverted to the black market continues to grow, which feeds drug addiction and leads to additional criminal acts by addicts,” said Acting United States Attorney Stephanie Yonekura. “Unscrupulous doctors who prescribe controlled substances without a legitimate medical purpose are simply fueling a black market of narcotics. These doctors are the same as street dealers who face lengthy sentences in federal prison.”

The indictment also charges Cham with fraudulently issuing prescriptions for controlled substances to Tracy Townsend, who used at least five false identities. Townsend, 51, of Studio City, is also charged in the indictment, but his whereabouts are currently unknown.

An investigation by IRS - Criminal Investigation and the Drug Enforcement Administration’s Financial Investigation Group showed Cham used at least four bank accounts to launder the proceeds of his illegal prescriptions. The indictment charges Cham with concealing proceeds derived from the undercover visits by depositing them into an account held in the name of a separate business.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

If convicted of the 31 counts in the indictment, Cham would face a statutory maximum sentence of 339 years in federal prison.

The investigation into Cham was conducted by the Drug Enforcement Administration, IRS - Criminal Investigation Division, the Los Angeles County Sheriff’s Department’s Health Authority Law Enforcement Task Force, the Federal Bureau of Investigation, the California Medical Board and the Los Angeles Police Department.